Internet & Social Media Law Blog
Back in the day when I rushed home after school to play The Sims, I would have never imagined that one day I would actually become a Sim… Of course, it turns out The Sims—and games like it—have always been an early, somewhat limited iteration of what is now popularly referred to as the metaverse. And no matter the world you inhabit, where there are humans, there are efforts to sell things to them. But that raises the question: how different are the rules for advertising in the metaverse going to be? It turns out that whether “uni,” “multi” or “meta,” certain constants apply when it comes to advertising, no matter the ’verse.
Truth … or Consequences
Ads in the metaverse must still be truthful and non-deceptive. Deception in advertising occurs if the representation, omission or practice is: (1) likely to mislead the consumer and (2) material, or likely to affect the consumer’s decision with respect to the advertised product or service. Actual deception is not required. Instead, the Federal Trade Commission (FTC) analyzes the overall impression of an advertisement. Anything that can be reasonably concluded from the ad—both express and implied—must be substantiated by a “reasonable basis.”
Those familiar with social media are already used to seeing influencers adding disclaimers to their posts when working with a sponsor or promoting a product or service. The same disclosure requirements will also apply to metaverse influencers. As a quick reminder, influencers who “post” sponsored endorsements are required to: (1) clearly disclose their relationship to the sponsor; (2) tell their “followers” that they were paid or given the item; and (3) not be misleading in promoting the product. However, this may get tricky in the metaverse, as information will not necessarily be “posted.” Instead, influencer avatars may simply be roaming around the metaverse in various spaces endorsing various products by donning them on their avatars. The FTC has made it clear in sample warning letters to influencers that disclosures should be easy to notice and consumers should not have to look for them. Although this FTC guidance was made in the context of Instagram posts, streams and stories, it will likely apply in the various metaverse spaces as well.
Advertising’s Next Step to Full Immersion?
If audiovisual advertisements excite you, wait until you experience an immersive advertising experience in a metaverse. For instance, in Nikeland on Roblox, users can engage in gameplay while naturally exploring the company’s range of products—from shoes to apparel and even accessories.
Metaverse worlds will allow companies to replace humans with avatars created perfectly for their specific brand. Think CGI, but three dimensional. No more relying on faulty humans to do the job right when brands can create avatars from scratch.
And that’s just the start. There will be virtual reality billboards and collectibles only available in the metaverse. Given these variations from traditional and even digital advertising as we know it, branding boundaries may become blurred. Will companies be able to control ad spots? Will influencers endorse competing brands simultaneously? And what about the heightened risks associated with user-generated content in such a decentralized environment?
Stick to the Fundamentals, No Matter the World
Disclose, disclose, disclose. In a metaverse, the mechanics of disclosure will likely shift. It is unclear where disclosures must occur, or how far removed from the interaction the disclosure must be. Until there is explicit agency guidance on this, make sure your company discloses as much as possible to promote transparency.
At a minimum, make the following disclosures:
- Disclose that your avatar influencer is not a human. There are no guidelines on this, but the passage of California’s bot law suggests that lawmakers care about whether people understand whether they are dealing with a human.
- Label ads, endorsements, and potentially brand-building events as advertisements. The law requires that ads and endorsements be clearly identifiable as advertising. This, of course, can get complicated in an immersive experience like Nikeland, where the entirety of the experience is essentially an advertisement. But conspicuously disclosing that it is an advertisement before the user participates will likely be helpful.
- Disclose what data you are gathering and tracking. This already happens to some degree in targeted advertising. But the new element of eye movement tracking may add an additional layer in a metaverse. Advertisements in the metaverse may manipulate the virtual environment to show users what the algorithm thinks the user might want to see rather than what is really happening in the virtual space.
- Disclose any sponsorships or other relationships. Although it’s not a legally settled question whether an avatar not based on a real human can have “relationships” in the FTC sense, the behavior of an avatar may suggest that it can and any such relationships based on advertising should be disclosed.
- Mind your hashtag manners. Don’t use or allow your influencers—human or otherwise—to use misleading hashtags or other practices. It is unclear what equivalent, if any, to hashtags may evolve in a metaverse. But it is unlikely that the novelty of a virtual world will exempt companies from proper use and disclosure in this area.
Overwhelmed? Don’t be. We have quite some time before metaverses become a regular part of our reality. The best you can do right now is stay up to date with the current advertising landscape and stick to tried-and-true advertising principles. And if you think your company will be able to escape this metaverse phenomenon, think again. Generation Alpha (those born between 2010 and 2025) are already sold on metaverse experiences. For companies looking to stay relevant and competitive, the metaverse is a societal evolution that will need to be embraced, as well.
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