Influencer marketing has quickly become a new marketing category. It is a type of marketing that focuses on the use of key industry leaders to drive your brand’s message to a specific audience who follows and favours the influencer. A bit like a tribal leader. Influencers are typically paid very well for what is asked of them: such as posing in one of our shirts, or taking a picture with a thumbs next to one of our products.
While they get paid well, they also produce a more than sufficient ROI for the business they market for, making the deal a win win for all parties. In this article we’re going to look at an example from a recent Lord & Taylor marketing campaign. As a result of this campaign Lord & Taylor was able to sell out of the product it was promoting, although they did not comply with FTC laws (yikes).
E-commerce transactions continue to dominate the retail marketplace. It is becoming more important than ever for sellers to find new and innovative ways to promote their brand and products. Social media marketing and advertising is a great outlet for Amazon sellers (especially those selling their own private label brand) to reach targeted buyers for new products. It also sparks discussion about existing products. However, the United States Federal Trade Commission (“FTC”) has special rules in place for this type of “Influencer Marketing.” Sellers should take advantage of the great reach of Influencer marketing, but they must comply with the law as well.
In March of 2016, Lord & Taylor launched a clothing line called “Design Lab,” targeting women aged 18–35. The ad campaign included editorials featured in online fashion magazines and aimed to use fashion “influencers” with a large following. Lord & Taylor also started the “Product Bomb” campaign, which focuses on a single Design Lab dress – “The Paisley Asymmetrical Dress.” Here is how it was structured:
Fashion Influencers on Instagram:
- Lord & Taylor gives free Paisley Asymmetrical dress to 50 fashion influencers (Instagram users with fashion based accounts and high volume of followers);
- Each Influencer receives up to $4,000 to post on Instagram over a particular weekend;
- Influencers must use the #DesignLab hashtag and @lordandtaylor Instagram user handle;
- Lord & Taylor must pre‐approve the posts.
- The campaign reached 11.4M users, and generated 328,000 brand engagements.
- The dress sold out.
- Lord & Taylor did not disclose free dress, payment, or that the posts were part of ad campaign.
Nylon Magazine Article About Design Lab collection;
- Magazine Articles that appear to be Facebook posts;
- Lord & Taylor pays for and preapproves the “article.”
- Lord & Taylor does not disclose payment, or that the post was a part of their ad campaign.
Nylon Magazine Published an Instagram Post in its Magazine
- “Our editor‐in‐chief  transitioned her everyday outfit into the perfect springtime ensemble with this patterned dress by @lordandtayor’s new #DesignLab collection.”
- Again, Lord & Taylor does not disclose payment, or that the post was a part of their ad campaign.
What is the Law?
The FTC issued Native (Influencer) Advertising Guidelines in December of 2015. According to the FTC standards any claim in an advertisement must be truthful, not misleading, and substantiated. In other words, your business or Amazon Seller account must disclose any material connections between you and your influencers. Deception occurs when ads “mislead reasonable consumers as to the true nature or source of the product; and when the representations / omissions are material”. The FTC then defines a representation or omission as material if:
- They are likely to affect consumer choices or conduct regarding the advertised product; or
- If consumers give greater credence to the advertiser’s claims or interact with ads they would not otherwise interact with.
Essentially the FTC is concerned about transparency, or making sure that consumers realize they are viewing an advertisement and not a “purely” honest testimonial. Translation? The influencer is biased to the experience with the product because they have been financially incentivised to endorse it.
The Result for Lord & Taylor
Lord & Taylor’s failure to disclose that they were advertising was a clear violation of the FTC rules. As a result, the FTC filed an Enforcement action against Lord & Taylor in 2016. The FTC ruled that Lord & Taylor may not falsely claim that an endorser is an independent consumer. They also required Lord & Taylor to fully disclose their connection to the endorser and to establish a monitoring and review program of its endorsers.
Lessons & Tips for best practice when using Influencer Marketing
Influencer Marketing is great and can change your business over night. But you must be aware of and comply with the law. For Amazon Sellers, incentivized reviews are no longer an available tool because Amazon now operates the exclusive Amazon Vine program where the company invites trusted reviewers to post opinions about new and pre-release items. All other forms of incentivized reviews are banned. This is where Influencer Marketing is a great tool that Amazon Sellers should consider using to replace incentivized reviews. The following tips will help make sure that your Influencer Marketing campaign runs smoothly:
- Ensure transparency: The ad should not suggest or imply to consumers that it is anything other than an ad;
- Consider the impression the ad creates: both in form and content.
- Disclosures should be clear and prominent: as close as possible to the influencer ad, in a font and color that’s easy to read and in a shade that stands out from the background.
- For social media, #ad provides disclosure with few characters.
- Develop and implement a social media compliance policy: train employees, influencers and media agencies.