The Federal Trade Commission slapped retailer Lord & Taylor for flouting marketing guidelines. Remember folks: use promotional hashtags.

The Social Media Campaign That Got Lord & Taylor in Trouble

Product: A paisley dress from Lord & Taylor’s Design Lab collection.

Marketing Tactic #1: Shelled out money — and a free dress — to 50 fashion influencers in exchange for posting a picture of themselves wearing the same paisley dress on the same day.

Marketing Tactic #2: Ran a paid (“native advertising”) article in Nylon magazine.

Problem With Marketing Tactic #1: Most of the participants neglected to include promotional hashtags (i.e., #ad, #sponsored, #paid) with their posts. In the end, the lack of proper disclosures amounted to unfair and deceptive marketing, in the eyes of the FTC.

Problem With Marketing Tactic #2: According to reports, the Nylon article wasn’t sufficiently marked as paid content; nor was it presented as part of the social media blitz.

Punishment: The FTC publicly forbade Lord & Taylor from “misrepresenting that paid commercial advertisements [are] from an independent or objective source.” The consumer agency also announced plans to monitor the brand’s marketing efforts temporarily. Why no fine? Well, this is the first high-profile cases of its type; it’s the warning shot.

Consider Yourself Cautioned: From now on, the commission will likely dole out severe fines for not tagging social media marketing posts.

FTC’s Warning: “The use of influencers right now is huge for brands. We are just emphasizing through this case and other investigations that we’ve had that when companies are paying consumers to help promote their brands, that that needs to be made clear to consumers; that advertising should be identifiable as advertising.”

How Did The Social Media Campaign Work Out For Lord & Taylor?

How did the promotional event work out for Lord & Taylor? The paisley dress flew off digital shelves. Sold out. Which raises the question: Are FTC fines sufficient deterrents? Or, do the potential profit gains outweigh the risks associated with ignoring marketing regulations?

For its part, Lord & Taylor has assumed a conciliatory stance. Company spokeswoman Molly Morse rationalized to USA Today: “A year ago, when it came to our attention that there were potential issues with how the influencers posted about a dress in this campaign, we took immediate action with the social media agencies that were supporting us on it to ensure that clear disclosures were made.”

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Article Sources

Malcolm, H. (2016, March 16). Lord & Taylor settles FTC charges over paid Instagram posts. Retrieved April 18, 2016, from http://www.usatoday.com/story/money/2016/03/15/lord–taylor-settles-ftc-charges-over-paid-instagram-posts/81801972/