“Backdoor online advertising” is the act of deceiving consumers
“Backdoor online advertising” refers to the act of introducing products or services as if they were real reviews of products purchased, so-called “nae-don-nae-san” in Korean, and promoting the products in the form of receiving money or other benefits. This is a side effect of the active development of “digital nomad” type jobs. “Digital nomad” is a newly coined term combining the words, digital and nomad, referring to a person who lives freely by telecommuting and mobile work using digital devices based on Internet access, without being constrained by space. Influencers such as media companies, journalists, famous SNS account owners, YouTubers, streamers, and power bloggers are examples of digital nomad type jobs.
Backdoor advertising is less “obvious”
The reason why people use backdoor online advertising is because consumers usually take defensive attitudes when they know it is an advertisement. On the other hand, in the case of backdoor advertisement, especially the ones posted by influencers, consumers misunderstand them as honest reviews, which turns out to be less obvious than general advertisements. Choi Yung-kyun, Professor of the Department of Advertisement and Public Relations stated, "The reason why backdoor online advertisements flooded is due to the expectations to increase the effectiveness of advertisements by hiding the fact that they are advertisements. This is because readers recognize advertisements as content rather than advertisements, which raises attention. Many stakeholders are involved in backdoor online advertising, such as YouTubers who are called influencers, content producers on YouTube, and advertisers of brands that appear in the content." Meanwhile, Ahn Hongmin, Professor of the Department of Advertisement and Public Relations, added, “Consciousness is a great factor that influences the persuasive effect when being exposed to advertisements. According to the Personal Knowledge Model (PKM) theory, when consumers are exposed to content that contains advertisements knowing that they are advertisements, the defensive mechanism of not trying to be persuaded by them is activated.” Professor Choi explained, "The more YouTubers do not inform subscribers that they are advertising, the higher the number of views they can get, which is reported to advertisers. This performance is the basis for YouTube's advertising content unit price. Even if the advertiser does not explicitly require backdoor online advertisement, it results in benefiting both the advertisers and YouTubers, creating a symbiotic relationship." Professor Ahn concluded, “This is the reason why advertisers prefer backdoor online advertising. Therefore, it is deceptive and unethical to persuade people without informing them that it is an advertisement.”
How did the backdoor online advertising controversy start?
The backdoor online advertising controversy started from celebrities: Han Hye-yeon, a fashion stylist, and Kang Min-kyung, a member of the duo Davichi. Especially, Han, one of the most sought-after fashion celebrities these days, gained fame on TV and brought her influence to her own YouTube channel. Her signature move was her “honest” reviews and recommendations since she bought the products with her own money, so-called “nae-don-nae-san.” However, on July 15th, Dispatch reported that the YouTube video contents that were introduced as “nae-don-nae-san” by some celebrities such as Han Hye-yeon and Kang Min-Kyung were mixed with product placement (PPL), and received advertising costs of tens of millions of won. It pointed out that under the local regulations, the content that had been originally paid for by advertising should be marked as “paid advertising.” However, they rather added false information such as “nae-don-nae-san.” As the controversy blew up, the celebrities apologized with an official statement.
The controversy over the celebrities’ backdoor online advertising led to the dispute over YouTubers’. Especially, YouTubers, who have millions of subscribers such as “YangPang” and “Moon Bok-hee,” were found out to be posting backdoor online advertisements on their videos and were criticized for their involvement in the shady promotional practice.
