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Marketers have been paying celebrities to endorse their products and services for decades, so it's no surprise that there's a booming market for celebrity endorsements via their social media profiles.

With the help of companies like Ad.ly, celebrities and 'influencers' are reportedly earning thousands upon thousands of dollars for a single tweet or Facebook status update.

In the United States, marketers paying high-profile individuals to tweet and blog about their products worried the Federal Trade Commission (FTC) so much that it developed guidelines around the practice.

Now Britain's Office of Fair Trading (OFT) has something to say about the subject too. According to The Guardian, it is investigating blog network Handpicked Media. The OFT's concern: that Handpicked Media was being paid by marketers to publish blog posts about their products and services.

The problem: the apparent lack of disclosure that the content was essentially paid for. As the OFT sees it, paid promotion without disclosure is "deceptive."

If the OFT moves aggressively to regulate these types of social media promotions, it could ensnare a number of major brands. As The Guardian notes, Range Rover recently developed a campaign in which celebrities and other social media 'influencers' were loaned a new Range Rover and encouraged to promote their use of it via outlets like Twitter. At least some of the posts and tweets published would seemingly upset the OFT as they didn't contain any disclosures.

Naturally, full disclosure is hard to provide when one is limited to 140 characters. That's one of the reasons that the FTC guidelines consider the inclusion of the words 'ad' or 'spon' to constitute disclosure. But it's still unclear whether such disclosures really tell consumers anything they don't already know.

When Kim Kardashian tweets about a fast food restaurant, for instance, one has to believe that a good number of her followers who are actually paying attention and see the tweet already know that it was probably little more than a paid advertisement. After all, many of the celebrities that are being paid to promote products and services on their social media profiles are active endorsers outside of social media too.

From this perspective, efforts to regulate paid social media promotion are probably 'protecting' consumers in an area in which little protection is really needed, no matter how well-intentioned they are. In reality, social media will eventually regulate itself.

Many celebrities and other 'influencers' will likely become more selective in what they choose to promote, and may look to tie social media promotions to larger multi-channel endorsement relationships. And marketers, realizing that online influence may be harder to quantify than thought, will become more sophisticated about who, if anybody, they pay to tweet, and what gets tweeted.

Photo credit: david_shankbone via Flickr.

Patricio Robles

Published 11 January, 2011 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2402 more posts from this author

Comments (5)

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Hero Grigoraki, Client Services Director at Webgains.com

the FTC has been issuing guidelines on celebrity endorcements for quite a long time now. It's surprising to see that they have to be so specific as to which mediums their regulations cover really.

over 5 years ago

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Krista Thomas

Note that when we pioneered the paid tweets / social endorsements space in 2009, we established 100% disclosure best practices, which is in compliance with the U.S. FTC. In every tweet or Facebook "Like" Page post, we use #Ad or (Ad) or a clear editorial disclosure (such a "I am working with XYZ brand to promote XYZ..."). Meanwhile, fyi, today we published the Ad.ly Consumer Influence Index -- our top 10 list of celebs that drive the most consumer traffic to advertisers' sites. You can find it here: http://bit.ly/eZnAJS Best, -Krista The Ad.ly Team

over 5 years ago

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buyer beware

Two stories seem to be muddled up here. The OFT completed an investigation last year into bloggers not dislcosing they were receiving payments or benefits in kind from companies they featured in posts. This is something Matt Cutts has raised since 2009 so hardly news and relates to EU legislation that came into force in 2008. Jeff Jarvis raised objections to this sort of regulation citing freedom of speech but the OFT is not saying bloggers can't post what they like, it's that it has to be labelled advertorial so the reader knows it is not editorial. If under EU law bloggers have to disclose sponsorship then that has to apply to celebrities too doing the same thing on Twitter. This latest move by the OFT is just applying the law fairly.

over 5 years ago

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Krista Madden

This is from Handpicked Media.

I'd like to clarify that our investigation by the OFT was prompted by 2 bloggers who had failed to write 'sponsored post' on an article they were paid for in May 2009. This was an oversight and has never been repeated.

The very thorough 6 month investigation that followed found no other failure to disclose in all our activity and campaigns. They needed to flag the fail back in 2009, so that is where we have been penalised.

However the case was closed with a satisfactory conclusion that we were operating with full disclosure so therefore no fine was issued.

The reports and articles are misleading, it gives the impression we were trying to act dishonestly as a strategy.

We cooperated fully with the OFT as we knew we were instructing clear guidelines to our bloggers and clients that all 'paid for' activity would be labelled on posts.

over 5 years ago

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James Samson

Online influence is becoming harder to quantify but that should not take away from the power that a huge online following and clever brand management can do for a business. A great example is Lady Gaga.

over 3 years ago

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