Building Smart Influencer Strategies for Direct Selling Success
Peter Marinello, Vice President, Direct Selling Self-Regulatory Council, BBB National Programs
The proliferation of influencer branding, status, and notoriety has shaped not only social media but also the marketing strategies of many industries—including the direct selling industry. While increased efforts in influencer marketing within the direct selling space can be an effective tool to drive sales, regulatory complications encourage a thoughtful and methodical approach to working with influencers.
The good news is there are clear rules of the road to assist direct selling companies navigating the regulatory and compliance challenges of influencer partnerships to help them achieve successful and compliant influencer collaborations while mitigating potential risks.
Over the years, the direct selling industry has vastly transformed its approach to sales and marketing. The industry began first with door-to-door sales and hosted selling parties, but the modern era has lent itself to online iterations of these methods. Today content is disseminated across multiple different digital platforms. Despite these changes, direct selling is fundamentally a business model that cuts out third parties and directly reaches consumers.
For the most part, online activity by direct sellers has consisted of salesforce members using social media to grow their customer base, promote products, and highlight the entrepreneurial component of their work, but influencer brand partnerships are a natural new development for this increasingly online business model.
When direct selling brands are considering expanding their audience reach by partnering with influencers, they are often looking for individuals who curate their own content, ranging from lifestyle to beauty, to make sponsored posts in return for payment or in exchange for free product. Mary Kay and NuSkin are two examples of direct selling companies that have responsibly implemented influencer marketing strategies to promote their products.
At the core of federal regulatory standards guiding influencer partnerships and advertisements are disclosures and transparency in advertising. Under the FTC’s Guides Concerning Use of Endorsements and Testimonials in Advertising, influencer testimonials or endorsements are treated similarly.
According to the Guides, an endorsement is “any advertising, marketing, or promotional message for a product that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.”
The Guides further state that when there is a “material connection” between the advertiser and the endorser that the viewer would not ordinarily expect, that connection must be clearly and conspicuously disclosed within the endorsement message. Therefore, any content an influencer makes for a company must be paired with a “clear and conspicuous” disclosure about the relationship. The disclosures must be in plain, easy-to-understand language, and must be placed so it is noticeable to the everyday consumer. This is required even if an influencer is not paid directly to make a post and instead receives a free or discounted product in return for posting content about the product.
Although influencers can be held liable for failure to disclose their brand relationships, direct selling companies are also liable for any misleading or unsubstantiated statements made through an endorsement or for failing to disclose the connection between themselves and the influencers or endorsers. In the past, non-compliant brands have seen penalties and fines from FTC action for lack of clear and conspicuous material connection disclosures.
This potential risk becomes more prominent when working with emerging influencers who may not have a team to assist them or do not have any prior experience partnering with businesses. The burden of ensuring compliance often falls on the direct selling companies. A strategy to mitigate risks is through clear partnership contracts and agreements with influencers that include compliance measures. This can consist of providing guidance about what claims are acceptable, reviewing posts before they are made live, and monitoring posts after posting to ensure compliance.
When it comes to the influencer’s content, it needs to reflect the influencer's own honest opinions and positions. For example, a direct selling company seeking reviews or testimonials from an influencer cannot require that influencer to provide a positive review. The FTC Endorsement Guides prohibit any distortion of reviews and testimonials. Furthermore, the Consumer Review Fairness Act bars any provisions in a contract that would prevent an influencer or reviewer from leaving a negative review.
Thus, direct selling companies need to include supervision of posts after-the-fact to ensure compliance and weigh the potential risks and reputational harm of poorly received influencer content before entering into a partnership.
When working with an expert influencer, these companies should ensure the individual truly has professional expertise, which means they possess knowledge above what an average individual possesses in any particular subject area that was acquired through “experience, study, or training,” and that the expertise is in the field or area touted in the ad. It has become increasingly common for individuals to lie about their credentials online, even going as far as creating AI-generated videos that use the likeness of actual experts for their content. This falsification leaves direct selling companies open to liability and risk associated with misrepresentation if an influencer promotes a product by relying on expertise they do not possess.
After verifying that an influencer is in fact an expert, businesses should follow the FTC Endorsement Guides’ admonition to ensure that the expert has used their knowledge in evaluating the product. Direct selling companies should be cautious when highlighting an influencer’s expertise if such expertise cannot be used to evaluate their product or service.
While influencer partnerships have the potential to expand a direct selling company’s brand, such relationships also pose regulatory risks that necessitate a compliance-forward approach. By establishing internal policies, actively monitoring compliance, and thoroughly vetting influencers, direct selling companies can mitigate potential risks and ensure successful and trustworthy partnerships that align with their brand values and regulatory requirements.
The proliferation of influencer branding, status, and notoriety has shaped not only social media but also the marketing strategies of many industries—including the direct selling industry. While increased efforts in influencer marketing within the direct selling space can be an effective tool to drive sales, regulatory complications encourage a thoughtful and methodical approach to working with influencers.
The good news is there are clear rules of the road to assist direct selling companies navigating the regulatory and compliance challenges of influencer partnerships to help them achieve successful and compliant influencer collaborations while mitigating potential risks.
