Lord & Taylor's recent Instagram push, where it tapped 50 fashion bloggers to promote the same dress, is bringing old regalatory issues back into the spotlight. By many measures, the campaign was a success -- the dress it showcased sold out in a matter of days. But the push may have violated 2013 Federal Trade Commission disclosure rules, causing confusion among fans and highlighting the fact that some brands are still misleading consumers with social media endorsements.
While no company wants to get hit with a $250,000 FTC fine -- one of the largest penalties doled out so far for non-disclosure -- a brand's relationship with consumers is really what's at stake.
"It erodes trust," said Ted Murphy, who advised the FTC in drafting the disclosure rules and is CEO of IZEA, a marketplace that connects brands with influencers. "It erodes trust with the brands and the [influencers] who participate in campaigns that aren't disclosed."
In the case of Lord & Taylor, some influencers marked the posts as sponsored content, while others did not. And consumers noticed. One user, @mommybynurture, took it upon herself to tag the posts as ads in the comments. And on Lord & Taylor's Instagram, a debate brewed over whether or not the company took the right approach.
Lord & Taylor did not return requests for comment.
In the wake of the controversy, here are five key lessons for marketers and agencies to consider when using social media endorsements.
With so much content across varying platforms, there are many ways for brands to disclose their relationships with endorsers. It can be as simple as using the hashtags "#ad" or "#sponsored" in the post, or an overlay could be added to an image or video that indicates who is sponsoring the content. The disclosure must always be in the original post.
Bloggers who are given items for free in exchange for reviewing or promoting products should also disclose that early in their posts, just as a reviewer for a news outlet like The New York Times would.
And in more complex instances, marketers should err on the side of caution. Cole Haan waded into murky waters in 2012 with a Pinterest promotion in which users were encouraged to share five images of their favorite Cole Haan shoes with the hashtag #WanderingSole for a chance to win $1,000. It failed to meet FTC guidelines, because it was unclear to average consumers that the pins were incentivized, according to a letter the FTC sent to Cole Haan.
The push might have worked if the hashtag included the word "contest," and if the pins had language indicating they were part of a contest to win a $1,000 shopping spree.
"There's no silver bullet," said Bradley Shear, a Bethesda, Md.-based attorney who specializes in social media, privacy law and technology. "Transparency really is the key in all this. As long as the brand and the marketing agencies are fully truthful, then the FTC is not going to come back and say this is unfair and deceptive."
When in doubt, disclose, disclose, disclose
As new social platforms crop up, there is bound to be confusion over the best way to disclose relationships with influencers. Online video, for example, can be a challenge because of the way films are shared across platforms. Marketers and bloggers have to disclose their relationship in the films, in the descriptions of the films and in the posts used to promote them.
For the launch of the 2015 Toyota Sienna, agency Golin tapped the YouTube dads behind "Convos With My 2-Year-Old" and "Action Movie Kid" to create digital videos featuring the minivan. To show that Toyota sponsored the content, the brand's logo was overlaid at the bottom of the screen throughout the films and Toyota messaging appeared at the end of the ads.
The bloggers were also open about their relationship with Toyota when they promoted the videos on social media. "Toyota lent us their new 2015 Sienna," said one post by "Convos With My Two-Year-Old," which closed with the hashtag #sponsored.
While some commenters were disappointed that their favorite bloggers "sold out," many enjoyed the ads. "Best sponsored video I've seen in awhile," said one Facebook comment. "You totally deserve a free minivan," said another.
"Transparency doesn't hinder the effectiveness of a campaign, it enhances it," said Jeff Beringer, global practice leader for digital at Golin. "It makes things clear so people can focus on the content."
Get it in writing
The safest marketers and agencies treat social media endorsements like they would any other sponsorship. They have written agreements in place with the influencers they work with that provide specific instructions on how disclosure will take place.
"It's baked into the structure of the relationships," said Mr. Beringer at Golin, adding that top-tier influencers are used to this and take disclosure as seriously as brands do.
A written agreement can go a long way if a brand ever needs to defend itself against an FTC crack down. But it's not enough. Marketers still need to watch the posts to make sure that they match the agreed upon language.
"You can't just wash your hands of it," said Mr. Shear, the attorney. "Even if you have an agreement in place, you have to make sure the agreement is being followed."
Fix your mistakes
It can be easy to slip up on disclosures, especially when managing large campaigns with numerous influencers. But getting out ahead of the problem and clarifying relationships with influencers can help brands earn back trust from consumers, who tend to be more forgiving when brands own up to their mistakes, and offer protection against FTC enforcement.
"It's always helpful when you try to correct a mistake," said Mr. Shear. "It's very difficult to bring the hammer down on a brand and say that it was intentionally deceptive, if it found out there's a problem and then tried to correct it."
Curb your expectations
Earlier this month, Pharrell Williams sported the Apple Watch on Instagram along with one word: "Woah." For our purposes, let's consider "woah" an endorsement and presume the watch, which is not yet available for purchase, was given to the hip-hop producer for free. Apple might still be in the clear for not disclosing its relationship with Mr. Williams, if the technology giant didn't expect the star to endorse or review the product and he acted independently.
"If someone is given something for free and there's no quid pro quo and no expectation there, then people have a First Amendment right to talk about things," said Mr. Shear. "Again, it comes back to being fully transparent."