Last year, fashion retailer Lord & Taylor ran an aggressive and very effective Instagram influencer campaign to sell a new fashion line. It paid 50 fashion bloggers to post pictures of themselves on Instagram wearing the identical dress. It was part of a larger campaign to introduce the retailer’s Design Lab collection.
The social campaign was a big success, and the dress sold out. Among other placements, there was also a sponsored post in fashion magazine Nylon. Yet none of the paid placements were initially disclosed as such. Subsequently, some disclosures were added; however, the initial failure to comply with FTC guidelines caught up with the company.
The complaint filed by the FTC (see below) alleged that the social campaign was misleading because it suggested the content tied to the dress reflected “the independent statements of impartial fashion influencers,” when they were in fact part of a paid ad campaign with contractual provisions.
The settlement agreement between Lord & Taylor and the FTC prohibits the company from doing something similar in the future (and sends a message to others):
The proposed consent order settling the FTC’s complaint prohibits Lord & Taylor from misrepresenting that paid commercial advertising is from an independent or objective source. It also prohibits the company from misrepresenting that any endorser is an independent or ordinary consumer, and requires the company to disclose any unexpected material connection between itself and any influencer or endorser. Finally, it establishes a monitoring and review program for the company’s endorsement campaigns.
Late last year, the FTC issued guidelines for publishers and marketers to prevent consumer deception in native ads and paid placements. It published a guide, Native Advertising: A Guide for Business, to point out what will and won’t be considered “deceptive.”
The IAB has expressed concern that the FTC is getting into the business of designing advertising. However, it’s likely that the FTC will continue to strongly police native ads and sponsored content, especially as they grow in popularity in the wake of ad blocking.
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