A recent NAD case (Report #7841) addressed this very issue but since the advertiser voluntarily pulled the ads in question, NAD did not make a substantive determination. Here's what we know: P&G initiated a SWIFT case against Dr. Squatch, challenging a number of posts on TikTok.The posts in question all featured individuals who participated in the TikTok Shop affiliate program where creators and influencers earn a commission on sales of Dr. Squatch products made through their affiliate links. These posts included a disclosure stating "creator earns commission."
In addition to its influencer program, Dr. Squatch also periodically runs an affiliate reward program where content creators can earn rewards and prizes in addition to affiliate commissions. P&G argued that this is "an unexpected material connection separate from and on top of TikTok Shop commissions" and that, therefore, this reward earn potential should be clearly and conspicuously disclosed in addition to the affiliate commission disclosure.
Since Dr. Squatch voluntarily and permanently discontinued the advertising, NAD did not review the merits of the challenge. Which means that we don't know (yet) whether NAD wants to see double disclosures in influencer posts if the influencer can earn two income streams from the post. Should it?
Taking a step back, and thinking about the FTC's Endorsement Guides, we know that the whole point of "material connection" disclosures is to ensure that the consumer can evaluate the credibility of the speaker and the advertising message. As the FTC puts it in the preface to its FAQs: "... suppose the person works for the company that sells the product or has been paid by the company to tout the product. Would you want to know that when you're evaluating the person's glowing recommendation? You bet. That common-sense premise is at the heart of the Federal Trade Commission's (FTC)Endorsement Guides." In other words, if the consumer knows that the speaker has a bias – is an employee of the company, is married to the owner, has received gifts from the company (etc) -- then the consumer can take the speaker's endorsement with a grain of salt.
And what exactly does the speaker have to tell consumers in order to make that bias clear? According to the FTC, "[w]hat matters is whether the information would have an effect on the weight readers would give your review. So, whether you got $100 or $1,000, you could simply say you were "paid." (That wouldn't be good enough, however, if you're an employee or co-owner.) And if what you got is so small that it wouldn't affect the weight readers would give your review, you may not need to disclose anything." The FTC also says that those earning affiliate commissions from links in content they post should make that clear, whether in plain language like "I get commissions for purchases made through links in this post" or labeling an affiliate link as a "Paid link."
So is P&G right that the Dr Squatch influencers should have included both disclosures, that they earned affiliate commissions and potentially other rewards? We don't really know from the facts in the Decision what the influencers could earn in Dr Squatch's incentive program. A big pink Cadillac? Or some Dr Squatch products? If the latter, would a consumer really evaluate the influencer's credibility and endorsement any differently than she would knowing the influencer could earn money from sales of the product through the link in her content? I'm dubious. However, knowing that the influencer could earn a car in the incentive program – or, say, is also an owner of the company, or getting paid $100,000 for her posts, could indeed impact a consumer's view of the influencer's bias and the credibility of the endorsement. Such additional material connections could potentially necessitate a double disclosure or, at least, a clear disclosure of the most material of the connections. (If you know someone is the owner of the company, would you really need to know that she is also earning affiliate commissions to evaluate the credibility of her endorsement?)
Given NAD's ongoing interest in influencer disclosures, I suspect it will get another opportunity to weigh in on the Double Disclosure issue. May common sense prevail!
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