The FTC Cracks Down on Warner Bros. and PewDiePie’s Shady Influencer Marketing… Sort Of

With 46 million YouTube subscribers, PewDiePie is arguably the most powerful individual force in the gaming industry. His channel is the largest on YouTube by a large margin: Second place, HolaSoyGerman, has 28 million subscribers. No one in the traditional games media industry even comes close: He has almost 40 million more subscribers than IGN, the most popular game site on the platform.

So suffice it to say, when PewDiePie plays your game, it’s like winning the jackpot. Previously obscure games like Happy Wheels, Amnesia: The Dark Descent, and Slender: The Eight Pages can attribute their viral success in large part thanks to PewDiePie’s wildly popular play-through videos.

Video game studios are more than willing to pay for that famous PewDiePie bump. The problem? They sometimes have trouble disclosing it. That’s exactly what Warner Bros. did back in 2014 when it paid PewDiePie, along with other famous YouTubers, to play Middle Earth: Shadow of Mordor.

Today, the Federal Trade Commission announced that it has settled its complaint with Warner Bros. for a paid influencer campaign that included a video posted by PewDiePie. In the complaint, the FTC alleges Warner Bros. “deceived consumers” and failed to “adequately disclose” the paid nature of the sponsorship.

The ruling is the most high-profile sign to date that the FTC is cracking down on native advertising. PewDiePie is perhaps the most famous internet celebrity, and by targeting a campaign that used his channel, the FTC seems to be sending out a signal to influencers and advertisers across the social media landscape. It’s also a sign that influencer marketing appears to be more in the crosshairs of the FTC than native advertising from traditional publishers.

Three practices, in particular, were called out by the FTC:

1. “Warner Bros. instructed influencers to place the disclosures in the description box appearing below the video. Because Warner Bros. also required other information to be placed in that box, the vast majority of sponsorship disclosures appeared ‘below the fold,’ visible only if consumers clicked on the ‘Show More’ button in the description box.”

The press release also pointed out that including disclosures in the info box made it impossible for consumers to know about the paid sponsorship when they viewed the videos on external networks like Twitter or Facebook.

2. “In some cases, the influencers disclosed only that they had received early access to Shadow of Mordor, but failed to disclose that Warner Bros. also had paid them to promote the game.”

This is a confusing practice you see regularly on social media. Influencers will say they received “early access” or that they “partnered with” or were simply given a product. As outlined in the FTC’s December 2015 native advertising rules, the organization is looking for specific wording like “paid” and “advertising.”

3. “Warner Bros.’ contracts with influencers subjected their videos to pre-approval, and that on at least one occasion Warner Bros. reviewed and approved an influencer video that lacked adequate sponsorship disclosure.”

This is probably the most interesting takeaway from the complaint.

The FTC seemed particularly perturbed that Warner Bros. required influencers to express positive sentiment in the campaigns. A blog post by Lesley Fair, a senior attorney at the FTC, repeatedly called out Warner Bros. for requiring that the videos “‘promote positive sentiment’ about the game,” “‘not show bugs or glitches that may exist'” and “‘not communicate negative sentiment’ about Warner Bros. Home Entertainment, its affiliates, or the game.”

It’s a complex rule considering that the FTC classifies influencer marketing as paid advertisements, which are meant to be positive. But it also shows that the FTC believes influencer marketing and native advertising are inherently confusing for consumers. Consumers may not realize that paid videos often require positive reactions and may take an influencer’s paid recommendation as their personal opinion.

The potential results of the settlement, pending public comment, are relatively lackluster. Most of the orders simply require Warner Bros. to follow regulation lest they receive more punishment, though they also require Warner Bros. to educate influencers and even withhold payment if influencers do not follow proper compliance.

Clearly, the FTC is putting the onus on brands, not influencers, to comply with regulations. As Fair writes in her post, “No one knows better than advertisers how to make disclosures clear and conspicuous.”

In other words, influencers like PewDiePie don’t risk FTC punishment for not following the rules—but the brands that sponsor them do.

UPDATE 7/13:

PewDiePie responded in a video that sums up the controversy well:

As he says, the fault here lies at the feet of Warner Bros., not PewDiePie or any of the other influencers. I want to make that clear since we used his name for the headline and his image. But make no mistake: the FTC’s targeting of a campaign that used his video was undoubtedly meant to send a clear message to both influencers and advertisers that compliance will be expected.

Image by Cam Stone

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