Social media endorsements: Brands and DTC influencers play hide and seek with disclosures
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If you’re following DTC Twitter, chances are you’ve come across a post praising the new darling of the financial tool world, Parker. Parker describes itself as “an all-in-one financial solution designed specifically for your eCommerce."
According to its website, with Parker you can “track your financial metrics, campaign profitability, and pay all business expenses with a card that can keep up with your growth.”
While that all may be true, it’s a credit card.
Yes, a credit card.
And everyone is posting on Twitter about this new thirst trap of a credit card—even though the brand has less than 600 Twitter followers.
Over the past month, Parker has engaged with a number of micro-influencers on Twitter to promote its credit card and official launch party (which happened on Sept. 29), generating FOMO on behalf of the brand.
Some of the influencers have disclosed they’ve been paid, adding a #sponsored hashtag to their post or some other indication of a professional relationship. Others, though gushing about the credit card and its party, have not indicated sponsorship.
Meanwhile—for its part—Parker isn’t saying who it’s paying, at first saying they wouldn’t speak with BANKNOTES, then saying they would, and then again going silent.
To be clear, this is a strong go-to-market strategy by Parker—getting popular Twitter thought leaders to back it and show up for events and dinners. But the ambiguity of who’s getting cash, travel, a dinner and who isn’t is leaving some wondering if the rules are being followed.
Phillip Jackson, VP of Commerce at Rightpoint and Future Commerce Co-Founder, was one of the first to publicly talk about the lack of disclosures on Twitter:
And Aaron Orendorff (former VP of marketing at CTC and Shopify Plus editor in chief) agrees, saying influencers who are being wined and dined by a brand should be disclosing their affiliation and whether they’re paid to promote that company.
“As simple as it sounds, honesty should be the only rule,” he said. “This includes not only disclosing paid posts through clear hashtags— #sponsored or #ad—but also any personal financial interests; namely, investments in the company being promoted or shared.”
In fact, both Orendorff and his former company, CTC, have posted Twitter content endorsing Parker, and both have disclosed the sponsorship.
One thing is clear: DTC operators have learned how to monetize their personal brands in a myriad of channels, from Twitter and LinkedIn to newsletters. And with paid advertising becoming less effective, companies like Parker have fueled the rise of the DTC micro-influencer as a viable alternative.
Parker isn’t alone. Other eCommerce-related companies like Varos, Triple Whale, Octane AI, MarketerHire, and Rep have all hired micro-influencers in 2022 and are doing so effectively.
What needs to be disclosed?
According to the Federal Trade Commission, any monetary relationship is considered sponsored.
That means even if people weren't paid in dollars, getting invited to an exclusive event would be considered monetary. That doesn’t mean they have to use #sponsored in their social media posts, but they do need to make it clear somehow that the company sponsored their trip.
Additionally, any financial interest or investment in a company also should be disclosed.
So who’s actually accountable?
You may have caught the news recently about Kim Kardashian’s lawsuit for failing to disclose that she received payment from a crypto asset, which she promoted on her Instagram feed. But did the Crypto company get in trouble?
Nope. And here’s why:
According to the FTC, influencers are responsible for disclosing when their content is sponsored, meaning they’re the unfortunate souls who will get the lawsuit—not the business.
If you’re thinking, that doesn’t seem fair, then here’s a good argument from Phillip Jackson:
“Creators being paid to promote products should be held accountable. Nobody is forcing them to post. They're adults and successful operators in their own right. Despite whether the FTC mandates it or not, each creator should understand and recognize the moral dilemma around promoting a product they don’t use but are being paid to post about.”
Even though the onus is on influencers to know when to disclose sponsorship, this issue is a symptom of the industry at large. Everyone needs to be held accountable for learning the laws around sponsored posts and influence each other to abide by them.
Why? It comes down to consumer trust and brand credibility.
Why is it wrong not to disclose sponsorship?
Trying to get someone to purchase a product because you, the influencer, benefit from it is completely different than someone posting about that same product (with no pay) because they feel like they’re sharing valuable information. (Think about the difference between sponsored posts vs UGC.)
In short, consumers need to be aware of the intent behind posts.
The integrity of your relationship with shoppers relies on honesty—and it’s key to build brand trust from the moment these shoppers are acquired from the influencer’s post.
According to a survey by Ad Standards Research, 68% of consumers strongly agreed that news websites should have rules around sponsored posts so that they don’t appear the same as other content. Also, 70% said the rules around influencers disclosing when they’ve been compensated need to be more transparent.
Jackson explains the situation well: “Consumer protection is a shared responsibility that we should all shoulder. If we rely solely on the government to mandate behavior, we'll have more government oversight in our everyday business practices. Nobody wants more regulation, so we as an industry should self-govern.”
Best practices according to the FTC
The rules by the FTC are clear: you must disclose a relationship with a company when you have a material connection. This means a personal, family, employment, or financial relationship.
What’s considered a financial relationship? When you’re paid in a dollar amount for the post, if you receive free products, if you’re offered a discount, or another similar type of perk (including free services like a meal, trip, or event invite).
And here’s an important bit: even if the brand didn’t ask you to mention its products, you must still disclose the endorsement if you decide to post about it.
Now, obviously the FTC governs US law, so what if you’re posting about a brand from abroad? The US law still applies if you’re posting to consumers in the US who could be affected by your endorsement.
Note: There may be foreign laws to consider. Make sure you look up your country’s laws on social media sponsorship to make sure you’re following them correctly.
“There's a generational divide and a cultural shift that has happened in the age of the Internet. When I was growing up, being a ‘sell out’ was viewed as a flaw of moral character. How could you be trustworthy if you only say what you're being paid to say? Today, success is measured by how fast you can sell out. What a dramatic change in a short period of time.”