Backdoor online advertising can cause side effects in many ways
The point of the backdoor online advertising issue is consumer deception. The reason why it is problematic is that benefiting by deceiving and ridiculing viewers is an act that deserves criticism. Since YouTube is flooded with videos based on paid advertisements, it has become much more difficult to see a genuinely honest review, which is why the “nae-don-nae-san” phrase has drawn attention from viewers yearning for accurate information about the products they consider buying. However, if influencers, who receive advertising offers because of their influence on people, do not indicate that they received money for advertising, consumers who encounter backdoor advertising will be unaware of the hidden economic relationships. This unawareness may lead consumers to mistake the advertisement for influencers’ provision of information such as opinions, assessments, and feelings, and can hinder rational purchasing decisions. Advertisements using creators and influencers rely on familiar images and emotional bonds, so if an incident occurs, consumers’ resistance and disappointment toward them will be maximized. Therefore, it is difficult to recover their image after trust is broken as the advertising effect is great. Professor Ahn defined,“The primary problem is that there was no right indication of the hidden advertisement. The problems can be defined in three perspectives: consumers, companies, and influencers.” She mentioned, “First, in the consumers’ perspective, the consumer who purchased the product may be harmed by side effects caused by it. Who is going to be responsible for this side effect is not clear, so the consumer might have to inevitably take charge of it.” She added, “Second is the companies’ perspective. When the deceptive attempts are revealed to the public, the companies will lose credibility which will do large damage on long-term relationship with consumers.” She concluded, “Thirdly, it is the influencers’ perspective. When an influencer is found out to have engaged in backdoor online advertisements, the backfire effect would be incredible. Thus, credibility of the influencer will fall to an irreparable level.” Lee Sang-don, a sophomore of the Department of Industrial and Systems Engineering, said, “A YouTuber is a job whose primary customers are subscribers, which is why he/she has to make content that satisfies the needs of them. However, backdoor online advertising is the act of cheating on subscribers. It is obviously wrong since it makes subscribers feel uncomfortable.” Also, Jeon Min-cheol, a sophomore of the Department of Industrial and Systems Engineering, added, “I think there are two main problems of YouTubers’ backdoor online advertising: this shady way of advertising can lead to consumer deception and an industry slump. Consumers get to have a tinted look at the product or product line, and in the process, the related industry stagnates.”
Some YouTubers get entangled in the dispute
YouTubers posted heartfelt self-criticism after it was revealed that they had been secretly taking money for products appearing in their videos and their comment sections blew up with an outpouring of anger from subscribers who felt betrayed by them.
Mun Gi-yeon, who runs the mukbang channel “Eat with Boki” with 4.7 million subscribers, apologized, admitting that she had taken payments for some of her videos, which show her trying food. After posting an apology, she added the tag “including paid advertisements” to some videos.
Suspicions of backdoor online advertising were also raised against Park Jeong-won, a YouTuber running the channel “Tzuyang” of 2.7 million subscribers, who became popular for eating shows. As a result, Tzuyang suffered from false information and malicious comments due to the controversy over backdoor advertisements, and announced her retirement as a YouTuber on August 6th with an explanation. Along with an apology, she added that she does not want to do any more broadcast activities in the future since she is worn out of the comment culture that spreads false information such as “tax evasion” and “fraudster.”
Yang Eun-ji, who owns the channel “YangPang” of 2.49 million subscribers dealt with the situation by belatedly adding the phrase “including paid advertisements” to videos that had omitted the labeling of paid advertisements. According to her, she had a total of 20 cases of backdoor advertising among her videos. She made an apology, confessing that she had deceived the subscribers in a live video of a chicken brand commercial, telling a lie that she had ordered it herself and that it was not a sponsored advertisement.
|Yang Eun-ji, who is running the channel “YangPang,” posted an apology for backdoor online advertising.|
New laws on backdoor online advertising are needed
The backdoor online advertisement of influencers has been subject to a crackdown by the Fair Trade Commission (FTC) since online marketing using SNS began to gain popularity. In 2015, they took corrective measures to 20 domestic and foreign entrepreneurs who promoted their products on blogs without revealing that they were advertisements. Last year, the FTC decided to impose fines on seven businesses, including cosmetics and small home appliance companies, for violating the “Act on the Fairness of Labeling and Advertisement.”
However, the problem is that the same matter recurs as a new platform emerges. Although there were standards for displaying advertisements and sponsorships for text-oriented platforms such as blogs, there were no ways to display economic interests that suited the characteristics of each media as new photo and video-oriented platforms emerged. Since there were no clear regulations, advertisers and influencers had a practice of making advertisements as if they were not actually advertisements to the extent of not violating the law. This is because advertisers prefer to promote their products naturally as if they were not advertising due to the high rate of viewers’ content deviation when it turns out to be an advertisement. Popular YouTubers receive millions to tens of millions of won for advertising, and many YouTubers earn a monthly income of hundreds of millions of won, which is one of the reasons why many are calling for legal standards to punish backdoor online advertising.
