FTC Cracks Down on Shady Social Media Practices

Remember how mad your parents got when you broke their house rules?

Well, the Federal Trade Commission (FTC) wants online marketers to know if their businesses fail to follow its new guidelines, the agency is prepared to ground those businesses for a lot longer than a Saturday night.

Starting with new guidelines issued earlier this summer, the FTC is striving to give businesses crystal clarity about what truth in advertising means and how to achieve it in crafting, delivering, and following up messages to consumers.

The FTC has long published an online endorsement guide for advertisers which focuses on helping marketers understand their responsibility for shaping consumer perceptions and assumptions.

The guide offers simple examples, answers FAQs and shows how the pitfalls companies can inadvertently encounter by creating misleading marketing campaigns.

Now the FTC is bringing that same level of scrutiny to online advertising. It has issued updates to the guide which spell out best practices for marketing on digital and social media platforms.

The agency’s new guidelines address four previously under-regulated aspects of digital advertising and sales through social media. The guidelines: 

Spell out the standards of transparency that bloggers, endorsers and paid influencers must meet in disclosing the existence of any underlying financial or reciprocity relationships with marketers.

Address the growing impact of online content on consumer purchasing decisions. According to Forrester in its “U.S. Cross-Channel Retail Sales Forecast: 2014 to 2018” report, the Internet will account for or influence 59% of U.S. retail sales by 2018, up from 52% this year. 

That means that as product reviews, blog commentary and peer-to-peer social media posts increasingly influence purchases, the FTC wants to ensure that the online and social media content that consumers use in their decision making is accurate and trustworthy.

Protect consumers from being overly trusting of targeted sales offers.  As social media allows advertising and content to reach out to niche markets as never before, the FTC is determined to educate consumers about the misperceptions and manipulations that can arise as a result.

Scrutinize the practice of purchasing followers. When businesses try to create instant followers on their social media profiles by purchasing Facebook page fans and Twitter followers, the FTC contends that the intent is to make an account appear more influential than it actually is.

Ironically, consumers say that building a community of “false followers” may actually backfire. According to Marketing Profs, 54% of consumers report that “smaller communities command greater influence than larger ones.” 

The FTC has its work cut out for it in determining when advertising messages on social media cross the line from engagement to shading the truth.  For example, it’s difficult to tell from a photograph and comment whether someone behind the scenes received a free pair of shoes in exchange for a post endorsing the shoe brand. 

Cole Haan is a case in point. Last year Adweek reported that the FTC reviewed a Cole Haan social media campaign in which contestants shared photos of themselves wearing Cole Haan shoes to Pinterest with the #Wandering Sole hashtag.

The FTC reprimanded Cole Haan, contending that the contest blurred the area between endorsing products and casually sharing interest.

New media marketing tactics underscore the challenge for the FTC in policing not only the letter but the spirit of the law. Prior to now, the agency has handled incidents of misconduct, through warnings and attempts to educate rather than enforcement. That approach may be about to change.

So how can a business make sure it adheres to current and future FTC online marketing guidelines?  Here are six preemptive measures:

1. Designate someone in the organization to stay current on existing and new FTC guidelines.
2. Voluntarily improve online disclosure of paid or in kind product endorsement arrangements. 
3. Pay very close attention to the wording used in any contests, endorsements and reviews.
4. Provide consumers with information that will allow them to assess the credibility of product promoter(s) and their associated message(s) for themselves.
5. Set reasonable expectations in digital messages for how products or services will realistically perform offline.
6. Use analytics to track metrics like number of followers, campaign response rates, A/B tests, share rates, etc. to maintain a quantitative “paper trail” as evidence that neither consumers nor ROI has been manipulated.

The Best Practice Is to Follow Best Practices 

In the final analysis, the best way to keep the FTC from knocking on a company’s digital door is to follow the agency’s best practices guidelines with integrity and transparency.

Just as the quickest way to alarm one’s parents back in the day was not to answer one’s phone, the quickest way to attract the FTC’s new enforcement scrutiny is to manipulate the very consumers who have come to trust a business.

Title image by Malik Earnst.