This Hollywood Studio Got Busted for Social Media Marketing

The Federal Trade Commission slammed Warner Brothers on Monday over a stealth marketing campaign in which the studio paid popular YouTube stars like PewDiePie to promote a Lord of the Rings video game.

According to a FTC complaint, Warner Bros (TWX) and its ad agency failed to comply with rules concerning the use of “influencers” when it failed to tell consumers that the “opinions” broadcast by social media stars were basically marketing pitches.

The marketing campaign involved the studio paying thousands of dollars to PewDiePie and others to hype the game Middle Earth: Shadow of Mordor on YouTube (GOOG) and also to publicize the videos on Facebook and Twitter (TWTR) accounts.

It’s not illegal, of course, for brands to pay celebrities to pitch products online or elsewhere. Warner Bros, however, landed in hot water because it failed to tell consumers “clearly and conspicuously” that the social media content was sponsored. Instead, it used tactics like stuffing the disclosure notice into small boxes with other messages, making it unlikely viewers would ever see them.

The FTC did not fine Warner Bros, but instead imposed a series of conditions on the company that include an internal compliance system, a process to inform “Influencers” about the marketing rules, and a requirement it cut off payments to “Influencers” who don’t comply. The conditions came as part of a settlement, which will be in force for the next 20 years.

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The complaint against Warner Bros comes as the FTC is cracking down more broadly on companies over the use of conspicuous disclosures—established features on TV and radio ads—to inform consumers about the social media campaigns they sponsor.

Last year, for instance, the FTC slapped Lord & Taylor for failing to disclose it was behind a popular internet post, “50 Instagram Stars Wore the Same Dress on the Same Day.” The federal agency took issue with an Instagram campaign in which a drug maker paid Kim Kardashian to tout the virtues of a morning sickness pill during her pregnancy.

The FTC’s first target over stealthy social marketing campaigns was Sony and ad agency Deutsch LA, which got in trouble over a Twitter campaign in 2014.

In all of the campaigns, the FTC has directed most of its fire at the brands and agencies that produced the campaigns, largely giving passes to PewDiePie and other celebrities that take money to promote products.

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