A US Federal Trade Commission (FTC) investigation looking into the earnings of major YouTube stars has shown that some were earning as much as US$30,000 per video with hidden endorsements for the Xbox One.
The practice of putting a hidden endorsement in YouTube videos has become part of the increasingly-lucrative business of being a ‘YouTuber’, with vloggers and other YouTube stars – without their audience’s knowledge – receiving money to promote a product or service.
It was reported last year that Machinima, the YouTube network that manages a number of YouTubers, had approached the content producers about receiving financial gain from Microsoft for promoting their then upcoming console, the Xbox One, while stifling any negative comments.
It became a serious gripe among those YouTubers who criticised their peers for accepting money without notifying their audience.
The FTC has since decided to step in and charge Machinima for engaging in ‘deceptive advertising’.
The press release issued by the FTC makes clear that Microsoft was not leading this advertising campaign. It was, in fact, organised through an advertising agency called Starcom, after Machinima promised that their cadre of YouTubers could garner 19m views for Starcom products.
Blame it on the last guy
From their investigations, the FTC found that Machinima paid two of its clients US$15,000 and US$30,000 apiece for producing YouTube videos that were watched 250,000 and 730,000 times, respectively.
In the second phase of the marketing programme, Machinima agreed to pay a larger group of influencers US$1 for every 1,000 video views, up to a total of $25,000. At no point did they require their YouTube clients to inform their audience of the deals.
As part of the settlement agreed between Machinima and the FTC, the organisation will be barred from any further endorsements with YouTube personalities without informing the viewer.
In effect, this will also be passed down to other US-based YouTube video creators.
In a statement afterwards, Machinima have pinned the blame on a previous management structure, saying they were “deeply committed to ensuring transparency with all of its social influencer campaigns.”
Xbox One event image via Shutterstock