Generally many people do not have a problem when someone is doing an advertisements for a company just many times you need to disclose it. Unless you are Buzzfeed, which made stories that are generally advertisements for the products they are discussing but that is another story for another time. However, Machinima was nailed for paying YouTubers up to $30,000 to say positive stuff about the Xbox One.
If someone was willing to pay me $30,000, I would say amazingly nice things about the Amazon Fire phone. Too soon? Well, the Federal Trade Commission made public the results of their investigation which uncovered a contract agreement between Microsoft and the web channel for promoting positive press regarding the console.
According to the FTC, YouTubers were contractually blocked from discussing this agreement, but were given talking points, suggested video cuts and required that videos refrain from saying anything negative about the console or its launch titles.
The FTC ruled that Machinima engaged in deceptive advertising in creating a slanted YouTube marketing campaign. Machinima settled with the FTC and are required to clearly disclose when an advertisement is an actual paid endorsement.
“When people see a product touted online, they have a right to know whether they’re looking at an authentic opinion or a paid marketing pitch,” Jessica Rich, Director of the Bureau of Consumer Protection told Polygon. “That’s true whether the endorsement appears in a video or any other media.”
Microsoft, nor Starcom, were cited for wrongdoings in the findings, as the letter would indicate that was written to Microsoft:
“The failures to disclose here appear to be isolated incidents that occurred in spite of, and not in the absence of, policies and procedures designed to prevent such lapses. Microsoft had a robust compliance program in place when the Xbox One campaign was launched, including specific legal and marketing guidelines concerning the FTC’s Endorsement Guides, 16 C.P.R. Part 255, and relevant training made available to employees, vendors and Starcom personnel. Since the Xbox One campaign, Microsoft and Starcom have adopted additional safeguards regarding sponsored endorsements, and they have committed to, among other steps, specifically requiring their employees to monitor influencer campaigns conducted by subcontractors in the future. In addition, Microsoft and Starcom took swift action to require that Machinima insert disclosures into the campaign videos once they learned that Machinima had paid the influencer and that no disclosures had been made.”
It would seem that the FTC is localizing the wrongdoings on the lap of Machinima but keeping the parent company and Microsoft out of the spotlight. According to the FTC findings, it seems that some rogue employees within Machinima were the leaders behind this program. It would seem doubtful that no one else knew about the program but it seems that Machinima would take the hit this time.