THE OUTLAWS ISSUE
The week of September 6, 2015

That Facebook post you just liked is an ad—and you didn’t even realize it

By Aaron Sankin

Imagine the following post popped up in your Facebook News Feed from musician and former soap opera star Jesse McCartney.

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If you saw this post, you probably wouldn’t give it a second thought, and you might’ve even clicked on it. You likely follow dozens of verified pages on Facebook—celebrities, movies and TV shows, publications—all of which regularly share stories to the platform. And McCartney appears to have simply seen a cute article and wanted to share it with his 2.6 million fans.

The reality is a bit more complicated. The post is essentially an ad.

McCartney is among the 200 influential social media personalities represented by Liquid Social, a relatively new startup that connects publishers with top influencers. For a price, Liquid Social and companies like it will present a list of stories to their clients, who will then select the ones that will most likely resonate with their audience. These curated ads are slowly creeping into your News Feed—so subtly they’re often difficult to detect.

There’s an obvious need for the services Liquid Social provides. Over the last few years, as publishers devoted more resources to maximizing their Facebook presence, the platform has become infinitely more competitive. Tried-and-true methods of fostering engagement on Facebook—optimizing headlines and images, providing the dreaded “curiosity gap” in summaries, and maximizing reach through paid spend—have become less and less efficient. That’s because everyone has gotten better at optimizing for the Facebook traffic they once got for free, and there’s more content than ever competing for real estate in your News Feed. That means traffic to individual publishers is dwindling, and as publishers and brands pay more to compensate, the demand for that paid real estate naturally drives prices up.

In the gold rush for Facebook traffic, brand and celebrity pages are the final frontier. Liquid Social’s strategy circumvents that problem facing most publishers by letting people with influential social media accounts do the legwork.

“The influencer chooses everything they want to post. They find things that make sense for their feed,” explained Liquid Social founder Mike Frankel. “It’s the issues they want to talk about and are concerned about, that they want to share with their fans. They find it on our partner sites.”

Frankel gave an example, the Supreme Court’s recent decision legalizing same-sex marriage. “A lot of these influencers wanted to report on it. They wanted to alert their fans that this decision happened,” he recalled. “We gave them an outlet for that. They’re going to be generating income for some publisher regardless, so they might as well share [through our system] while they promote what they’re interested in promoting.”

“As soon as that trust starts to erode, the value of a sponsored post or tweet or whatever it may be erodes along with it.”

In theory, it’s a win-win. Publishers expose their content to a new universe of readers (read: unique visitors), and influencers get some money for sharing articles they believe are on #brand. It’s a system that only works with a certain level of quality assurance: Facebook is a constant feedback loop, boosting posts from entities whose previous content resonated with users and punishing those who are not as engaging. Influencers, thus, have an incentive to keep quality high, or at least clicky.

Liquid Social pitched the the Kernel’s parent site, the Daily Dot, earlier this year. The proposal was enticing, but the example posts, of which McCartney’s was one, were troubling. (Despite previously supplying the example posts to an employee of the Daily Dot, Frankel would not confirm they were part of the program. “Our policy is to not discuss particular partnerships for publication,” he said.)

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If you’re not in media, you might not realize what’s missing: None of the influencers disclosed that they were being paid. That can be a serious issue.

The Federal Trade Commission has clear guidelines for what constitutes an ad, and it doesn’t matter how small or fleeting that ad might be. Whether it’s a 140-character tweet or a 6-second vine, if the exchange of money, or something else of value, is behind the message, it has to be clearly identified as a paid advertisement.

When asked specifically about the disclosure issue, Frankel said the company’s focus was on making the relationship between publishers and influencers as frictionless as possible. “We’re such a new company and we’re in a field that’s changing so quickly, our focus is on creating the most organic relationship that is always in the best interest of everybody,” he said. “With that in mind, that’s how we’re approaching this [disclosure issue].”

While the FTC’s general preference is relatively clear, according to some industry veterans, the rules aren’t being widely enforced. There’s so much being shared across social media that tracking it all is practically impossible, and there’s been some research that suggests millennials care more about ingesting interesting content and less about when they’re being marketed to. Taken altogether, that’s created a situation where disclosure is a largely voluntary exercise—one where it’s almost impossible to discern what’s an ad and what isn’t.

