Facebook is looking to grow its ad revenue, now projected to reach $7 billion in 2013, according to eMarketer, but its advertising ecosystem is still the frontier from a regulatory perspective. Now a new decision by the Better Business Bureau's National Advertising Division should offer guidelines for advertisers to follow when looking to drive up "Likes" on their fan pages.
The NAD, a self-regulatory forum for the advertising industry, has found that marketers need to be careful what they promise in exchange for a "Like" on Facebook and that they're not using "misleading or artificial means to inflate the number of Facebook 'likes.'"
The specific decision at hand involved a case brought against the eyewear purveyor, Coastal Contacts, by a competitor, 1-800 CONTACTS. Submitted in mid-June, the complaint contended that Coastal Contacts had deceptively offered free and discounted products to Facebook users who "liked" the company's fan page, and that the number of "Likes" presented to investors through press releases had been fraudulently obtained.
With respect to the claim about deceptive postings, the NAD evaluated status updates on Coastal Contacts' fan page, including language such as "Like This Page! So you too can get your free pair of glasses!" In its decision, it determined that Coastal Contacts should add clarifications to those postings to inform consumers that they're responsible for shipping and handling charges, and that not all models of glasses are available for free. It also instructed the retailer to remove language about consumers having the ability to save 70% on contact lenses, on the grounds that the figure was based on a selective analysis of the marketplace.
In terms of the more serious part of the complaint, alleging that Coastal Contacts had inflated its Facebook "Likes" and misrepresented itself to consumers and investors, the NAD decided in favor of the advertiser, determining that the overall thrust of the campaign was truthful even though some details were misleading.
According to the NAD Senior VP Andrea Levine, the decision is significant in the message it sends to advertisers and the spotlight that it puts on this type of campaign, often referred to as "Like-gating."
"We used the opportunity in the decision to caution that companies that are utilizing deceptive practices to get 'Likes' would have to go back and remove those 'Likes' from the website," she said.
The NAD cannot itself enforce decisions, but it can refer matters to the Federal Trade Commission if an advertiser doesn't comply with one of its decisions; Ms. Levine noted the NAD has a 96% compliance rate. Since "Like-gating" is an increasingly popular strategy among advertisers looking to entice consumers with freebies and other promotions, she thinks the NAD's decision is significant.
"In the last week I've started to see ads on national television saying, 'Like us and you can get that ," Ms. Levine said. "So the concept of corporate "Likes" being broadly procured through offers of discounts and sweepstakes is becoming very, very common and very broad, but they need to be produced through truthful promotions."
Facebook does have a team in place that investigates some complaints about violations of its terms -- which includes both an automated component and human review. It stipulates that contests, promotions and sweepstakes should be run through third-party apps so that users are aware of the precise nature of the information they're providing to brands.