Business Ethics: Endorsements are a Treacherous Path.

“Social-media-ad spending is expected to reach a total of $4.8 billion at the end of 2012 and $9.8 billion by 2016”. Bloomberg

The use of social media by companies to market their brand is one of the most successful ways to receive maximum publicity with a minimal budget. No matter what the business, people want to be in the know and that involves knowing what others think. However, the ethics surrounding online reviews and endorsements can be a grey area. This post is limited to two examples: paying for coverage on YouTube and celebrity endorsements on Twitter. However, the general ethical guidelines apply to all areas of social media reviews/endorsements.

In a recent interview Kelly McBride, the author of The New Ethics of Journalism, discussed the complex ethics surrounding paid endorsements on YouTube. She also discussed the value of transparency and credibility – a business lacking transparency is at risk of losing credibility (similar theme to Topic 3). However, these values do not simply apply to YouTube but to all reviews on social media. As such, the motives behind a product endorsement must be clear, as they will undoubtedly influence how the reader judges the information provided (Rose, 2014). Vloggers in particular often come under fire for breach of ethical codes. A recent article describes an incident whereby Vloggers were said to have broken the law after participating in a sponsored campaign promoting Oreo biscuits.

From previous blog topics, it is clear that legally monitoring social media can be difficult. However, the Federal Trade Commission (FTC) is an independent agency of the U.S. government that fights for the protection of consumers. They have introduced standards to ensure that if an advertiser or a marketer is paying someone to write favourable reviews, they should clearly disclose this information to the viewer (FTC, 2013).

Blog 5 1The same principles apply to celebrities who endorse products on Twitter. The FTC explains that if a celebrity fails to use the #ad or #spon, both the advertiser and endorser may be liable. The Advertising Standards Authority UK has similar guidelines (Gibson, 2014). However, despite these authorities’ guidelines, social media will always be difficult to regulate due to the various ‘grey areas’ surrounding online marketing (Varney, 2013).

Blog 5 2

Blog 5 3

This great Slideshare, discusses the laws regarding social media marketing and provides examples of endorsements conducted in the right and wrong manner.

It’s clear that often viewers are unaware of the nature of endorsements and reviews. If viewers are informed, they may carry out different actions. Nonetheless, it must be noted that this is an exceptionally broad topic with many interesting view points.

FTC (2013) .com Disclosures: How to Make Effective Disclosures in Digital Advertising, Federal Trade Commission.

Gibson, W. (2014) Celebrity spokespersons and the federal trade commission, Social Media Explorer.

Rose, M. (2014) Pay for Play: The ethics of paying for YouTuber coverage, Gamasutra.

Varney, C.  (2013) Celebrity Twitter Ads: Regulations, Allegations and Selling Out, Brandwatch.

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13 thoughts on “Business Ethics: Endorsements are a Treacherous Path.

  1. Interesting article, Leigh. I like the idea of how you merged your knowledge of what was discussed last week into this week’s topic. In your blog you wrote, “The same principles apply to celebrities who endorse products on Twitter. The FTC explains that if a celebrity fails to use the #ad or #spon, both the advertiser and endorser may be liable.” Just a rhetorical question for you: do you think that celebrities like Kanye West, Cristiano Ronaldo, etc. who have their own line of clothing-wears. They often wear it or come on twitter to endorse it, are they liable? For example Nike sponsors Ronaldo and they created a line of soccer boots called CR7, just for him. He claims they are the best boots in the world because he has scored lots of goal with it. Moreover Nike does indeed have some of the best boots on the market (I am not been biased just saying…)

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    • Hi Aliyu
      Even though your question is rhetorical, I have a few responses because I found it very interesting.
      I think that your question can be divided into two types of celebrity endorsements. The first: those that endorse a brand because they are paid to. Nike reportedly pays Ronaldo 6 million Euros a year for a range of endorsements. Every time he promotes a Nike product, even if it’s a product they made for him, he gets paid. Many believe that he should have to display his links to the brand, as a consumer may reconsider their purchase depending on whether Ronaldo wore the product because he liked it or because he was paid to wear it.
      Secondly: celebrities who own their own range and market their products. I’m under the assumption that this can’t be monitored, as the celebrity is marketing their own business and not being paid to market someone else’s. As mentioned, the endorsement sector is very difficult to control and it has many grey areas. You mentioned Kanye West, whose recent clothing line for Adidas was highly promoted by himself and his wife. Should he have used #ad on Twitter even though he designed the range himself? Technically, he was paid by a company to produce the range, but does that mean its self-promotion or promotion of the company?

