All Kim Kardashian wanted to do was to sell some drugs. But the world’s biggest social media personality forgot to add a health warning to her Instagram post and the Feds had no choice but to get involved. When you’re advertising on social media, things can get surprisingly complicated.
The Food & Drug Administration said that Kardashian’s Instagram promotion of prescription morning sickness drug Diclegis was “false and misleading” because it failed to mention the drug’s possible side-effects. Diclegis hasn’t been studied in women with severe vomiting, and its most common side-effect is drowsiness. Unlike a regulated ad, Kim’s Insta-promo didn’t include the required fine print.
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From Ted Murphy, IZEA Founder & CEO
The FDA’s regulations are stricter than the rules imposed by the FTC and other groups, which makes pharmaceuticals promotions less appealing to social media marketing agencies like Florida-based Izea. CEO Ted Murphy told Vocativ: “The big issue with the Kim Kardashian post is she was dealing with a highly regulated industry. For those types of products in those regulated spaces, advertisers have to be much more careful and disciplined in how they roll out social sponsorships.”
Izea, which has produced paid Twitter advertisements for actresses like Hilary Duff and Elizabeth Banks, mostly deals with packaged goods, technology and travel. Murphy happily explained: “Those are areas which are relatively benign in nature, and there’s not a lot of regulation around them. You don’t need to have the same levels of disclosures and disclaimers as things that are regulated.”
Murphy claimed Izea is a pioneer in social media advertising. The New Yorker founded it in 2006 during the early days of Facebook, and produced the first paid advertisement on live-streaming service Periscope earlier this summer. Business is booming: Izea’s revenues increased 135 percent year-on-year to $4.6m between April and June as its advertisements reached 2.97 billion people.
Murphy told Vocativ his company usually takes a 35 percent cut of deals it makes with advertisers and content creators. He said his largest clients, who command followings of “tens of millions,” can expect to earn “easily six figures, or even more” for one campaign. Murphy declined to state who these clients were, but said most advertisers Izea works with actually prefer to monetize posts from lots of smaller creators, rather than making a larger offer to someone like Kim Kardashian or Beyonce.
“From an advertiser’s standpoint, you’re diversifying your risk. You may pay $50,000 for a big celebrity, or you could pay $50 for tweets from 1,000 regular people. In most cases you’re going to wind up with a better result by engaging with 1,000 people than with one celebrity.”
He said a creator’s audience demographic matters, too. “Someone who is a skateboarder and has a very concentrated following, but they’re all into skating—that’s of value to an advertiser, versus someone who has a much bigger audience, who are all millennials but may not all be specifically into skating.”
