Study after study shows that word of mouth is the best form of advertising. The trick nowadays, particularly in social media, is how to get people to say nice things about a brand’s products.
The apparel industry does this often, asking celebrities and socialites to endorse their products in exchange for discounts and free merchandise. The catch is marketers face disclosure requirements from the Federal Trade Commission if they incentivize people to to say those nice things online.
“Companies who engage in social media should have a policy that provides endorsers with guidelines about what they can, can’t and must do,” said Gonzalo Mon, partner at the law firm Kelley Drye & Warren. “It’s not just enough to have the policy in place, however. Companies must also monitor to ensure endorsers comply with the policy and take action against those who don’t.”
Here are five instances where companies have been investigated due to lack of policy and monitoring.
The FTC recently investigated a Nordstrom new-store promotion, in which it plied social influencers with gifts as an inducement to write about the grand openings. The problem: Nordstrom didn’t tell the influencers they must disclose the gifts. The FTC let Nordstrom off the hook after the retailer tightened up its social media policies.
Ann Taylor Loft
Ann Taylor also erred on influencer gifting. It promoted its Loft division by sending bloggers gifts. Again, some failed to disclose the incentive in their posts. Like Nordstrom, Ann Taylor got off the hook by revising its social media policy and agreeing to closer monitoring of compliance by bloggers.
Legacy Learning Systems
Legacy Learning Systems, which sells guitar-lesson DVDs using social media, got in hot water for recruiting people to promote its courses through endorsements. In exchange, these people received commissions on referral sales. According to the FTC, the company ran “deceptive ads” by representing that the endorsements reflected the views of ordinary consumers, without clearly disclosing that the affiliates were compensated. Legacy paid a $250,000 fine and agreed to monitor compliance of affiliates.
It’s never a good idea to impersonate others. That landed PR firm Reverb Communications in the FTC’s crosshairs. Reverb employees posted game reviews at the online iTunes store without revealing themselves as PR pros working on behalf of a client. The employees also posted endorsements on social media. Reverb settled, agreeing to remove the endorsements and not repeat the practice. It was not fined.
Cosmetic surgery company Lifestyle Lift got into trouble with the State of New York for faking positive consumer reviews on the Web. When the investigation began, emails were uncovered that ordered employees to pretend they were satisfied customers and write glowing reviews of its face-lift procedure on relevant Web sites. Lifestyle Lift also created its own sites of face-lift reviews to appear as independent sources. The company paid $300,000 in penalties and costs to the state.
Image via Flickr
‘Its inevitable’: Domino’s hungers for attention and context
Attention-based buying is turning into a legendary tale of patient and nonchalance. So when there’s a glimpse of progress, marketers tend to take notice. Domino’s being one of them.
Why Cars.com is driving away from performance marketing and toward influencers
To boost brand awareness, Cars.com is doubling down on its influencer marketing efforts.
Why Unity Technologies is leaning into AI as economic headwinds pick up
As one of the largest gaming companies listed on New York Stock Exchange, Unity Technologies leaned into AI during its May 10 earnings call, with Unity CEO John S. Ricciatello stressing Unity’s “competitive advantages in and around AI.”
SponsoredWhat the measurement and currency discussion really means to TV advertisers
Ali Mack, head of TV and agency, Experian Major streaming video providers have recently made headlines by adopting new currencies for ad measurement, threatening Nielsen’s long-standing TV ratings monopoly. NBCUniversal, for example, has certified iSpot and VideoAmp as currencies for advanced audiences and formed the Joint Industry Committee with Paramount, TelevisaUnivision and Warner Bros. Discovery. […]
Dopamine rush to deeper engagement: short-form video boom fuels brands’ embrace of longer-form content
Audiences craving more are now being treated to captivating longer-form narratives. It’s the addictive nature of those quick hits that has fueled this transformation.
How gamers’ engagement with short-form video is changing
To better understand how modern gamers are engaging with short-form video, Digiday teamed up with Gamesight to pull key points from an exclusive report on gamers’ shifting video consumption preferences.