Under the Influence

Team TikiThis week, my firm hosted a fundraiser for a local food bank.  The event – styled as a pub trivia contest – involved a fair amount of buying and selling of knowledgeable associate attorneys, trash talking and general chicanery. And of course it was the perfect opportunity for a cocktail.  Our team – Team Tiki – didn’t disappoint and came prepared to mix and pour Halekulani cocktails at the table (much to the envy of other teams who didn’t have our foresight).

And since we live in an age of social media, I took the opportunity to post on the HoochLaw Instagram account pictures of the setup of Team Tiki’s table before we began the event and during the festivities.  The astute follower will note that in both of the pictures that were posted, there are bottles of booze visible (and identifiable) on the table.  Further – in my post of the pre-festivities photo, I actually mention one specific spirit (Privateer Silver Reserve Rum – some members of Team Tiki wanted a clear-liquor alternative to the Halekulani’s traditional use of Team Tiki2rbourbon) in the description.  [Note: I’ve explained the above-mentioned teammates that all liquor is clear as it comes off the still, and so the clear spirits preference is somewhat silly – but there’s no getting through to some people.]

I mentioned Privateer in my post because I happen to like the stuff, have had the opportunity to meet and interact with their head distiller – she’s a delightful person who exhibits the kind of swagger and badassery that you would hope to find from someone making rum – and wanted to preempt any cocktail aficionados from telling me that I was using the wrong spirit in the drink.  My mention of Privateer was not because they paid me or provided me any monetary benefit (which – to be clear – they haven’t).

That last sentence is important.

As any marketer will tell you, advertising comes in many forms.  Lately, the form that’s been growing the fastest may be social media.   According to a recent report, brands spent roughly 65% more on Facebook, Twitter, LinkedIn, Instagram and Pinterest advertising in 2016 than they did in 2015.  What was the fastest growing component? Instagram.

Brands are jumping headfirst into social media – particularly Instagram – marketing. They’re doing this because in a time when consumers are able to avoid viewing traditional commercials quite easily, consumers are nevertheless consuming social media at an increasing rate.

So, you might ask, what does this have to do with Privateer and your Instagram post?

Federal law states that if there is a “material connection” between an endorser and the marketer of a product, then that connection must be clearly and conspicuously disclosed. Such a material connection could be a business or family relationship, monetary payment or the gift of a free product.  Put another way, if you’re being paid to endorse a product – or if you or your family will benefit from the endorsement – then there’s a good chance you need to think about Federal Trade Commission rules governing advertising. Among other things, those rules may require you to disclose that you’re being paid for providing the endorsement.

But of course people don’t always know – or at least don’t always follow – these rules. Recently, the FTC acknowledged this by sending letters to more than 90 celebrities, athletes and other “influencers” on Instagram.  The letters served to remind these influencers that if they’re going to be making social media posts which constitute paid endorsements, they need to disclose that they’re being paid and need to do it in a way that consumers understand.

This has implications for the spirits industry – and not necessarily only for Diageo-sized participants.  We don’t know with certainty who received the FTC’s letters.  [Note: I’m nevertheless confident at least one was addressed to a Kardashian; that name seems to automatically result in an extraordinary number of social media followers.] But it is a fair guess that at least a few went to celebrities that endorse spirits brands. And those endorsements can occur without the celebrity actually saying anything.  A simple product placement is enough to trigger the need to disclose – although a formal review will obviously also implicate the rules.

While the primary focus of the FTC’s recent efforts has been on increasing compliance by the endorsers of products, the brands themselves need also to be aware of these obligations and behave accordingly.   That can mean reminding endorsers of their obligations to comply, as well as monitoring endorsers’ posts for compliance with their disclosure obligations.  And if they fail to comply – the brand should probably cut them off.  Failing that, the brand may find itself accused of being complicit with the endorser in flouting the rules.

For the record, none of the posts on this blog, the HoochLaw Instagram account or my personal Twitter account are the result of compensated endorsement.   I’m a HoochLawyer, not a Kardashian.

Also for the record, Team Tiki won the trivia contest – by a wide margin.


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