According to the FTC, a total of 458 cases of “violation of consumer-related laws on SNS markets” were tallied from 2019 to July this year, of which 277 cases (60%) were found to be violations of the “Act on Fair Labeling and Advertising (hereinafter referred to as the Labelling and Advertising Act),” which did not properly indicate that they are advertisements. Consumer-related laws refer to the Labeling and Advertising Act, Electronic Commercial Law, Door-to-Door Sales Act, Installment Transaction Act and so on, and SNS markets refer to types of domestic online transactions, mobile transactions, and other communication sales through YouTube, Instagram, Facebook, Twitter, Kakao, and Naver cafe. Under the current law, there is no means to directly sanction influencers for backdoor online advertising. The Labeling and Advertising Act is intended to punish businesses that commit unfair advertising. In this case, a fine of less than two percent or less than 500 million won of sales or imports will be imposed, and if accused by the prosecution, he/she can be sentenced to maximum of two years in prison or fined up to 150 million won. However, creators and influencers who directly deceive consumers are free from the law. Lee Young, a member of the Future Integration Party, mentioned in 2019 that the domestic advertising market is worth 14 trillion won, of which the SNS advertising market alone is close to five trillion won which naturally results in the increase in the impact of YouTubers and influencers on consumers. She pointed out that amid the situation, consumer protection institutions are not keeping up with reality, adding that there should be system improvement so that the institution can rationally overhaul the sanctions on unfair practices of the Labeling and Advertising Act and induce self-purification effects such as education in related industries.
|The comment section on the latest video on the channel “Eat with Boki” blew up with criticism.|
Revision to the backdoor online advertisement bill is proposed
As a result, a bill was pushed to sanction backdoor online advertising by influencers or YouTubers. Jeong Yong-ki of the Democratic Party of Korea, a member of the National Assembly’s Culture, Sports and Tourism Committee, and Kim Doo-kwan, a member of the Strategy and Finance Committee, proposed a partial revision to the Act on Fairness of Labeling and Advertising on August 11th. The revision, so-called “Prohibit Backdoor Advertisement Act,” requires influencers who receive a corresponding price when they post a review of a specific product, to notify the fact through their SNS and so on. It also included a punishment rule that would impose fines of up to 10 million won if they do not make a notification.
The government comes up with a newly revised bill
The snowballing controversy prompted the FTC to ban what is known as “backdoor online advertising” from September 1st. The FTC implemented a revision of the advertising guidelines for social media platforms. The new rules require all social media influencers to state clearly that they are promoting a sponsored product or service. Vague wordings like “thanks to” or “reviewer group” are prohibited on their videos as well. A video on YouTube, for instance, must specify in the title that it is sponsored. The video itself must also carry a banner stating that it is a paid promotion. Live-streaming videos must inform viewers about the paid advertising every five minutes repeatedly, for those who view only a part of the video. If not, both the influencer and the sponsor will be charged with a fine of up to two percent of related sales and revenue or 500 million won.
The controversy over backdoor online advertising has been fading since October 1st, when the FTC implemented the revision. Since clear rules for influencers to follow have been made unlike before, the act of influencers deceiving consumers would not happen as easily as before from now on. However, industry insiders agree that all “deception” that subscribers complain about cannot be regulated. Opinions are also divided on to what extent YouTubers and production companies’ planning and production should be regarded as “deception.” Jung Duk-hyun, a culture critic, mentioned that “Backdoor online advertisements may not be a big problem hereafter since paid advertisements have to be indicated in the videos.” He then added, “Aside from this, YouTube has a greater level of immersion than other media, and as YouTube’s influence grows, the need for ‘media literacy (the ability to view and interpret media contents)’ education is continuously being brought up.” Professor Choi emphasized, "The desirable attitude consumers should take is to make decisions on purchasing based on a variety of information and always make sure that what the content provides is reliable and correct, rather than unconditionally following the recommendations of backdoor online advertisements of famous influencers."
Kwon Min-jeong firstname.lastname@example.org
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