Sponsored content has long been a mainstay in the online influencer ecosystem. Almost as long as there has been a YouTube, online creators have been pairing with brands to promote everything from coffee creamer and boutique hotels to gaming consoles and home furnishings.
The pay-off to the advertiser is in the ability to reach a young and often hyper-engaged audience with a direct message delivered by someone they care about. The creator, meanwhile, gets to put a few extra dollars in the bank, beyond the usual ad-share rev earned off their chosen video platform.
But if not done right, there can be backlash for everyone involved — the brands, the influencers and the multi-channel networks that often broker the deals between two.
Avoiding that scenario is perhaps why so many in the industry are paying attention to a recent ruling by the Federal Trade Commission (FTC), which attempts to answer critical questions around online paid endorsements, including what needs to be disclosed and who is on the hook for making the practice transparent.
Earlier this month, the FTC, an independent federal body that promotes consumer protection and regulates business practices, approved a final consent order against gaming MCN and digital media co Machinima requiring the MCN to disclose when it has compensated online influencers to endorse or provide positive reviews for products.
Industry-wide, the Machinima case is also being examined and, according to Paul Kontonis, president of the Global Online Video Association (GOVA), a non-profit organization aimed at promoting growth in the online video industry, could set a major precedent for brands and networks.
Kontonis told StreamDaily the rules surrounding paid influencer campaigns have not always been clear, which is why the recent order “will profoundly impact the marketplace.”
GOVA itself is currently w0rking on formalizing best practices regarding paid influencer campaigns for its industry members, including Machinima. (Gutstein is among the industry professionals on GOVA’s board of directors).