The Federal Trade Commission’s (FTC) advertising disclosure rules for “material connections” are not new. The FTC has long required that advertising contain clear and conspicuous disclosures of endorsements and other material connections to ensure that consumers are not misled by hidden commercial relationships.[i] The longstanding expectation is simple: brands, influencers, and endorsers must make clear and conspicuous disclosures about the nature of their connection in a manner that is hard to miss.[ii] What is new and perhaps not as simple, however, is the practical application of these principles in the rapidly changing world of interactive media.
Interactive media encompasses digital experiences where users actively participate in or engage with content (i.e., more than just static ads). This includes livestreams, video gaming environments, and short-form videos on platforms like TikTok, Instagram, and Twitch. In these spaces, advertising content can be woven into real-time commentary, in-game actions, or even collaborative brand-sponsored events. For example, a Twitch streamer may verbally promote a sponsor’s product during a livestream in which the streamer is playing a videogame, or a TikTok creator might seamlessly integrate a sponsor’s product into a comedy sketch video. As evident by these examples, the dynamic and immersive features of interactive media makes clear and conspicuous disclosures more challenging to execute, yet all the more critical.
Below are practical tips for effective disclosures in interactive media to help brands and endorsers remain compliant with the FTC’s disclosure requirements in this ever-changing environment.
- Clear Connection: The connection between the brand and the endorser must be clearly and conspicuously disclosed to the consumer from the outset, so that consumers understand the nature of the relationship[iii] (regardless of whether it involves free products, a commission, a flat fee, or some other material connection) before engaging with the content. Depending on the context, phrases like “Thanks to [Brand]” or merely tagging a brand are often inadequate because they are too vague in the evolving digital environment and unlikely to meet FTC requirements.
- Explicit Language: Relying solely on platform disclosure features like the “Paid Partnership” tool on Instagram without additional clear and conspicuous disclosures is often insufficient. In addition to using the platform disclosure features, consider overlaying explicit text such as “#ad” or “Sponsored by [Brand]” directly onto videos or images, mentioning the commercial relationship verbally (preferably at the beginning of a video or, if a livestream, at the beginning and periodically throughout), and including a note at the beginning of the caption. Importantly, the FTC does not make exceptions to its disclosure requirements based on a platform’s space or text character limitations. Transparency remains the priority for legal compliance, so delete those extra emojis and make room.
- Virtual Influencers: In June 2023, the FTC updated its advertising guidelines, expanding the definition of “endorser” to include virtual influencers,[iv] such as hyper-realistic AI-generated personas. While there is currently no explicit FTC rule requiring virtual influencers to disclose that they are not human, if an omission of such information would likely mislead or deceive consumers, disclosure is necessary to avoid deceptive advertising practices. In addition, some social media platforms have adopted more explicit requirements than the FTC. For example, TikTok’s Community Guidelines require that “creators label AI-generated or significantly edited content that shows realistic-looking scenes or people.”[v] Additionally, the FTC has clarified that a virtual influencer cannot make statements expressing or implying personal experience with a product. For instance, a virtual influencer should not state, “I love this coffee!” because, as non-humans, they cannot have genuine human experiences.
As advertising seamlessly blends into ever-changing interactive environments, transparent and prominent disclosures are necessary for continued legal compliance. Brands and endorsers who prioritize clarity not only foster consumer trust, but also stay on the right side of FTC enforcement. We partner closely with brands, agencies and influencers to anticipate regulatory change, navigate evolving state and federal requirements and implement effective and strategic compliance strategies.
FOOTNOTES
[i] Guides Concerning the Use of Endorsements and Testimonials in Advertising
[ii] Disclosures 101 for Social Media Influencers | Federal Trade Commission
[iii] Guides Concerning the Use of Endorsements and Testimonials in Advertising
[iv] Federal Trade Commission Announces Updated Advertising Guides to Combat Deceptive Reviews and Endorsements | Federal Trade Commission
[v] Community Guidelines | TikTok
