CARU Recommends Children's YouTube Channel Include Material Connection Disclosures Clear to Children, Jordyn Milewski

As part of its routine monitoring program, the Children's Advertising Review Unit ("CARU") opened an inquiry into videos and advertising on the YouTube channel, “Vlad and Niki” – a children's channel owned and operated by Content Media Group FZC , LLC ("CMG") (the “Channel”) (run by Vlad and Niki's parents) that stars “kidfluencers” Vlad and Niki. As of the date of this blog post, the Channel has 118 million subscribers.

CARU's chief concerns surrounded whether material connections exist between the Channel and certain products it endorses, reviews, or features, and whether the Channel sufficiently discloses those material connections in a manner that is clear and conspicuous for its audience and is complaint with the Federal Trade Commission's Guides Concerning the Use of Testimonials and Endorsements in Advertising (the “FTC Guides”) and with CARU's self-promulgated guidelines, the Self-Regulatory Guidelines for Children’s Advertising (the “CARU Guidelines”).

CARU's decision identifies three different types of content that the Channel produces: (1) “Sponsored Videos," which are videos produced in connection with brand partnerships (where the Channel earns compensation and receives free products to use in the videos); (2) “Vlad and Niki Product Promotion" videos, which are videos promoting Vlad-and-Niki branded products under licensing and merchandising agreements (where the Channel shares revenue generated through sales of those products and where some agreements may obligate the Channel to produce videos promoting those products); and (3) “Independent Content" videos, which are videos not sponsored by any brands or promoting any branded products.

Sponsored Videos

While CARU found that many of the Sponsored Videos did include clear and conspicuous disclosures that were in line with both the FTC Guides and CARU Guidelines, they were concerned that some did not. Specifically, they found that certain videos either (i) used disclosure language that would not be considered clear to children (such as “sponsored by” and “paid promotion”); (ii) did not include disclosures at the end of the video (in addition to at the beginning); and/or (iii) included disclosures in the description box (rather than in the video itself).

For these Sponsored Videos, CARU recommended that CMG update disclosures to ensure (i) that disclosures are present in both text and audio in the video itself, at the beginning and end of videos (and for longer videos, also after each ad break); and (ii) that disclosures use language that is clear for children to understand (such as “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”).

Vlad and Niki Product Promotion

With respect to the Vlad and Nikki Product Promotion videos, CMG asserted that “because each product [featured in the videos] is Vlad and Niki branded, the relationship between CMG and the toys is self-evident" and claimed that the videos did not include endorsements of the branded products, so no further disclosure was needed. CARU disagreed, noting that because CMG shares in the revenue from sales of the products, and because some of CMG's agreements may obligate them to produce certain videos highlighting those products, there is a material connection between CMG and the branded product companies. CARU did not believe that relationship would be self-evident, stating, “CARU is unconvinced that young children will understand the selling intent as to the Vlad and Niki branded products and that CMG earns money from making these videos and selling the branded products. Here, CARU believes the line is blurred as to the mere enjoyment of playing with the toys and the advertising nature and purpose of the video, i.e. to sell the toys.” As such, CARU recommended that CMG include clear and conspicuous disclosures in these videos that are in line with the FTC Guides and CARU Guidelines.

CMG noted that it does include certain disclosures in these videos (for example, CMG said that the videos (i) include “#ad” in the description; (ii) utilize YouTube's built in disclosure tool, and (iii) several of them include an audio and video disclosure stating “this video features products that Vlad and Niki helped to create"). However, CARU determined those disclosures were not sufficient.

Specifically, CARU was concerned that (i) the Channel's disclosures would not clearly tell children the videos are intended to sell products to them (rather, young children are “likely to simply think Vlad and Niki like to play with their own toys that they helped create” not that they get paid to make the videos and sell their products); and (ii) only the YouTube disclaimer tool is shown throughout many videos, explaining that “while a platform's own disclosures may be sufficient in circumstances," because the videos are on the longer side and contain multiple products/services, the YouTube disclosure “does not clearly tell children what products were provided for free, who paid them to make the video, etc.”

Instead, CARU recommended that CMG “include their own video and audio disclosures in a clear and conspicuous manner that better represents the material connection" including disclosing “that Vlad and Niki get paid or received free product to make the video, who paid them and for what.” Additionally, CARU highlighted that it should be made clear to children that “the intent of these videos is to sell the Vlad and Niki branded products to them and they are not merely playing with their own toys.”

Independent Content

CMG stated that it receives no compensation from any partner in connection with the Independent Content on the Channel and therefore (even though the Independent Content may include products manufactured by brand partners) CMG did not believe there was any “material connection” that needed to be disclosed in such content.

However, CMG voluntarily decided to include disclosures “in all of its future videos that feature products manufactured by a then-existing brand partner, including in its Independent Content" citing interests of further transparency and taking into account the vulnerability and lack of sophistication of the Channel's target audience.

CARU noted that if an endorser has a financial connection to a company, that relationship exists whether or not the endorser is being paid for a particular post and explained that in this case, CMG has brand partnership agreements in place that require them to promote specific products in specific videos.

CMG agreed to comply with the recommendations from CARU.