It was a powerful illustration of the effectiveness of influencer marketing, but did it cross the line into undue influence?
Last weekend, 50 popular fashion bloggers each posted on Instagram pictures of themselves wearing an identical paisley print dress from retailer Lord & Taylor. The campaign, meant to introduce the company’s new Design Lab collection, was a huge hit, with many of the posts picking up more than 1,000 likes from fashion fans. A few of the posts got more than 5,000 likes and this one soared past 13,000:
So excited to be dressing for spring in this dress from @lordandtaylor’s new #DesignLab collection!!
A photo posted by Cara Van Brocklin (@caraloren) on Mar 27, 2015 at 10:27am PDT
And the ROI wasn’t merely measured in engagement; the dress quickly sold out. Lord & Taylor was understandably thrilled.
“The program was designed to introduce Design Lab to this customer where she is engaging and consuming content every day,” Lord & Taylor CMO Michael Crotty told Adweek. “The goal was to make her stop in her feed and ask why all her favorite bloggers are wearing this dress and what is Design Lab? Using Instagram as that vehicle is a logical choice, especially when it comes to fashion.”
Disclosures Must Be “Clear And Conspicuous”
However, the bloggers left out an important piece of information in their Instagram posts: a disclosure that they had been paid to post by Lord & Taylor.
That’s a clear violation of U.S. Federal Trade Commission guidelines for digital advertising, says Ted Murphy, founder and CEO of IZEA, a company that acts as middleman between brands and social media influencers. The FTC rules state that when people are paid to post they must disclose that fact in a “clear and conspicuous” way.
“There’s really no excuse for not disclosing that there’s a material relationship there,” Murphy told Marketing Land. “These FTC guidelines have been out there since 2009.”
We asked Lord & Taylor for comment via a LinkedIn message on Wednesday and email on Thursday, but hadn’t received a reply before publication.
[Update, April 7, 2105: Some of the Instagram posts have been edited to include disclosures, as you can see in the example above, which now includes #ad in the caption. We checked a handful of others and there is now disclosure language on this, this, this and this post. We found two that don’t disclose the sponsorship.
Also this morning, we received an emailed statement from a Lord & Taylor spokesperson: “We are proud of this campaign and our partnerships but want to reiterate that our influencers were compensated by Lord & Taylor, as is customary in these types of programs. We are always looking for ways to improve our process and communications with our customers. We look forward to continuing to build great marketing campaigns.”]
The FTC guidelines were updated in 2013 and are laid out in a PDF document here. Acceptable disclosures include language like “#ad,” “sponsored” “brought to you by,” “I’ve partnered with,” Murphy said. “All of those things would qualify but there was clearly no effort either by the brand or the creators to do that. It’s really difficult being in this space today to claim that you didn’t understand that that’s how things were supposed to be done.”
Murphy is passionate about this issue because his company is an influence marketing pioneer. Founded in 2006, IZEA is now working to link more than 250,000 popular creators with brands such as Walmart, Allstate, AT&T and Samsung. Murphy knows the rules well, having helped FTC draft them.
When they are flouted, he said, the whole industry suffers. People get the impression that all such campaigns “are tying to trick consumers.” He noted that there were a number of comments on the dress posts by people wondering if there was a pay-for-post arrangement.
Murphy said disclosures don’t make campaigns any less successful — “We’ve seen just as high level of engagement on sponsored content that is clearly disclosed” — and doing the right thing is smart marketing even if you put aside the issue of the guidelines.
“I actually think in the long run it is the only way to do this and be successful, because once people feel like they’ve been tricked or deceived, they lose trust in the brand and they perceive it negatively,” Murphy said. “And the same happens to the creator. Once people figure out that the person who they thought was just taking a picture in a dress that they liked was actually being paid to do that and was not disclosing that to them, that authenticity and credibility that person had with you is eroded. So, long term, the creator winds up losing their relationship with the audience and the consumer perceives the brand negatively.”
FTC Has Yet To Crack Down
Murphy said the rules are ignored by “hundreds of agencies” and that IZEA loses clients because it refuses to bend its standards. One of the reasons so many skirt the guidelines is that the FTC has yet to take strong enforcement action.
“I was confronted by a lawyer at one point who said, ‘Point to one case for me where the FTC has actually gone after someone and it has resulted in a fine,’ ” Murphy said. “And I haven’t been able to do that. The challenge for this space is that the FTC hasn’t really proven a point with anyone.”
But that could change. In December, the agency settled with Deutsch LA after finding the ad agency hadn’t properly disclosed its client relationship with Sony during a 2012 Twitter campaign. It was the first time the agency went after a company for lack of disclosure on Twitter, but “it’s unlikely to be our last,” said Mary Engle, director of the FTC’s Division of Advertising Practices, in the Wall Street Journal.
“As marketers rely more and more on social media to promote their products,” Engle said, “ad agencies, public relations firms, and marketers alike must be clear about reviewers’ financial connections to the touted product.”
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