The rise of sponsored social

What Liquid Social does is called “sponsored social.” It’s likely the single hottest thing in advertising right now. At its core, sponsored social is when someone with something to sell rents someone else’s social media channel to make the pitch.

Within a decade, sponsored social has ballooned into a massive industry. Rapper Snoop Dogg reportedly makes upwards of $8,000 for a sponsored tweet. Former pop diva Paula Abdul netted $5,000 per tweet. In the middle of actor Charlie Sheen’s drug- and porn star-fueled public meltdown, digital marketing firm Ad.ly brought him onto Twitter. He took home $50,000 for a single tweet.

“It’s not a question of forgetting; it is that people are purposely not disclosing.”

These prices are high, but the exposure and engagement they bring to brands can be massive. When Sheen announced he was taking on an intern to assist his going-crazy-in-public shtick, it earned sponsor Internships.com a million pageviews and made #TigerBloodIntern trend on Twitter.

Sponsored social is more prevalent than you might realize. A 2014 report, compiled by the Halverson Group at the bequest of advertising firm IZEA, found that just over half the online marketers surveyed use paid online endorsements, and 81 percent of influencers reportedly engage in some sponsored social campaign at least monthly. Marketers were not only more excited about using sponsored social than any other form of marketing, but the year-over-year growth in their level of excitement for the channel was far greater than for any other form of marketing. Between 2013 and 2014, the increase in how positively marketers regarded sponsored social grew slightly more than the amount the same group’s sentiment toward print newspaper ads shrank.

“In whatever format they might appear, readers should be able to understand when they’re being advertised to,” explained Mary Engle, the head of the Federal Trade Commission’s Division of Advertising Practices. “You should be able to recognize that an ad is an ad.”

That principle has applied to the offline world for generations. In 2000, the agency brought the concept online with the publication of a document titled “.com Disclosures,” which was updated in 2013 to account for social media. “Truth in advertising is important in all media, whether they have been around for decades (like, television and magazines) or are relatively new (like, blogs and social media),” the FTC’s endorsements guide notes.

That guide specifically mentions the need for disclosure around shares and likes. “[Sharing] your interests with friends and followers by clicking a button or sharing a link to show that you’re a fan of a particular business, product, website or service … [requires a disclosure] if you’re doing it as part of a sponsored campaign or you’re being compensated.”

Ashley LeMieux runs a lifestyle blog and online jewelry store called the Shine Project, which raises money for the education of underprivileged youth in her native Phoenix, Arizona. She said she gets pitched sponsored social stories every day but only picks ones—like a campaign with paper goods manufacturer Dixie, pushing families to turn off their mobile phones during dinner—that fit snugly within her personal brand.

She’s careful to disclose when she’s getting paid for something by appending every sponsored post with “#ad” or “#sponsored.”

“It’s important that my followers know when I’m getting paid to promote something and when I’m not.”

“There’s no real way to naturally and organically throw that in because it just is what it is,” she said. “I keep it at the end of whatever it is that I’m writing. It’s important that my followers know when I’m getting paid to promote something and when I’m not. That’s disclosed in every tweet, blog post, or Facebook post that I put out.”

That level of caution is far from universal.

Last year, BuzzFeed profiled a handful of popular parody Twitter accounts. One was @TweetLlkeAGirl. Run by Cameron Asa—a communications major from the University of Tennessee—the account tweets a steady stream of funny memes aimed at eliciting chuckles of recognition from women around the world. Asa told BuzzFeed he charges between $500 and $1,000 for a sponsored tweet. However, a search of @TweetLlkeAGirl’s feed didn’t find a single message appended with common hashtags used to identity ads, like #ad, #sponsored, #spon, or #sp.

@SexFactsOfLife, a parody account profiled in the same story with over 2 million followers, used to regularly put #ad on sponsored posts but abruptly stopped in November of 2013. A third account, @yaboybillnye, which reimagines the persona of science educator Bill Nye with a swaggering hip-hop flavor, also dispensed with disclosure hashtags in late 2013. None of the operators of these three accounts responded to a request for comment.

