4 Essential Things the FTC Wants You to Know Before Endorsing a Company’s Products – Transcript

Read More

[Intro Music] This is Office Talk with Annette Stepanian.


Are you a blogger who receives free products or payment in exchange to share a review about that product on let’s say your Instagram account or your blog? Or are you an online business owner who participates in affiliate programs where you promote another company’s products, and in exchange, you receive a commission for each sale that you refer?

Well, then today’s episode is for you. In today’s episode, I’m going to share four things you need to know when you endorse another’s product or service. In a future episode, I’ll flip it on its head and take it from the company’s perspective. So if you’re a company or advertiser that wants to work with affiliates, customers or influencers to help market or promote your products and services, then make sure to subscribe to the show, so you don’t miss out on that episode. But for now, let’s get to the topic at hand.

Now, today’s tips come from the guidelines set out by the FTC, or the Federal Trade Commission. The FTC is a federal agency here in the United States, and one of its purposes is to protect consumers by stopping what they call unfair, deceptive, or fraudulent practices in the marketplace.

On a side note, if you’ve never checked out the FTC website, and I’m guessing you probably haven’t, you probably have other things on your plate then to jump on the FTC website. But I would still encourage you to do so because they have some really great resources and content for small business owners on topics like advertising and marketing, privacy and security, protecting your business against scammers. Just some really great user friendly guides on there. So I’m going to go ahead and link up to some of those FTC resources on today’s topic in my show notes, which are available at annettestepanian.com/podcast/42.

Now, the general principle when it comes to endorsements is that if there’s a connection between an endorser and the marketer, or let’s say, the company that you’re working with, that consumers would not expect, and it would affect how those consumers evaluate that endorsement, then that connection needs to be disclosed. So think of it like this: If I as a consumer learn about this great product from you, the endorser, the fact that you’re getting paid, or that you’re receiving something of value in exchange for giving that review or testimonial of that product – well, that’s going to affect how I as the consumer, perceive your recommendation.  You know, I may not give it as much weight because I’m thinking well, is she recommending this because she’s getting paid for it. So I as the consumer need to be made aware of that relationship between you, the endorser, and the company whose products or services you’re endorsing. And we do this by way of a disclosure. So according to the FTC, it says,  “the question you need to ask is whether knowing about that gift or incentive would affect the weight or credibility your audience gives to your recommendation? If it could, then it should be disclosed.”

So that leads me to the first tip, a disclosure is required, regardless of whether or not you’ve been financially compensated for that endorsement. The question really comes down to have you received something of value in exchange for your endorsement or promotion of that company’s product? Obviously, if you go out and you buy a product yourself, and you write a review about it, there’s no disclosure needed there because you don’t have a relationship with the company. You’re just a customer. But let’s say a company gives you free product or a discount or other perks like an opportunity to be featured in a TV commercial for the company, or they’re going to enter you into a sweepstakes for a significant prize. Well, those are things of value that may or may not influence your review, and therefore you’re going to need a disclosure.

So remember, it’s not just if you received cold hard cash for your review or your endorsement. The FTC considers other benefits and perks received with the expectation that you’ll promote or discuss that company’s products to be things of value, and therefore requiring a disclosure.

Moving on to tip number two. A disclosure is required, regardless of the format of the endorsement. So whether you’re endorsing a company by posting an image on Instagram or Facebook, or you’re setting out a tweet publishing a blog post on your blog, or recording a YouTube video, you’re probably going to need a disclosure. Now, there isn’t specific wording required for disclosures and in fact, the FTC guides give a few examples of how you can phrase it. So for example, they’ll say “company x sent me insert the name of the product to try and I think it’s great.” Or at the start of a short video, you might say something like, “some of the products I’m going to use in this video were sent to me by their manufacturers.” On platforms like Twitter where you’re limited by the number of characters, you can use hashtags, like,  #ad, #sponsored, #promotion.  And by the way, don’t hide these hashtags, and a slew of 100 other hashtags, on Instagram in a separate comment, okay? You want to make the use of that hashtag very obvious and clear.

Also, don’t assume that just because you put a single disclosure on one page of your website  that it is enough to cover you. Here’s what the FTC has to say about this. It says, “a single disclosure on your homepage doesn’t really do it, because people visiting your site might read individual reviews are watch individual videos, without seeing the disclosure on your home page.” So regardless of the format of your endorsement, the question is, does your audience understand your relationship to the company whose products are being recommended within the context of your sponsored message? IIt’s almost like you have to look at that sponsored message that pose that video, whatever the content is, you’ve got to look at it in isolation. If all I as the consumer saw was just that video, just that post, just that article, whatever it was, would I know within the context of that message, that your message was sponsored, or this isn’t a paid endorsement, right? You can’t expect me as the consumer to go search your home page or to go search your profile on Twitter to see that you have made that disclosure there, for instance. So you want to look at it in isolation. And that message within and of itself needs to convey that this is a sponsored message. So that is what’s going to be deemed an effective disclosure.

Which brings me to tip number three. Make sure the disclosure is “clear and conspicuous.” Now, the term clear and conspicuous is a term of art, but it’s kind of common sense. Consumers should be able to notice the disclosure easily. They should not have to search it, meaning you’re not hiding or burying them in footnotes in blocks of texts, or hashtags, like we talked about earlier. You know, just text that people are just not going to read, or you’re not hiding them behind hyperlinks. If the disclosures are hard to find, are tough to understand, they don’t meet the clear and conspicuous standar. According to the FTC, disclosure should be close to the claims in which they relate, in a font that’s easy to read, in a shade that stands out against the background. For video ads on the screen long enough to be noticed, read and understood. And for audio disclosures read dedicated, that is easy for consumers to follow. And in words, consumers will understand. So they should not sound like this. If you look at this, and as a consumer, I can’t understand what you’re saying. And that is not clear.

So I don’t know if you guys are old enough to remember that Micro Machines commercial where the guy would talk really fast at the end about the micro machine cars. But that totally reminded me of that, and that was super fun.

Okay, here’s the final tip. Tip number four. Your endorsement has to reflect your true experience. So if you haven’t tried the product, you can’t talk about it as if you did. And if you were paid to try a product and you thought it totally sucked, you can’t say it was awesome. Okay. Again, this stuff all seems like common sense when you think of it from the perspective of the FTC, which is really trying to protect consumers from those false, misleading or deceptive advertising or marketing claims.

So there you go. Those are the four essential things you need to know before endorsing a company’s products.

So to recap, tip number one is a disclosure is required regardless of whether or not you’ve been financially compensated for the endorsement. So as long as you receive something of value, you’re probably going to need to disclose that.

Number two, a disclosure is required regardless of the format of the endorsement. So it doesn’t matter if it’s on Instagram. If it’s on Twitter, if it’s a blog post, if it’s a video, the format doesn’t matter.

Tip number three, the disclosure must be clear and conspicuous. So don’t hide it. In fact, keep it very close to and within the context of the message itself.

And tip number four, your endorsement has to reflect your truth. through experience. Again, I’ll link up to some helpful resources from the FTC over in my show notes which you can get at annettestepanian.com/podcast/42. And make sure to subscribe to the show because in an upcoming episode, I’ll share some things that the FTC wants you to know if you’re a company or an advertiser that wants to work with affiliates, customers or influencers to help market or promote your products and services.

So with that, said, my friend, I hope you have a fantastic day and I can’t wait to talk to you later.

[Outro Music]