While celebrity endorsements can provide significant marketing benefits, there are several concerns businesses should consider before using them for their products. First and foremost, the Federal Trade Commission (FTC) requires brands to disclose “material connections” with their endorsers. These disclosures must be “clear and conspicuous.” Generally, a material connection is a relationship with an endorser (e.g. financial incentive, free products) that could impact the credibility a consumer gives to an endorsement.
Some best practices include:
- Contracts with Endorsers: Ensure that in your contracts with endorsers, they are required to clearly and conspicuously disclose their material connection to your brand. How they disclose this generally depends on the medium. For instance, an influencer in a YouTube video might state at the beginning that they were compensated or received free product. A user on X might use the hashtags #ad or #sponsored in their posts.
- Endorsement Guidelines: The FTC has specific Endorsement Guidelines on how and what needs to be disclosed depending on the medium (see https://www.ftc.gov/business-guidance/resources/ftcs-endorsement-guides-what-people-are-asking). You should generally have your endorsers adhere to these guidelines as part of their engagement with you.
- Monitor Compliance: It is not just the responsibility of the endorser to make these disclosures. Brands/companies have a responsibility to monitor and ensure that their influencer network is adhering to these rules. Make sure that as part of any program to use influencers/endorsers, you are frequently checking to make sure that your network is adhering to these disclosure practices.