Academic journal article Journal of Corporation Law

Corporations, Social Media, & Advertising: Deceptive, Profitable, or Just Smart Marketing?

Academic journal article Journal of Corporation Law

Corporations, Social Media, & Advertising: Deceptive, Profitable, or Just Smart Marketing?

Article excerpt

I. INTRODUCTION II. BACKGROUND       A. Social Media Marketing Spending by the Numbers       B. FTC Regulations of Deceptive Advertising and Endorsements       C. FTC Regulation in Various Marketing Mediums          1. FTC Regulation of Radio Advertisements          2. FTC Regulation of Newspaper Advertisements          3. Clear and Conspicuous Standard in Television          4. FTC Regulation of Infomercials and the Internet          5. FTC's View on Celebrity and Influencer Social Media             Advertising       D. FTC Impact on Companies' Profits from Deceptive Celebrity          and Influencer Advertisements III. ANALYSIS       A. Celebrity Endorsements and FTC Compliance on Social Media       B. Read & Comprehend Test       C. Clarity on Sponsored Endorsements & Voluntary Endorsements       D. Application of Old Standards to New Platforms Would Fail       E. Financial Profit of Celebrity Endorsements and FTC Impact on          Those Profits IV. RECOMMENDATIONS       A. FTC Guidelines          1. Creating a Clear Definition of Read and Comprehend          2. Having Advertising Notifications at the Beginning and End             of Social Media Posts          3. Clearly Defining What is a Sponsor or Partner in the FTC             Guidance       B. Financial Penalties to Corporations       C. Financial Penalties to Celebrities and Influencers V. CONCLUSION 

I. INTRODUCTION

Companies promote their products through advertising, and for decades, celebrities have played an integral part of advertising products to consumers. For example, millions of kids purchased Nike shoes in the 1990s to "be like Mike." Pepsi hired Britney Spears to promote its soda; and Armani and H&M both hired David Beckham to promote their clothes. (1) Celebrity endorsements span all types of products similar to how advertising spans different kinds of marketing mediums including social media. Social media platforms--such as Facebook, Instagram, Snapchat, and Twitter--have all been used by companies and celebrities to promote products.

As the platforms for advertising have evolved, the Federal Trade Commission (FTC) has tried to regulate advertisements to prevent deceptive information from negatively impacting the consumer. The FTC's newest regulation in advertising has extended into social media advertisements. This Note addresses the FTC's attempted regulation of celebrity social media advertisements and how those regulations impact the companies that hire celebrities and social media influencers (2) to promote their products and the consumers who follow the celebrities on social media. In Part II, this Note will examine several areas. First, this Part will explore the financial growth of social media via company spending. Second, this Part will lay out the meanings of "deceptive" and "endorsement" as those terms relate to advertising. Third, this Part will delve into the FTC's regulation of other advertising mediums such as radio, newspapers, and television to lay a framework of the FTC's past regulation of deceptive advertising to show why those same regulations could not be applied to social media. Finally, this Part will examine the FTC's impact on companies' profits from deceptive advertisements.

In Part III, this Note will examine how the FTC's current guidance is perplexing to companies, celebrities, and influencers who want to truthfully advertise on social media. It will also analyze the financial impact on companies who have been found guilty of deceptive advertising. Finally, in Part IV, this Note will recommend that the FTC change its guidelines to (1) create a clear definition for "read and comprehend," (2) require advertising notifications at the beginning and end of social media posts, and (3) define what qualifies as a celebrity sponsor and social media influencer sponsor. There will also be a recommendation that the FTC implement a standard formula for fines that will be used to punish companies, celebrities, and social media influencers who participate in deceptive advertisements on social media. …

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