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  2. Pingback: Topic 4: A reflective summary on ethical issues of social media in the workplace | aaaliyu

  3. Nice post Leigh.
    What did interest me most here was your tweet by Rebecca Adlington, as we can see that the introduction of direct bias/sponsored endorsement can become fuzzy. Obviously if you receive free or cheaper products from a company there is no doubt that you’ll not be able to perhaps critique those products compared to those you have paid money for. In situations like this do you think the athlete should have still had to mention their sponsorship by the brand?
    As advertisements are increasingly trying to find more ways to become indiscernible from regular content online do you think the onus lies more on the user to be aware of advertisement or on a legal system to curb this sort of behaviour by corporations?

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    • Hi Jens

      Rebecca Adlington’s tweet perfectly highlights this grey area – as she wasn’t paid directly for the tweet, by law she doesn’t have to mention sponsorship. I found that in this case it’s more about consumer awareness. The law can only do so much in regards to social media, as we have discussed in previous blog posts, consumers must do their part to make sure they are well informed. A quick Internet search reveals that Rebecca is sponsored by BMW, thus an educated consumer may reconsider the sincerity of the tweet. Towards the end of this article(1), it explains that the law only covers direct advertising if they have paid directly for the endorsement. However, the article states that “the UK’s consumer protection and competition authority is looking to deepen its understanding of the way businesses use online reviews and endorsements, after concerns were raised about their ‘trustworthiness’ and ‘impartiality’”. Interesting, this could also suggest that the current laws do not cover enough and that in the future tweets like Rebecca’s will require a specific hashtag. The # must be visible, even if the specific tweet is not paid for, as it highlights her links to various sponsors.
      Another article (2), suggests that consumers are not the “lame sitting ducks” marketers make them out to be. It also highlights that consumers have started to shy away from social media endorsements/reviews and prefer word of mouth. The comments section highlights various interesting aspects surrounding the debate.

      (1) http://www.out-law.com/en/articles/2015/february/uk-regulator-to-scrutinise-practices-around-use- of-online-reviews-and-endorsements/
      (2) http://www.senseimarketing.com/social-media-has-killed-consumer-trust/

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  4. Hi Leigh,

    I enjoyed your post and agree that more brands are resorting to new digital technologies such as social media instead of traditional mass media as it is more effective and essentially cheaper.

    Your post was interesting to me as I’m a frequent user of Youtube, and daily watch hauls and reviews of products from my favourite Youtubers. Your post brought to light that some of these reviews may not be genuine and companies endorse some Youtubers, which leaves viewers such as me, deceived. Recently, I noticed that more Vloggers/Bloggers state disclaimers in their description bar to highlight that the products mentioned were given to them by the company , which I think stops them from breaching ethical codes.

    I also like your use of slideshare and your acknowledgement of the relationship to previous Topics. As the weeks go by, I realise how they all interlink and become more dynamic.

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  7. Hi Leigh,

    You’ve identified an interesting theme here – as reflected in the number of Q&As.

    One of the themes that I loved this week is how ‘old school’ thinking is simply being re-applied today; for instance Aliyu (https://aaaliyu.wordpress.com/2015/03/22/topic-4-ethical-issues-of-social-media-in-the-workplace/) talked about the need to apply the ‘Golden Rule’ (which is c4000 years old) to govern our behaviour on the internet, and you’ve highlighted that the 55 year old ASA (which I had wrongly associated with just checking TV adverts) has the authority to take action against companies whose advertising on the internet misleads their consumers.

    I note that the ASA provides advice to bloggers and vloggers on how they should highlight when they are being paid to promote a company’s products: (http://asa.org.uk/News-resources/Media-Centre/2013/Blurring-advertising-and-blogs.aspx#.VSOlOfnF83l)

    So the legislation is in place – the courts and enforcement bodies are in place – but in reality, in most instances, action will only be taken when someone complains to the ASA. I therefore wonder if the only thing that is stopping unethical advertising of this nature is consumer apathy. If you, I and others complained to the ASA (and their international equivalents) when we see this ‘hidden’ advertising, then I suspect it would soon stop, simply because the sponsoring companies would back away from the bad publicity.

    So my question is – would you ever complain to the ASA? (I must confess I’m not likely to).

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