Friday, March 18, 2016

The FTC….yes, again!

Ok, I know I have written about them twice already, and perhaps everyone thinks I am obsessed. But this was pretty big news in the industry: “Lord & Taylor has agreed to settle a Federal Trade Commission complaint over an online ad campaign with social media and native-ad components, the FTC announced on Tuesday.” The first article below is the original news story I read, and the second suggests this is only the first of many rebukes coming from the FTC:

The story is basically this:

Lord & Taylor gave a paisley sundress to 50 fashion bloggers in March of 2015 – so, this is influencer marketing – and paid them $1000 - $4000 each to model the dress in photos posted to Instagram. They were allowed/encouraged to wear and style the dress however they wanted, but Lord & Taylor reviewed and either approved or edited and approved all of the posts before they went live. The bloggers were instructed to use #DesignLab (the L&T private label that made the dress) and @lordandtaylor. There was also an article that ran in the online version of Nylon magazine that was native – it was about Design Lab, and was paid for, reviewed and preapproved by Lord & Taylor.

The big deal is that none of the pieces of content, either online or on Instagram, mentioned that Lord & Taylor had given consideration for and had approved of that content…hence the deception.
The settlement with L&T doesn’t involve any financial penalty, but, as I mentioned back in February, sure enough the FTC might seek monetary damages if L&T violates the terms of the consent anytime in the NEXT 20 YEARS! They will now need to provide their endorsers with written statements which detail their obligations to communicate clearly and transparently their connections to the company.

So, this is the first one, and there will probably be more to come, because the FTC is clearly making a statement that they won’t tolerate deceptive marketing practices. With all of the influencers that have built followings across social media, YouTube, etc., this should continue to be an interesting corner of the business to watch. Also, since native advertising is one of the purported solutions to ad blocking and fake clicks, it will also be interesting to see if the engagement metrics for native advertising fall as a result of the presumed increase in transparency that is coming. Because what I haven’t mentioned yet is the results the L&T campaign: they reached 11.4 million Instagram users and sold out of the dress! There has been much data indicating that the impact of native is strong, like these points from a research piece by IPG and Sharethrough:
  • Consumers looked at native ads 53% more frequently than display ads.
  •   25% more consumers were measured to look at in-feed native ad placements (the most common editorial native ad format) than display ad units.
  • Native ads registered 18% higher lift in purchase intent and 9% lift for brand affinity responses than banner ads
  • 32% of respondents said the native ad “is an ad I would share with a friend of family member” versus just 19% for display ads.
So, in case anyone is thinking about using native advertising as part of a campaign, I thought I would pass this along from an attorney who did a guest column for Ad Age:

Be transparent!

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