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More than five years ago, when the Federal Trade Commission issued new endorsement disclosure rules for social media marketing, Ann Taylor Loft was one of the first companies to get dinged for giving social influencers incentives to write about its brand. Fast-forward to today, and Kim Kardashian's missteps endorsing a morning-sickness drug show marketers still haven't gotten it right.
Ms. Kardashian, who had been paid to promote the anti-nausea drug Diclegis, may have broken FTC rules when she endorsed the product in social media with only the vague disclosure that she was "so excited and happy" about the drug's results for her that she was "partnering" with its maker "to raise awareness about treating morning sickness."
And the star violated strict FDA pharmaceutical marketing regulations, which require marketers to prominently disclose prescription drugs' safety risks when and where they promote the drugs' benefits.
But it's the marketer of Diclegis, pharmaceutical company Duchesnay, that will feel the ill effects, just as it hoped to reap the benefits of associating itself with Ms. Kardashian in the first place. It received a warning letter from the FDA dated Aug. 7, calling out Ms. Kardashian's Instagram post about Diclegis, which it said "misleadingly fails to provide material information about the consequences that may result from the use of the drug and suggests that it is safer than has been demonstrated."
"If you are hiring celebrities, be sure you have proper controls in place," said Linda Goldstein, partner at Manatt, Phelps & Phillips, where she is chair of the advertising, marketing and media division. Most brands already know the guidelines, but the incident reinforces the point: The halo and reach that comes with celebrity can also draw the attention of regulators.
It's unclear how the FDA will proceed if it doesn't like Duchesnay's response, which it asked to receive by Aug. 21.
It's also unclear what course the FTC will take. A spokesman for the agency declined to comment for this article, citing a policy against commenting on cases or potential cases before they're public. But Ms. Kardashian's celebrity, social-media power and frequent endorsements might make it tempting to use her as an example, Ms. Goldstein said.
A spokeswoman for Duchesday confirmed that the company paid Ms. Kardashian to promote Diclegis on Facebook, Twitter and Instagram. That's despite Ms. Kardashian's assertion just in June that her Instagram feed is "off limits" to brands.
"Duchesnay USA takes our regulatory responsibilities very seriously, and acknowledges that our communications, including in social media, need to be in accordance with all applicable rules and regulations," she said by email. "We are taking quick action in responding to the Food & Drug Administration's (FDA) Warning Letter and immediately and effectively address any issues. We appreciate and fully support the FDA's objective of ensuring that promotions remain consistent with approved labeling. Duchesnay USA stands by its product. The FDA's Warning Letter does not question the safety or efficacy of our product. The issues raised relate to omission of risk information, limitations of use, and important safety information. Again, we are taking corrective action to quickly address these issues."
Despite that, and adages about all publicity being good, the affair is beginning to look like a net negative for Duchesnay.
Ms. Kardahsian's endorsement and ensuing press may have put Diclegis on the radar of more people than another campaign that actually followed the rules. But it will come at some price to the marketer's reputation -- which isn't ideal for a drugmaker, said Shift Communications CEO Todd Defren.
"At the end of the day, any paid promotion in the pharma sector must adhere to the strict FDA guidelines," Mr. Defren said. "From a brand perspective, with a high-profile endorsement like this one, the company's awareness will increase in the short run -- but brand trust will likely erode in the long run. When you're a pharmaceutical company, dealing with life and death issues, safeguarding that trust must always be paramount."
A light touch in disclosing payment is dangerous, too. "Some brands -- and even some influencers -- want to make the partnerships seem as natural as possible, so it's very tempting to be elusive of, or even forgo disclosure altogether," said Rebecca McCuiston, senior VP of influencer marketing at digital agency 360i. "But in most cases it's not worth the risk, as public violations like this show that the industry and consumers are watching."
That's likely more true the more famous your endorser is.
Social-media marketing hiccups and outright violations are rising along with new platforms such as Snapchat, where disappearing content makes enforcement tough, Ms. McCuiston said. Add the proliferation of social influencers looking for income and you can expect more endorsement controversies.
In the case of Ms. Kardashian and Diclegis, it was good to see action taken, Ms. McCuiston said. "It's harder for advertisers who follow guidelines to appear authentic when celebrities and other influencers don't follow the rules of disclosure," she said. "Since this case included the highly-regulated pharma industry, it was especially important for the point to be made that regulators won't let this slip by."
There can be a "gray area across advertising, PR and influencer marketing when it comes to the interpretation of FTC guidelines," she said. But if the rules aren't clear, markerters should use extra caution, she said.
Big pharma usually takes that advice. "The FDA drafted guidelines for online promotion of prescription drugs over a year ago, and they're still not finalized," said Kavin Shah, an MD who is VP and group medical director at Publicis Groupe's DigitasLBi. "It's because there's so much ambiguity in the space, and big pharma is saying it's not worth our time."
But it's not impossible to use social media, and some pharmaceutical marketers have embraced it. Unbranded campaigns focused on disease categories or ailments have fewer restrictions than branded campaigns for specific drugs. Despite the heavily regulated market and an aversion to social platforms prone to regulatory violation, this year's top pharma prize at the Cannes International Festival of Creativity's health awards went to DigitasLBi for "Take it From a Fish" -- a disease education campaign for pharma giant AstraZeneca that relied on digital media.
"We couldn't say anything about heart risk," said Dr. Shah. "So how do we educate the public and target an audience without stepping over the line to say this condition will lead to heart attacks? We started with an unbranded [campaign], just talking about a disease state and why it's so harmful."
The shop's "Take it From a Fish" campaign introduced two talking dead fish who comically attempt to educate unhealthy men on the nutritional value of triglycerides, starring in YouTube videos and offering interactive elements such as a "fish slap" that could be emailed to unhealthy friends.