MRKT 661 Week 7 Policy Paper Example

Policy Paper: A Disclosure and Review Policy for a Skincare Brand's Influencer and Social Media Marketing

The Program and the Policy Question

Clearwell Skincare sells cleansers, serums and sunscreens online and through two pharmacy chains. Last year it paid 140 social media creators, from beauty influencers with a million followers to dermatology students with a few thousand, to post about its products, and it sent free products to another 600 people who asked for them. The program drives a third of the company's online sales. It also exposes the company to three consumer protection problems: posts that do not tell followers the creator was paid or given products, claims about results that the company cannot support, and reviews written by people who received free products. This paper proposes a policy to address all three.

The Legal Framework

Deception in advertising is unlawful under federal law, and the Federal Trade Commission enforces that ban against marketers in every medium, social media included (Federal Trade Commission Act, 1914). The Commission's Endorsement Guides, revised in 2023, explain how that ban applies when a person, including a social media creator, praises a product the person has been given or paid to promote (Federal Trade Commission, 2023). Under the Guides, when a connection between an endorser and the advertiser would affect how consumers weigh the endorsement, whether money, a free jar of serum, or ties of family or employment, the connection must be disclosed clearly and conspicuously. The Guides also hold the advertiser responsible for misleading statements its endorsers make about its products and for failing to disclose material connections, and they expect advertisers to give endorsers guidance and to monitor their posts.

The Guides add that endorsements must reflect the honest opinions of the endorser and cannot convey claims the advertiser itself could not substantiate. If a creator says that a Clearwell serum "erased my acne scars in two weeks," Clearwell must have evidence for that claim as if it had made the claim itself. Free products given in exchange for reviews are material connections too, so the 600 recipients who post reviews must disclose that they received the product free.

What the Research Shows About Disclosures

Legal requirements tell the brand that it must disclose, but research shows how to do it well. Evans et al. (2017) showed 237 students the same Instagram creator post with no label or with "SP," "Sponsored" or "Paid Ad," and only "Paid Ad" clearly lifted the share who saw the post as an ad, a recognition that then colored how they felt about the brand and whether they would pass the post on. Abbreviations such as "SP" did little. Placement matters as much as wording. Across two native advertising experiments, Wojdynski and Evans (2016) saw readers spot sponsored content more often when the label sat partway down or at the end of the piece and used the word "advertising" or "sponsored"; eye tracking showed the placement effect ran through whether readers looked at the label at all.

Boerman et al. (2017) tested Facebook posts and learned that the word "Sponsored" made viewers think about persuasion when a celebrity shared the post, though not when the brand itself did; once viewers saw the post as an ad, they grew more skeptical of it and less willing to spread it. The findings carry a hard message for marketers: clear disclosures work, and because they work, they can reduce the persuasive power of paid posts. A disclosure policy that consumers can actually see will cost the brand some of each post's influence, and that cost is the measure of how much consumers were being misled without it.

The Proposed Policy

• 1. Every paid creator, and every person who received a free product and posts about it, must state the connection in plain words at the start of the caption or spoken in the first seconds of a video, using "Paid ad for Clearwell" or "Clearwell sent me this for free." Abbreviations such as "SP," "collab" or "spon" do not satisfy the policy.
• 2. On image and video platforms, the disclosure must also appear on the image or video itself, since many viewers never open the caption.
• 3. Creators may describe only their honest experiences, and may not state results, such as clearing acne or reducing wrinkles, unless Clearwell has provided the claim in writing with its supporting evidence.
• 4. Clearwell will not ask any creator or product recipient for a positive review, will not edit reviews, and will publish all reviews of a product, positive or negative, on its own site.
• 5. Every creator must complete a fifteen-minute training before the first paid post and sign the policy as part of the contract.
• 6. Clearwell will not pay creators whose audiences are mostly under 18, and no creator may direct a paid post at children, since the Guides note that endorsements aimed at children raise special concerns and younger viewers are less able to recognize persuasion even when it is labeled.

Why These Rules

Each rule answers a specific risk. The plain-word labels in rules 1 and 2 follow the experimental evidence that "Paid ad" and "Sponsored" are recognized and abbreviations are not, and the placement on the image follows the finding that position shapes whether viewers notice a disclosure at all. Rule 3 places substantiation where the law places it, with the brand. Rule 4 removes the incentive for recipients to inflate their reviews and gives prospective buyers the full range of experiences, which matters for a product applied to skin. Rule 5 meets the Guides' expectation that advertisers instruct their endorsers, and rule 6 reflects the extra care owed to young audiences.

Monitoring and Enforcement

The influencer team will review every paid post within 48 hours of publication and a random tenth of posts by product recipients each month. A post without a proper disclosure will be corrected within one day of notice, and a creator who fails to correct a post twice will be removed from the program. The team will report compliance rates to the marketing director each quarter, and the legal department will review the policy each year as the Guides and platform features change.

Conclusion

The policy protects consumers by telling them, in words they understand and in places they will see, when a post is advertising, and by limiting creators to claims that are true and supported. It protects Clearwell by meeting the Federal Trade Commission's expectations and by building trust that undisclosed promotion would eventually destroy. The research suggests that clear disclosure may reduce the persuasive power of individual posts, but a brand whose followers trust it has more to gain over time than any single post can deliver.

References

Boerman, S. C., Willemsen, L. M., & Van Der Aa, E. P. (2017). "This post is sponsored": Effects of sponsorship disclosure on persuasion knowledge and electronic word of mouth in the context of Facebook. Journal of Interactive Marketing, 38(1), 82-92. https://doi.org/10.1016/j.intmar.2016.12.002

Evans, N. J., Phua, J., Lim, J., & Jun, H. (2017). Disclosing Instagram influencer advertising: The effects of disclosure language on advertising recognition, attitudes, and behavioral intent. Journal of Interactive Advertising, 17(2), 138-149. https://doi.org/10.1080/15252019.2017.1366885

Federal Trade Commission. (2023). Guides concerning the use of endorsements and testimonials in advertising, 16 C.F.R. Part 255.

Federal Trade Commission Act, 15 U.S.C. § 45 (1914).

Wojdynski, B. W., & Evans, N. J. (2016). Going native: Effects of disclosure position and language on the recognition and evaluation of online native advertising. Journal of Advertising, 45(2), 157-168. https://doi.org/10.1080/00913367.2015.1115380