Hidden AD-gendas?

Last June, Selena Gomez posted a photo of herself drinking a bottle of Coke through a red-and-white striped straw on Instagram. “You’re the spark”—words from Gomez’s hit “Me & the Rhythm”—were visible on the label. Gomez added a caption: “When your lyrics are on the bottle.”

The photo, viewed by many of Gomez’s 112 million Instagram followers, is one of the most popular images in the social media platform’s history, with 6.5 million “likes” and more than 275,000 comments. Unlike some of the other photos Gomez posts, however, this one was a paid advertisement, and it spurred consumer advocates to take action.

TruthInAdvertising.org (TINA), a nonprofit group that monitors deceptive advertising, sent a letter to Coca-Cola, asking why the post wasn’t disclosed as an ad. After TINA’s complaint, the singer added the hashtag “#ad” to the post, which remains on her Instagram feed. (Gomez’s representatives didn’t return a request for comment.)

“If an individual has a material connection with the company, they are required to disclose that,” says Bonnie Patten of TINA. “The key here is transparency; it has to be clear if the content is advertising.”

This relatively new type of celebrity endorsement—and the ease with which the public can be fooled into viewing an unidentified ad—has federal regulators struggling to address the issue. Part of the problem is that long-standing rules, originally meant to regulate ads on TV and radio, aren’t so easily applied in today’s digital world.

The current wave of product placement on social media is rooted in the early days of radio and TV. In the 1950s, soap, tobacco, and oil companies wedged themselves into the names of the shows they produced, like the Colgate Comedy Hour and Texaco Star Theater. But rising production costs pushed advertisers out of the business of producing shows. Instead, marketers began focusing on the space between programs. 

Beginning in the early 1960s, a more subtle form of product placement took hold on TV. With shows like Mr. Ed—which featured a steady stream of Studebaker automobiles alongside Mr. Ed, a talking horse—companies paid to have their products placed in scenes, hoping consumers would link the brands with the show’s stars.  

Product placement on TV reached its peak in the new millennium, with hits like Survivor, American Idol, and Two and a Half Men featuring Apple, Reebok, and Ford products, among others. When companies pay for their products to be featured, federal rules require that the sponsorships be disclosed. But many programs buried the disclosures in the credits.

Movie makers have gotten in on the action, too. Blockbusters like last year’s Batman vs. Superman and Captain America: Civil War prominently featured products like Jolly Ranchers candy and Audi automobiles.

Today, advertisers are looking for new ways to reach consumers, in part because traditional TV viewership is declining, with approximately 2 million viewers per year “cutting the cord” and moving to online viewing. That leaves about 27 million U.S. households without a television today, 5 million more than in 2014, according to research firm Convergence Consulting Group.

“We live in the age of the cord cutter, viewers who want to watch what they want, when they want, from any device they want.” says Lauri Harrison, a marketing professor at Columbia University in New York. 

Given the success of Facebook and Twitter, it’s no surprise that advertisers are turning to social media. Brands such as Beats, Red Bull, and Airbnb are willing to pay tens of thousands of dollars per post to celebrities like Gomez, Kim Kardashian West, and Justin Bieber. And these so-called influencers often frame endorsements as innocent mentions, making the ads harder to spot.  

“Their followers may not realize they’re looking at an ad and it’s not just that Kim Kardashian West really likes a particular type of jeans,” says Patten.

The watchdog group investigated the social media practices of Kardashian West—who has 94 million Instagram followers—and her family members last year. 

By comparing Kardashian West’s Instagram posts with posts by companies suspected of paying her to feature their products, TINA found that they were almost identical. The similarity prompted a letter to her attorney.  

After the complaint, some posts were taken down, or the hashtag “#ad” was added. But the majority went unchanged, and last August TINA filed a complaint with the Federal Trade Commission (FTC), the federal agency that protects consumers from unfair or deceptive business practices.

But because product placement on social media is so new, the FTC is struggling to figure out how to define ads in that medium and the rules that govern them, says Michael Ostheimer, an FTC attorney. One big challenge is that celebrities post on social media all the time, usually for self-promotion and often to endorse products; it’s not always simple or easy to tell the difference (see “How to Spot an Ad,” below).

Patten, of TINA, says the responsibility for honest advertising lies not only with celebrity endorsers but also with the companies that pay them. But ultimately, she adds, it’s up to consumers to be aware of what they’re seeing. 

“Unfortunately, many of these companies and influencers aren’t following the rules,” Patten says. “So it’s up to us to be skeptical and aware that anything we’re looking at could be an ad.”