FTC Rulings Suggest Changes to Social Media Marketing World

FTC Rulings Suggest Changes to Social Media Marketing World

The Federal Trade Commission recently chimed into the social media marketing conversation, and businesses now need to watch their step.

Slowly but surely, all good things come to an end. In this case, the good thing that is coming to an end is the free-for-all that many businesses have enjoyed when it comes to social media marketing. This is not the first time the government – or a regulatory body, for that matter – has stepped into the mix. But what many saw as a quick, easy way to build brand equity is slowly becoming a structured, bureaucratic process – much like traditional avenues of marketing.

I’m not saying that we are facing any sort of an ‘end of social media marketing’ as so many people – for reasons beyond my understanding – seem to enjoy suggesting. Not at all. I am simply saying that the world of social media marketing is slowly becoming subject to more stringent regulation standards.

Regulations becoming more clear to social media marketing world.

Image credit: Shutterstock. Used under license.

So what happened?

Let me start off by making it clear that this relates to a ruling that affects the way brands conduct themselves on Pinterest. This is not universal, though it alludes to the almost inevitability of these kinds of changes taking effect.

Recently, Cole Haan launched their #WanderingSole campaign on Pinterest. Users were asked to pin Cole Haan images to their own, Cole Haan-branded boards and tag the brand in an effort to win $1,000. Sounds a lot like plenty of other campaigns we have seen sprout up on Pinterest. The difference here is that the FTC cited a violation of Section 5 of the Federal Trade Commission Act. What in the world is that, you might be asking yourself? Well, it states that the FTC has “the authority to take appropriate action when unfair or deceptive acts or practices are discovered.”

Now this definition is pretty broad, if you ask me. But in their ruling, the FTC made it quite clear what the issue was:

We believe that participants’ pins featuring Cole Haan products were endorsements of the Cole Haan products, and the fact that the pins were incentivized by the opportunity to win a $1000 shopping spree would not reasonably be expected by consumers who saw the pins. Moreover, we were concerned that Cole Haan did not instruct contestants to label their pins and Pinterest boards to make it clear that they had pinned Cole Haan products as part of a contest.

Based on the definition of the Section, it seems quite clear that their concern was that this campaign fell under the ‘deceptive’ category.

What’s the big deal?

In this case, The FTC seems to think that Cole Haan was incentivizing people to become brand advocates (or provide product endorsements) that were not created organically (and not specified to viewers of the participants’ pins).

Imagine you are walking through the aisles of the grocery store, minding your own business, when someone comes up to you and suggests you buy a particular brand of cereal. They tell you how great the taste is, how it is healthier than alternatives and much less expensive than other, comparable products. You’re convinced, buy the cereal then see the individual that talked you into buying it collecting a reward from the manufacturer behind the store. You would probably feel a little cheated. Maybe this person has never even tried the cereal! What have you done!

This dramatic reaction is exactly what the FTC is trying to avoid. When brand advocates sprout up on social media, they should be generated naturally. Brand advocates should not be bought. This relates to the idea of earned media. Cole Haan, in this case, was buying perceived earned media, which is, in many marketers’ opinions the most valuable type of media. (Media wherein brand advocates promote your brand without any incentive – simply a love of your product/service.)

What does this mean moving forward?

One of the amazing features of the world of social media marketing is that it is a market that has slowly begun to self-regulate. Basic laws of microeconomics have come into play and we can see them manifesting themselves and creating stability and common practice among market participants.

That said, there are still some elements that are not regulated. That is not the fault of a brand like Cole Haan. They were simply doing what they thought made sense for their brand to launch a successful campaign. The reason why regulatory bodies like the FTC exist – for better or for worse – is to prevent issues like this from becoming common practice. Earned media is a valuable asset, and if brands were to find a way to purchase it (without disclosing that it had become a paid-earned hybrid medium) it would lose a considerable amount of value (much in the way paid and even owned media have lost a lot of weight since the advent of social networks).

Brands simply need to ensure that they are not trying to find loopholes or backdoors when running campaigns. If a campaign works and goes viral, then you’ve done a great job. If it falls flat, then you’ve learned something. (Then again, you might need to start job hunting. But we’ll go with the glass-half-full perspective here.)

If you would like more (very, very exciting) information on Section 5 of the FTCA, click here. To read the full ruling by the FTC, take a look at the SlideShare below:

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Corey Padveen is a data-oriented marketing professional with a focus on statistical analyses of human behavior. This specialization has led him to speak and present at dozens of conferences around the world, to write for a variety of reputable online and print publications, and recently, to publish ‘Marketing to Millennials For Dummies’ as part of the world-renowned ‘For Dummies’ series. He regularly shares real world examples and findings from his research, and discusses how members of society are evolving as consumers, communicators, and a global network as a whole.

One thought on “FTC Rulings Suggest Changes to Social Media Marketing World

  1. One could argue about what the difference is between brands “buying” endorsements with campaigns like these and buying ads on facebook to get more page likes. Both will be activities where you pay to get endorsed (liking a page on facebook must be considered as endorsing that brand given that it shows up in your newsfeed).

    So in the eyes of the FTC, isn’t buying facebook page likes problematic as well then?

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