Brands using vloggers transformed from poachers to be gamekeepers by the FTC

On Monday 11 July 2016, the United States’ Federal Trade Commission (FTC) published news of its draft settlement agreement with Warner Bros. in connection with their vlogging campaign for the launch of the video game “Middle Earth: Shadow of Mordor” in September 2014. 

Warner Bros. engaged an advertising agency, Plaid Social Labs LLC to hire a number of YouTube influencers, or vloggers, to post positive videos of the game on YouTube.  These influencers were given free access to a pre-release of the game, as well as cash payments ranging from hundreds to tens of thousands of US dollars. They were instructed that the videos had to have a positive tone and met Warner Bros.’ requirements.  The video reviews were seen 5.5 million times. One of the vloggers was Swedish born Brighton based Felix Kjellberg, also known as PewDiePie, possibly the most influential vlogger of all, based on the number of views he generates. In this case, his review for Shadow of Mordor attracted 3.7 million views.  Speaking out in a YouTube video released after the controversy, PewDiePie denies wrongdoing, adding that his vlog was released in 2014 but the FTC didn’t release guidelines specific to YouTube until 2015.  Whilst it’s true that the FTC’s Endorsement Guides were not released until 2015, the FTC was recommending the need for clear disclosures for sponsored online content in guidance issued way back in 2000, and this guidance was updated for bloggers in 2013.  Given that PewDiePie reportedly earned US$12 million last year, he needs to accept that with great commercial success there comes a high degree of legal and ethical responsibility. Perhaps he didn’t know the rules; but he should have done.

To be fair, however, the levels of awareness about the disclosure requirements among both advertisers and vloggers is probably much higher now than it was nearly 2 years ago. Warner Bros., Plaid, PewDiePie and the other vloggers are rather unlucky that the mistakes that they made back then are only being made public now, as it is quite likely that if they had been planning a similar campaign this summer, these errors would have been avoided.

Warner Bros. exercised control over the content of the game play videos by telling the influencers how to promote the game, requiring them to make only positive comments and telling them not to disclose any bugs or glitches in the game.  As a result, these reviews became marketing communications, not genuine editorial representing the unalloyed views of the vloggers.  Unfortunately, however, this was not properly disclosed by the vloggers to their followers to the satisfaction of the FTC, particularly as many of these followers are children and young people. 

The FTC complaint explains that while Warner Bros. did instruct the vloggers to state that the videos had been sponsored, it did not specify how this should be achieved in practice.  Most influencers, including PewDiePie, only placed a disclosure in the description box below the video, visible only if viewers clicked on the “Show More” button.  Ask any teenager, and they will probably tell you that they never really look below the video, so the placement was inherently problematic.  However, it seems that Warner Bros. was unaware of the problem, as it reviewed and approved at least one of the YouTube videos containing an inadequate disclosure before the video went public.  The advertiser also failed to ensure that the videos posted on Facebook and Twitter contained the necessary disclosures.

The proposed settlement requires Warner Bros. to ensure that any opinion published as part of a paid for influencer campaign is not misrepresented as the views of an independent user or ordinary consumer.  The advertiser must also give clear and conspicuous disclosure of a material connection between the vlogger and themselves.  According to the definition of “clear and conspicuous” used in the FTC’s order against Warner Bros., this means ensuring that “the required disclosure is difficult to miss (i.e. easily noticeable) and easily understandable by ordinary consumers”. 

Perhaps most important, is the fact that the settlement continues the trend of the enforcement authority’s requiring advertisers to take positive steps to ensure future compliance by educating their vloggers on the requirements for disclosure; monitoring and reviewing the vloggers’ implementation of those requirements; and then if necessary, withholding payment or even terminating contracts if there is non-compliance by the vloggers.  In other words, as part of the settlement with the authority, advertisers have been required to police compliance by their advertising or social media agencies, as well as their own vlogging communities.

At the moment, most enforcement of the equivalent issues in the UK is through the Advertising Standards Authority (ASA), i.e. the self-regulatory body, rather than the Competition and Markets Authority (the CMA) which is the statutory regulator.  However, in the first half of 2016, we have seen the CMA get increasingly involved in social media issues, particularly about online reviews and endorsements.  The CMA could well adopt the FTC’s policy of requiring advertisers to act as policemen.  Although the ASA has limited formal powers to impose this type of sanction, they may seek to do so as part of an informal agreement not to pursue an investigation on a formal basis.

To read the full FTC proposed settlement agreement click here. 

For more information, contact Brinsley Dresden