“Native Advertising” 2: The FTC Tries to Square the Circle

There used to be something called Public Relations, whose goal was the same as that of today’s native advertising -- to have a product or company mentioned favorably in a publication’s (now website’s) editorial matter, taking on the authenticity and presumed impartiality of the publication or site sponsor itself.

The difference between that and native advertising -- and it’s a crucial one -- is that PR wasn’t bought. Editorial mention was achieved on the basis of newsworthiness. The  “news” might be contrived, but an editor had discretion to distinguish whether the information would be useful to his or her readers and to publish or reject it accordingly. That doesn’t work when the publication has taken money for it.

Mind-bogglingly(!), the FTC has promulgated rules to try to ensure that this inherently deceptive practice won’t deceive people. And predictably (see last week’s post)  marketers try to evade them, which brings us to the prestigious clothing retailer,  Lord &Taylor.

The FTC caught Lord &Taylor red-handed, and its report lays out a campaign the company organized to sell a new model dress. Among other things, 50 on-line fashion “influencers” were paid (between $1000 and $4000 each) to love the product publicly (if you haven’t had an opinion one way or the other about “influencers” you might form one now) on websites this writer never heard of but that obviously are important to young women who buy dresses. 

The good news is that the FTC acted, and Lord &Taylor is forbidden to do it again. That’s also the bad news, because although the FTC acted, that’s the extent of its punishment of Lord &Taylor.

The dresses “quickly sold out,” for some unreported but no doubt considerable amount of money (enough, apparently, to justify the expenditure of between $53,000 and $200,000 to the “influencers”). The FTC either doesn’t know the amount or won’t release it publicly. But the company is not being fined. It gets to keep the money it acquired deceptively. A letter (not mine) during the public comment phase suggested the company should be made to disgorge the profits it had made deceptively. The FTC declined to do that:

The Commission has determined that the conduct relief obtained 
by the order is appropriate, and will serve to deter future violations 
of the FTC Act by Lord &Taylor.   If Lord &Taylor violates the Commission’s final order, it will be liable for civil penalties of up to $16,000 for each separate violation, pursuant to Section 5(l) of 
the FTC Act, 15 U.S.C. § 45(l).

Naughty Lord &Taylor has been told not to do it again. The penalty, or "conduct relief," is some monitoring, record-keeping, and reporting tasks that will ensure the company obeys the rules in future that it ignored profitably last time.

The way I read the message to everybody else, it’s “Do it once and do it big.” You won’t get to do it twice (or not the same way, anyway) but you do get to keep the profits. You can apologize later.

Caveat lector.