Federal Trade Commission Addresses Native Advertising In Lord & Taylor Campaign

Federal Trade Commission Addresses Native Advertising In Lord & Taylor Campaign

March 16, 2016
by Jerry Glover

The Federal Trade Commission has settled charges against Lord & Taylor in connection with a fashion campaign it spearheaded that included the used of native advertising and paid endorsers. This is the FTC’s first look at a specific case involving native advertising since it issued a policy statement addressing that type of advertising.

Native advertising, usually appearing in print and on-line, looks like a news article prepared by the publication in which it appears. It is, in fact, written and paid for by a corporate entity which has a financial interest in the subject matter of the article. That interest is not disclosed to readers. The FTC considers native advertising to be deceptive if its “sponsor” is not disclosed.

In the Lord & Taylor case, the department store chain created a campaign involving print and social media to promote its Design Lab Asymmetrical Dress (see below).

The promotion campaign involved Lord & Taylor-branded blog posts, photos, video uploads, native advertising editorials in online fashion magazines and use of a team of “fashion influencers” recruited for their fashion style and extensive base of followers on social media platforms.

LTDressLord & Taylor gave the dress to 50 of these influencers each of whom were also paid in amounts ranging from $1,000 to $4,000 to post on Instagram one photo of themselves wearing the dress during the weekend of March 27-28, 2015. The store chain required the influencers to mention the company using “@lordandtaylor” as the Instagram user designation and the campaign hashtag “#DesignLab” in the photo caption. The agreements with the influencers did not require them to disclose that they had been compensated by Lord & Taylor or that they had received a free dress. Lord & Taylor reviewed each of the influencer posts before they were sent to Instagram.

According to the FTC, this Instagram campaign reached 11.4 million individual Instagram users, resulted in 328,000 brand engagements with the company’s own Instagram user handle and the dress sold out.

The FTC argued that these Instagram posts violated its endorsement guidelines which require disclosure by the endorser of any financial or other connection to the company whose products are being mentioned by the endorser. Sometimes #ad at the beginning of the post may be all that is required to insure that readers/viewers of the post understand that the endorser has been “influenced” by a corporate entity.

Another part of the dress campaign involved Lord & Taylor placing a Lord & Taylor-edited article in online fashion magazines including the magazine Nylon. Nylon also posted a photo of the dress along with a Lord & Taylor-written caption on its Instagram account but failed to disclose that the department chain had paid for all of these placements.

By failing to disclose the store connection, Nylon gave its readers the impression that the article and other dress-related postings were Nylon’s own independent statements/views about the dress thereby creating a false and misleading impression.

By now it would seem an elementary rule of marketing and advertising that a company must disclose and require its endorsers to disclose fee arrangements and other payments made in exchange for social media posts. So it is surprising that a sophisticated company like Lord & Taylor would seemingly ignore these basic precepts. Although this may have been the first time the FTC has had an opportunity to address a native advertising situation, it would still seem elementary that marketers must require publications to reveal that the marketer has written and edited what otherwise looks and feels like a regular, objective news article.

What did Lord & Taylor not understand about the phrase “false and misleading”?

 

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