- Phillip Jackson
Best practices according to us
The FTC does say it’s the influencer’s responsibility to know when and how to disclose these brand relationships. But the truth is, at least in the Twitter DTC ecosystem, many of these folks hired are “new” influencers. They simply aren’t aware of the rules.
That’s why we believe there is a shared responsibility for both businesses and influencers—and the FTC should govern how businesses approach and work with influencers as well.
For example, with a sponsorship contract agreement, businesses can explain how and why the influencer should disclose the relationship.
Whether you believe it’s the business’ responsibility or not, remember you’re risking consumer trust when the influencers you work with don’t disclose when a post has been sponsored.
Where the FTC can do better
In the “Disclosures 101 for Social Media Influencers” handbook, the FTC says, “Disclosures are likely to be missed if they appear only on an ABOUT ME or profile page, at the end of posts or videos, or anywhere that requires a person to click MORE.”
This is referring to Instagram posts where the disclosure is placed low down in the description, where users have to click a button to read the rest of the post (and likely 10+ hashtags before the sponsored one).
The FTC also doesn’t say you must disclose in this exact way—just that you should. There’s a fine line between law and recommendation here…
Also, what about Twitter threads? The rules aren’t exactly clear, which is exactly where the FTC can improve on the laws around sponsored posts.
How to disclose paid sponsorship on Twitter—the right way
Most social media sponsorships in DTC are happening on Twitter—after all, it’s the channel of choice for agency owners, brand founders, operators, and SaaS providers in eCommerce.
We compiled Twitter-specific tips to set the foundation for DTC influencers and companies’ rules of engagement for sponsorships.
Place it so it’s hard to miss. The disclosure of a sponsored post should be placed with the endorsement message itself. Disclosures are likely to be missed if they appear only on a profile page, at the end of posts or videos, or with a group of hashtags or links.
Use the right tag to declare the sponsorship. Use terms that are self-explanatory, such as “advertisement,” “ad,” and “sponsored.” Influencers can also use the terms “BrandPartner” or “BrandAmbassador” to disclose their endorsement.
The FTC further advises influencers to avoid using vague or confusing terms like “sp,” “spon,” or “collab,” or stand-alone terms like “thanks” or “ambassador.” And steer clear of other abbreviations.
Disclose often during a Twitter Space. If making an endorsement during a Spaces live stream, the disclosure should be repeated every so often so viewers who join late or only listen to part of the stream will still be informed.
Insert disclosure in both audio and video. Some viewers may watch video recordings without sound and others may not notice superimposed words, so declare sponsorship in the video caption and audio. Be sure to still add the sponsorship tag in the description of the post as well.
Don’t talk about your experience with a product you haven’t tried. This is a big one! Endorsing a product, company or service without having tested and tried it is borderline dishonest. Furthermore, if you’re paid to talk about a product or service and thought it was terrible, you can’t say it’s terrific.
Influencer and brand relationships work best when both parties, along with their audiences, benefit from that engagement.
A few DTC Twitter stars doing it right
We can tell you about all of the ways you should be disclosing your sponsorships. Sometimes it’s easier to see examples.
- Aaron Orendorff
Orendorff was one of the lucky few hired by Parker to promote the company’s credit card. His post was a single tweet, where he added a “#sponsored” at the very end. It’s very clear to readers that this is a sponsored post—no questions asked.
- Savannah Sanchez
Recently, Savannah Sanchez wrote a thread about Varos (one of the common tools you’ve likely seen these micro influencers talking about). In the first part of the thread, she explains how she used it to pull data for some of her clients.
In the last part of the tweet, she recommends readers check out Varos. She also explains a bit more about how the tool works, and includes the hashtag “#VarosAmbassador” before linking to the company’s website.
Even though she didn’t write “Sponsored” in her tweet, she is still disclosing that she has a monetary relationship with Varos by adding the ambassador tag.
P.S. Shoutout to Varos for working with women in the industry too. But that’s another issue for another day 😉
- Barry Hott
We reached out to Barry Hott to get his opinion on these paid sponsorship opportunities. He’s written several for companies like Varos. In his opinion, people shouldn’t be writing posts about tools they’ve never used:
“I turn down a lot of sponsorship opportunities because I don't know the product well or have time to try everything. I even turned down an opportunity from a good friend until I got more comfortable with their product. I've built my reputation around authenticity and truth. My audience prefers my authenticity over bullshit.”
Here’s a snippet of a thread he wrote promoting a few different tools:
Why Hott’s sponsored Tweet is correct: Even though he doesn’t use a hashtag, he still properly disclosed that he was compensated by some of the companies mentioned in his thread.
"I added the sponsorship note to my Twitter Thread because I want to be transparent—and I believe in following the law. It's an ethics (and legal) issue. I also explained that I personally used the tools because I don't think it's cool when people recommend stuff they haven't tried and don't like.”
- Barry Hott
We still have a long way to go
Truthfully, it’s difficult to find many examples of anyone disclosing sponsorship correctly.
We’re all making mistakes and learning. Orendorff even shared how he mistakenly didn’t add the sponsorship tag to his first paid post:
“In my zeal for engagement, the very first post I sent through Common Thread Collective’s sponsorship program did not include disclosure,” he explained. “Taylor Holiday (CEO of Common Thread Collective)—in true transparency loving fashion (and because I’m sure he knew it was the right thing to do, as well as the best for long-term audience trust)—spotted it and told me to correct it moving forward.”
Now, Orendorff includes a “#sponsored” to every post on every account he manages (personal and company accounts.)
These sponsored posts may be a smart go-to-market strategy for new products, features, and events, but we still have a long way to go to make sure our community is being honest and ethical with these posts.