In early July, Burbank, CA-based entertainment company Warner Bros., a division of Time Warner Inc. (NYSE:TWX), settled charges which were brought against it by the Federal Trade Commission (FTC) for deceptive marketing practices. The FTC’s order affects Warner Bros.’ activities regarding influencer campaigns promoting products and services offered by the company.
Warner Bros. has been under fire from the FTC over its activities related to marketing one of its video games, Middle Earth: Shadow of Mordor. This open world action-adventure game was released for video game consoles during the fall of 2014 and is set in a world designed to mimic the Lord of the Rings universe developed by fantasy writer J.R.R. Tolkien.
The FTC filed a complaint against Warner Bros. for violating provisions of the Federal Trade Commission Act by making payments to prominent members of YouTube for positive reviews of its video game without publicly disclosing those payments. The FTC focused on the activities of an advertising agency known as Plaid Social Labs which was contracted by Warner Bros. in 2014 to coordinate a YouTube influencer campaign which marketed Shadow of Mordor.
The FTC complaint listed two counts against Warner Bros., specifically one count for false claims of independent reviews and another count for deceptive failure to disclose material connection between endorsers and sellers. Technically, the YouTube video content did contain disclosures of material connection to Warner Bros., but those disclosures were made in the description box published below the video. Viewers would only see the disclosure if they clicked “Show More” link in that description box, effectively hiding the information from most casual users.
Individuals identified as YouTube influencers were offered advance copies of the game as well as cash payments ranging from hundreds to tens of thousands of dollars to create video content on YouTube. To earn this compensation, Plaid Social required that videos created by YouTube influencers would feature Shadow of Mordor gameplay, provide positive feedback about the game and include a strong call-to-action for viewers to visit the game’s official website. Plaid Social also required influencers to post a link of the video content to social media networks Facebook or Twitter. According to the FTC, the marketing campaign created nearly 30 sponsored videos which were viewed more than 5.5 million times. One such influencer contracted by Plaid Social was PewDiePie, a video game reviewer whose YouTube videos regularly receive millions of views; PewDiePie’s video received 3.7 million views according to the FTC’s press release regarding the Warner Bros. settlement.
Under the terms of the FTC’s settlement, Warner Bros. will have to clearly identify its sponsorship of marketing videos published on YouTube in the future. The FTC order mandates that Warner Bros. will disclose material connections between itself and influencers and will not misrepresent such influencers as independent users in the future. Warner Bros. will be responsible for informing influencers that they must disclose material connections in their video reviews and establishing a system to monitor video content and social media posts for such disclosures. The order will remain in place for 20 years or longer if the FTC files a new complaint alleging violation of its order.