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Start Up Mobile App Developers & Celebrities Beware: FTC’s Guidelines Come After You!

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This Monday, I  shared a post on my “mom blog” Bellyitch about the insane amount of money that celebrities get paid to tweet. (Kim Kardashian gets $8,000 and at one time Charlie Sheen pocketed $30K per tweet)

Then, as if the FTC Gods were watching, the very next day Tuesday, March 12, the Federal Trade Commission (“FTC”)  updated its disclosure rules for digital advertising that it put in place in the year 2000 to then respond to the dot.com boom.  The guidelines were released to help digital advertisers comply with the FTC’s Truth in Advertising rules and regulations.

But this round, given the new tech marketing boom involving mobile ads and mobile marketing, it added something special: policy for those digital ads that pop up on Twitter, Facebook and other mobile sites.

The global mobile ad market is predicted to reach $11.4 billion this year and $24.6 billion by 2016, BrandChannel.com writes. Many start ups that sell mobile apps rely on pop up ads for revenue and now they have to add these requirements on their check off list.

Another new target:  celebrity sponsored tweets!

The new FTC guidelines state:

 “Although online commerce (including mobile and social media marketing) is booming, deception can dampen consumer confidence in the online marketplace,” the guidelines state. “To ensure that products and services are described truthfully online and that consumers get what they pay for, the FTC will continue to enforce its consumer protection laws.”

In sum, it states that digital ads are to be treated just like print, radio and television in that it must 1. Conspicuously WARN the audience or reader that the message is a paid advertisement; and 2. Tell them that the product may not work to the expectations of the potential buyer, and in a same way as it works for the celebrity

Wow! How does one do that in 140 character tweet?

Copypress.com’s Amanda Hodge broke it down in an article today which breaks down to the following:

  1. The tweet must start with the word #ad.
  2. Adding the word #spon at the end is too confusing to the average Twitter user.
  3. The sponsored ad can’t simply include a hyperlink that leads to the product disclosure.
  4. These required disclosures MUST be repeated in each paid tweet and cannot be just in one of a string of tweets endorsing one product.
  5. Adding words like “typically” or “about” helps in the prevention of misleading readers. The common example they used throughout was a celebrity endorsing a weight loss product: “Typical loss: 1 lb/wk.”

Here is an an example provided:

WRONG

WRONG

 

RIGHT!!! DING! DING!! DING!!

As the Wall Street Journal notes, the celebrity and product she is marketing could be sued by the FCC, face serious fines and be issued warnings if she does not comply!

And just because Twitter is the latest thing that celebrities are making money off of doesn’t meant the FTC plans to stop there. In the report it states:

Most of the general principles of advertising law apply to online ads, but new issues arise almost as fast as technology develops. The FTC will continue to evaluate online advertising, using traditional criteria, while recognizing the challenges that may be presented by future innovation. Businesses, as well, should consider these criteria when developing online ads and ensuring they comply with the Law.

This means as usual, brands and companies must make sure that the executing party or celeb is following the rules too.

It’s all about consumer protection and making clear, but there is no doubt that this added disclosure could have the effect of decreasing sales because studies show that consumers are less likely to trust a product if they know the endorser was paid or that it is an advertisement.

This could be an example of the government interfering with the free market economy…but for the benefit of the unknowing and often easily misled and confused consuming audience.

Here is a video that explains the new guidelines more:

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