Over the years, the direct selling industry has vastly transformed its approach to sales and marketing. The industry began first with door-to-door sales and hosted selling parties, but the modern era has lent itself to online iterations of these methods. Today content is disseminated across multiple different digital platforms. Despite these changes, direct selling is fundamentally a business model that cuts out third parties and directly reaches consumers.
For the most part, online activity by direct sellers has consisted of salesforce members using social media to grow their customer base, promote products, and highlight the entrepreneurial component of their work, but influencer brand partnerships are a natural new development for this increasingly online business model.
When direct selling brands are considering expanding their audience reach by partnering with influencers, they are often looking for individuals who curate their own content, ranging from lifestyle to beauty, to make sponsored posts in return for payment or in exchange for free product. Mary Kay and NuSkin are two examples of direct selling companies that have responsibly implemented influencer marketing strategies to promote their products.
Regulatory & Compliance Challenges - Disclosures, Honesty, & Transparency
When crafting influencer partnerships, direct selling companies must balance managing influencer compliance while maintaining authenticity and independence with the content posted.At the core of federal regulatory standards guiding influencer partnerships and advertisements are disclosures and transparency in advertising. Under the FTC’s Guides Concerning Use of Endorsements and Testimonials in Advertising, influencer testimonials or endorsements are treated similarly.
According to the Guides, an endorsement is “any advertising, marketing, or promotional message for a product that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.”
The Guides further state that when there is a “material connection” between the advertiser and the endorser that the viewer would not ordinarily expect, that connection must be clearly and conspicuously disclosed within the endorsement message. Therefore, any content an influencer makes for a company must be paired with a “clear and conspicuous” disclosure about the relationship. The disclosures must be in plain, easy-to-understand language, and must be placed so it is noticeable to the everyday consumer. This is required even if an influencer is not paid directly to make a post and instead receives a free or discounted product in return for posting content about the product.
Although influencers can be held liable for failure to disclose their brand relationships, direct selling companies are also liable for any misleading or unsubstantiated statements made through an endorsement or for failing to disclose the connection between themselves and the influencers or endorsers. In the past, non-compliant brands have seen penalties and fines from FTC action for lack of clear and conspicuous material connection disclosures.
This potential risk becomes more prominent when working with emerging influencers who may not have a team to assist them or do not have any prior experience partnering with businesses. The burden of ensuring compliance often falls on the direct selling companies. A strategy to mitigate risks is through clear partnership contracts and agreements with influencers that include compliance measures. This can consist of providing guidance about what claims are acceptable, reviewing posts before they are made live, and monitoring posts after posting to ensure compliance.
When it comes to the influencer’s content, it needs to reflect the influencer's own honest opinions and positions. For example, a direct selling company seeking reviews or testimonials from an influencer cannot require that influencer to provide a positive review. The FTC Endorsement Guides prohibit any distortion of reviews and testimonials. Furthermore, the Consumer Review Fairness Act bars any provisions in a contract that would prevent an influencer or reviewer from leaving a negative review.
Thus, direct selling companies need to include supervision of posts after-the-fact to ensure compliance and weigh the potential risks and reputational harm of poorly received influencer content before entering into a partnership.
“Expert” Influencers
Many successful influencers are also experts in their relevant fields—dermatologists, lawyers, dieticians etc. This expertise is beneficial for direct selling companies because it provides an added layer of authority and trustworthiness with a given sponsored post based on the professional credentials of the influencer. This type of partnership is often seen with direct selling companies that sell cosmetics or health products. However, partnerships with “experts” also pose additional regulatory challenges that direct selling companies should consider.When working with an expert influencer, these companies should ensure the individual truly has professional expertise, which means they possess knowledge above what an average individual possesses in any particular subject area that was acquired through “experience, study, or training,” and that the expertise is in the field or area touted in the ad. It has become increasingly common for individuals to lie about their credentials online, even going as far as creating AI-generated videos that use the likeness of actual experts for their content. This falsification leaves direct selling companies open to liability and risk associated with misrepresentation if an influencer promotes a product by relying on expertise they do not possess.
After verifying that an influencer is in fact an expert, businesses should follow the FTC Endorsement Guides’ admonition to ensure that the expert has used their knowledge in evaluating the product. Direct selling companies should be cautious when highlighting an influencer’s expertise if such expertise cannot be used to evaluate their product or service.
Best Practices
Apart from following the relevant federal regulations, proactive measures and a commitment to self-regulation can ensure successful outcomes for direct selling companies with influencer partnerships.- Establish and follow an internal social media endorsement policy that defines the difference between a social media partnership and an independent salesforce member who engages in social media and clearly delineates the responsibilities and relationship between each party.
- Create procedures to handle influencer compliance failures, such as active monitoring, requests to modify posts to include a disclosure, or terminates a partnership if non-compliance continues.
- Thoroughly research the influencer before entering into a partnership, including investigating any other companies an influencer is affiliated with, an influencer’s engagement statistics, and the public’s perception of the influencer’s trustworthiness.
While influencer partnerships have the potential to expand a direct selling company’s brand, such relationships also pose regulatory risks that necessitate a compliance-forward approach. By establishing internal policies, actively monitoring compliance, and thoroughly vetting influencers, direct selling companies can mitigate potential risks and ensure successful and trustworthy partnerships that align with their brand values and regulatory requirements.