The FTC’s online disclosure guidelines don’t carry the force of regulation; however, if advertisers deviate too much, the FTC may decide to investigate. Such investigations (and subsequent enforcement actions) do happen on occasion, but they’re often carried out as part of larger actions. For example, when Sony was investigated for making knowingly false claims about the connectivity of its PlayStation Vita handheld gaming device in a case that settled last year, the FTC also hit the company and its advertising firm for having employees push a hashtag campaign on their personal social media accounts without mentioning that promoting the message was part of their job.

That said, straightforward enforcement actions do occur. Last week, the agency settled with Machinima after the gaming production firm allegedly paid its influencers to post videos extolling the virtues of Microsoft’s Xbox One console without disclosing they were being paid to do so.

“I think that most people are actually aware of [the guidelines], but there haven’t really been many enforcement actions,” noted Ted Murphy, founder of the marketing firm IZEA, which maintains one of the largest marketplaces connecting people on either side of the sponsored social equation. “People just feel like they can kind of get away with it. Since everybody is doing it, they’re going to do it too.”

Murphy prides himself on building disclosure directly into IZEA’s platform, through which all of the company’s sponsored social posts are distributed and tracked. If a tweet or Facebook post doesn’t have an advertising disclosure hashtag in it, IZEA won’t push it out. The company also has an “ethics center”on its website to educate both marketers and influencers about the importance of following disclosure rules.

“In whatever format they might appear, readers should be able to understand when they’re being advertised to.”

While marketers seem to generally be getting more cognizant of following the rules, Murphy said a focus on disclosure is far from universal; skirting the rules is commonplace. “It’s not a question of forgetting; it is that people are purposely not disclosing,” he charged. “That is a real detractor for the industry and people are trying to do things right, because the currency that we’re dealing with here is ultimately trust—the trust of the audience.

“As soon as that trust starts to erode, the value of a sponsored post or tweet or whatever it may be erodes along with it.”

The erosion of trust

While maintaining trust is important, the question of what exactly constitutes “sponsorship” of a tweet is far from black and white. Take this tweet for example:

Here, I tweeted a report by my colleague Dell Cameron. After spending days digging through a trove of emails from infidelity site Ashley Madison, Cameron discovered the company worked on an app where users could post pictures of their wives for other guys to rate. It was a great scoop. I retweeted him to give the story more exposure and subject my Twitter followers to a bad joke. But increasing the Daily Dot’s traffic is also part of my job description. Should I have put some disclosure on the tweet? What if Cameron had asked me himself to share it? What if the order to share the tweet came from my editor? What if it came from an advertiser who was running ads next to the story? Where’s the line for disclosure?

What about the sort of social media traffic trading universal to nearly all online news sites, where Site A will share a story published by Site B in exchange for Site B sharing one of Site A’s stories? Online publishers—including the Daily Dot—employ it because they’re essentially trading unique visitors for free. Almost every time you see one news outlet sharing another’s story, that’s exactly what’s happening. Should that be disclosed with every post?

Even trickier, the Halverson Group’s report found the most common form of sponsored social was paying an influencer to simply like a brand’s page. How does one even disclose a Facebook like when the platform doesn’t even provide a space to do so?

The FTC’s Engle declined to get into the weeds on what did or did not constitute a violation in cases like these. It’s a difficult line to walk, especially considering the FTC has stated that it’s “generally not … monitoring bloggers.” Even when the FTC does go after a violator, its focus is typically on the ad agency or PR firm rather than the influencer.

Since I’ve started reporting this story, I’ve started feeling that erosion of trust Murphy mentioned. Last month, civil rights activist DeRay Mckesson tweeted:

My first assumption was that it was an undisclosed sponsored tweet. When another Daily Dot reporter inquired, Mckesson responded he was helping a friend move into a college dorm and noticed a really good deal while standing in line at Bed Bath & Beyond. It was a sincere endorsement. The whole thing made me feel grumpy, cynical, and a little embarrassed.

That creeping cynicism keeps Murphy up at night.

“It affects the lens through which you look at everything,” Murphy said. “For the good of this industry, long term, the people who are doing these types of transactions need to recognize they’ve got to protect the entire ecosystem. Whether or not they get slapped from the FTC now, they’re going to impact their ability to provide value to clients in the future if people just look at these things and say, ‘I’m not sure if that was paid or not.’”

Illustration by Tiffany Pai