THIRD MOST POPULAR SOCIAL MEDIA NETWORK SITE

Pinterest is one of the fastest-growing websites of all time, and it has been estimated that Pinterest has become the third most popular social media network site behind only Facebook and Twitter. Even more important for companies, it has been widely reported that Pinterest drives more traffic to websites than Google+, LinkedIn, and YouTube combined. Because of this vast amount of traffic, it is not surprising that many companies are interested in creating a corporate account and integrating Pinterest into their branding and social media strategies.

QUESTIONS FOR ADVERTISERS

With this increase in traffic, however, Pinterest has also generated a number of questions for advertisers. Companies increasingly use bloggers as endorsers of their products, and will no doubt want to enlist popular Pinterest users, whether celebrities with large followings or Pinterest users who have managed to generate large followings, to endorse their products. Martha Stewart, for instance, has more than 100,000 followers on Pinterest.1Companies may give these users free products and services to review or may pay them outright for their endorsements. The U.S. Federal Trade Commission (FTC) requires that these arrangements be transparent.

"ENDORSEMENT GUIDES"

How much information must a blogger divulge when pinning an image? In 2009, having taken note of the increasing use of paid endorsers such as bloggers, the FTC released revised Guides Concerning the Use of Endorsements and Testimonials in Advertising (the "Endorsement Guides").2The Endorsement Guides require that, when there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., circumstances where such connection is not reasonably expected by the audience), such connection must be fully disclosed. The Endorsement Guides apply to all bloggers and, presumably, to creators of other forms of online content, whether their followings are large or small.

The Endorsement Guides specifically require that that "bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service." Bloggers who fail to disclose the relationship between themselves and the products they are reviewing or discussing can be subject to significant fines.

FTC INVESTIGATION

In 2010, the FTC launched an investigation as a result of a promotion run by women's clothing chain Ann Taylor, wherein the retailer invited select bloggers to an event and promised that bloggers who covered the event (and submitted posts to Ann Taylor within 24 hours of the event) would receive a gift card with a value of between $50 and $500 dollars.3In a letter written to Ann Taylor's legal representative, the FTC noted that "[W]e were concerned that bloggers who attended a preview on January 26, 2010, failed to disclose that they received gifts for posting blog content about that event."4Although ultimately no actions were taken against Ann Taylor, this investigation signaled that the FTC was carefully watching companies' interactions with bloggers.

ANOTHER FTC ACTION

In another FTC action, public relations company Reverb Communications Inc. posted positive reviews about its clients' games at the iTunes store using account names that gave readers the impression the reviews were written by consumers. The public relations company did not disclose that it was hired to promote the games and that it often received a percentage of the games' sales. The FTC argued that these facts would have been material to consumers who were evaluating the endorsement and the products, and that Reverb had thus ran afoul of the FTC's advertising guidelines.5

PINTEREST: QUESTIONS RELATING TO ENDORSEMENTS

In the case of Pinterest, questions relating to endorsements may arise in a number of contexts, including when:

  1. a company provides free products for a Pinterest user and asks that they pin an image of the product and comment;
  2. a company provides payment for pinning a product; and
  3. an individual pins company products and has an endorsement contract not specifically related to Pinterest.

In such instances, the endorser should disclose the relationship with the company. While Pinterest was not overtly contemplated, the Endorsement Guides are applicable to Pinterest users, and companies should consider the Endorsement Guides in developing any promotional policies for this newest blockbuster social media site.

HOW TO DISCLOSE RELATIONSHIPS

One key issue with the Endorsement Guides – a problem that has affected Twitter users and will presumably affect Pinterest users— is that the space constraints of the posting format on these social media vehicles hinder users' abilities to disclose connections. The FTC does not view space constraints as an excuse for bloggers not to disclose a material connection. Even with Twitter, the FTC suggested that "there are ways to abbreviate a disclosure that fit within 140 characters" and suggested using the hash tags "#spon" "#paid" and "#samp" to disclose the blogger's connection to the company within a defined space.

COMPANIES SHOULD DEVELOP INTERNAL GUIDELINES SPECIFIC TO PINTEREST

Because it is easy to run afoul of the FTC's Endorsement Guides, companies should develop internal guidelines specific to Pinterest with a section addressing the concerns raised above with the goal of taking advantage of Pinterest's benefits while limiting the company's potential exposure to potential FTC violations.

Originally published in the November 5, 2012 edition of Advertising Compliance Service.

Footnotes:

1. http://pinterest.com/marthastewart/ (last accessed October 8, 2012).

2. 16 CFR Part 255, available at http://ftc.gov/os/2009/10/091005revisedendorsementguides.pdf (last accessed June 4, 2012).

3. http://www.ftc.gov/os/closings/100420anntaylorclosingletter.pdf. (last accessed June 4, 2012).

4. Id.

5. In the Matter of Reverb Communications, Inc., et al., FTC File No. 092 3199.

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