Advertising Law Blog

As part of its routine monitoring activities, the Children’s Advertising Review Unit (“CARU”) of the BBB National Programs recently investigated videos and advertising on Vlad and Niki’s YouTube channel, owned and operated by Content Media Group FZC, LLC (“CMG”), for potential violations of CARU’s Advertising Guidelines and FTC laws and regulations. In particular, CARU investigated whether the advertising messages displayed on the YouTube channel sufficiently disclosed the material connection to the applicable advertisers, specifically as required in content directed toward children. Even though CMG had made clear attempts to act in compliance with material connection disclosure requirements, CARU ultimately determined that CMG violated its Advertising Guidelines in certain respects. This decision highlights the enhanced compliance obligations that apply when content is directed toward children.

The Vlad and Niki YouTube channel is a very popular kids’ channel, having 113 million subscribers with over 87 billion views. Three types of content were discussed as part of this challenge.

1. Sponsored Videos: These videos are produced in connection with a brand partnership. CMG is directly compensated for posting these videos. CMG acknowledged that these videos require clear and conspicuous disclosures and asserted that such disclosures are made in both audio and text at the beginning of each video.
2. Vlad and Niki Branded Videos: Vlad and Niki branded products are produced under various licensing and merchandising agreements. CMG asserted that the videos it produces that promote these products do not implicate the disclosure requirements as the relationship between CMG and the products is self-evident as they are Vlad and Niki branded.
3. Independent Content: These are videos where CMG receives no compensation from any advertising partner. Rather, revenue is derived solely from advertising commissions based on YouTube views. Some of these videos may include products from brand partners, but these particular videos are not created as part of any formalized brand partnership.

In discussing the disclosure standards that apply in this context, CARU noted that its guidelines recognize that children “may have difficulty distinguishing between non-commercial content and advertising and state that advertising should not be presented in a manner that blurs this distinction in a way that would be misleading to children.” To that end, advertisers should take additional care to ensure that advertising directed at children is transparent and easily understandable as advertising.

For the Sponsored Videos, CARU noted that the use of #ad is insufficient in this context. Instead, CARU recommended that CMG include language like “This is an advertisement for XXX,” “We were paid by XXX to make this video,” or “Thank you, XXX for paying me to make this video,” in both text and audio forms. CARU reiterated that reliance on any social media platform’s disclosure tools is not recommended as they may not be sufficient.

With regard to the Vlad and Niki Branded Videos, CARU was unconvinced that it would be self-evident to the children viewing the videos that Vlad and Niki are receiving payment in connection with the goods displayed in these videos. As such, CARU recommended that CMG add a clear and conspicuous disclosure, like “This is an ad for our Vlad and Niki toy” or “We are selling this Vlad and Niki toy” when Vlad and Niki are shown playing with or holding those toys.

CARU did not mandate specific disclosures for the Independent Content videos but noted that such a determination was based on the specific set of facts at issue.

TAKEAWAY: Advertisers should be extra diligent when crafting disclosures for content that is directed at or appeals to children. Such disclosures must be clearly and conspicuously displayed in a manner that children can see, hear, and understand. Further, this decision serves as a reminder to advertisers that commonplace disclosures, like #ad, or disclosure tools provided by social media platforms are not always sufficient.