The world of online advertising is a wild and wooly place. So much so, that the Federal Trade Commission updated its rules on what constitutes a promotion in 2009 and again in 2013 to include blogging sites such as Google's video unit YouTube.

But those rules have been getting a new push recently as the line blurs between advertisements and blog posts, or other mentions in social networks including Facebook and Pinterest. And it's important for any small business that's thinking of using social media to advertise, that it has to get up to snuff with regulations.

Here's what Mary Engle, associate director for advertising practices at the FTC, recently told the gaming site Gamsutra:

The basics are that the disclosure has to be in words that the consumer can understand. It can't just be a url or a link, it has to be in a place where consumers will see it. Certainly as a practical matter, the best thing would be to put it in the video itself, and for the person to say it.

While such guidelines may seem obvious enough, apparently it's not a common practice by any stretch. As Adweek reports, it turns out hidden placements are becoming common for so-called social influencers--people with large online followings--who accept lucrative deals from large consumer product companies to do discreet product pitches in their social media streams.

A Question of Sponsorship

The advertising executive Jason Peterson, for example, allegedly accepted a first class ticket to Iceland and $15,000 to post four photos of Dom Perignon products on his Instagram feed, which has more than 300,000 followers.

In case you had doubts about the trend, more than two thirds of advertisers have experimented with sponsored content via social media in the last three years, according to the social sponsorship advertising company IZEA's 2014 study on the issue, which surveyed 300 marketers and content creators.

Sixty percent of marketers and nearly 40 percent of content creators had little or no awareness of FTC guidance regarding placements, however.

“Advertisers have a responsibility to make sure that any sponsored content is marked as such," says IZEA CEO and founder Ted Murphy. "The disclosure should be clear and conspicuous, so that the reader understands there is a material relationship between the content producer and the brand."

Murphy adds that compensation of any kind--including cash, products, gift cards, or anything with value--needs to be disclosed.

The FTC's guidance is pretty straightforward about its updated rules for social media: If you're getting paid for a mention or promotion, you need to disclose it in a pretty obvious way. That means you can't bury marketing partnerships in a hyperlink or small print, or obscure them in any way.

(Nevertheless, the FTC in an addendum to its update said it hasn't taken any action against bloggers, and that there aren't any real fines for violating the rules. It added that it will only take action for breaking the rules on a case by case basis.)

Avoid Regulator's Ire

Although YouTube, the largest video social media outlet is not taking a stand, smaller social media outlets are. In response to consumer confusion, online video game blog site Twitch updated its rules earlier this month to require its reviewers to reveal when they've been paid to post a review of a game.

Here's what Matthew DiPietro, Twitch's vice president of marketing and communications said in a recent blog post:

While we have always encouraged our broadcasters to acknowledge if they are playing games as part of a promotional campaign, we are now establishing a much more transparent approach to all paid programs on our platform and hope that it sets a precedent for the broader industry. Simply put: We want complete transparency and unwavering authenticity with all content and promotions that have a sponsor relationship.

And if you're thinking of using sponsored content yourself, you'd probably do well to set similar guidelines and make full transparency your goal. Your customers will like you better for it, and the FTC won't be on your back.

Published on: Oct 22, 2014