There has recently been a flurry of activity from the Federal Trade Commission (FTC), the government agency tasked with protecting consumers from unfair and deceptive business practices. From the release of updated guidelines to rulings against brands and advertisers, the FTC has shined a spotlight on the importance of marketing compliance.
The FTC: The Frenemy You Never Knew You Wanted
Marketers have a sort of love/hate relationship with the FTC. Think of the FTC as your frenemy. On the one hand, it can be extremely tedious (and at times, can seem downright impossible) to keep up with the ever-changing guidelines that the FTC puts into place to protect consumers from unfair and dishonest marketing. On the other hand, like the best friend who offers you sound advice that you don’t want to hear, you know that, ultimately, the FTC is looking out not only for the consumer but your best interests as well.
Let’s break down some of the latest FTC rulings and guidelines to give you a general understanding of what the FTC expects from marketers, and how to translate these lessons into some marketing compliance ground rules.
The Danger of Native Advertising
As the world of marketing evolves, so do the guidelines set out by the FTC. It shouldn’t be surprising that with the recent trend toward native advertising (digital content that bears a resemblance to news, feature articles, product reviews, etc.), the FTC has stepped in with some business guidelines regarding the practice. Should your company participate in this form of advertising, there’s much to learn.
The official FTC document, “Enforcement Policy Statement on Deceptively Formatted Advertisements,” is wordy and lengthy (16 pages, in fact), and can frankly be a bit overwhelming on first glance. However, when it comes down to it, these guidelines are basically re-stating what the FTC has been telling marketers for years, which is to be transparent in your advertising. As a recent article on Re/code points out, the general idea of this 16-page document can be summed up in the following statement:
“Regardless of the medium in which an advertising or promotional message is disseminated, deception occurs when consumers acting reasonably under the circumstances are misled about its nature or source, and such misleading impression is likely to affect their decisions or conduct regarding the advertised product or the advertising.”
One company that learned this lesson the hard way is Dylon, a European business that makes color dye for clothing. The company was recently reprimanded by the British advertising regulator for its failure to adequately identify an advertisement published in the form of a “listicle.” The piece, entitled “14 Laundry Fails We’ve All Experienced,” ran on BuzzFeed UK and included a link to Dylon’s live Facebook feed. After British regulators had found that the article was not readily identifiable as an advertisement, the company was forced to remove the content.
The Importance of Playing Fair
Along with transparency and truth in advertising, the FTC has always focused on creating a fair playing field for all parties. Chobani Yogurt recently made the mistake of challenging this concept in a series of advertisements that took aim at the ingredients used in their competitors’ products.
The ad campaign, which featured TV, print, and online material, shows a woman throwing out a container of Yoplait yogurt after being told that it contained “Potassium sorbate…that stuff is used to kill bugs.” The campaign also led consumers to believe that Dannon Light & Fit contains a formulation of chlorine that “might be used in swimming pools as a disinfectant.”
Both Yoplait and Dannon sued Chobani Yogurt, and the court found in their favor. The acting judge ruled that Chobani was making improper comparisons that were misleading to consumers, and the advertisements were forced to be pulled.
6 Marketing Lessons from Recent FTC Rulings
Although the cases involving Dylon and Chobani are very different in nature, some clear marketing lessons can be learned from both. As long as you adhere to these basic marketing guidelines, you should find yourself in the good graces of both the FTC and your consumers:
Lesson #1: Be Transparent
You are not going to gain anything by trying to hide things from consumers or tricking them into taking action. Your advertisements should be clearly identifiable as a form of marketing; they should have a clear message, and that message should be free of deception.Use clear and simple wording:
Lesson #2: Use Clear and Simple Wording
The use of complex wording is another marketing strategy that won’t win you any favors. The language used in marketing, and especially in disclaimers and disclosures, should be concise and easily understandable for all consumers.
Lesson #3: Display Disclosures Prominently
Any disclosure that accompanies your product or brand needs to be easily found by the consumer. You can ensure the prominence of disclosures by following the guidelines set out by the FTC, which state that disclosures should be easily seen, that the consumer should not have to hunt for them, and that they should be included in advertisements whenever possible. Clear and prominent disclosures will help you avoid penalties from the FTC while establishing your reputation amongst consumers as an honest and respectable brand.
Lesson #4: Avoid Distracting Factors
Distracting factors are another form of deception. Allow your consumers to focus on your brand, message, and product so they understand what is being sold to them. Distractions that take away from your message or important disclaimers and disclosures will be viewed as dishonest marketing.
Lesson #5: Use Data Wisely
Big data offers a unique advantage that allows for a deeper understanding of your consumers, but, as we recently discussed in another blog, data has a dark side. It is important to have a representative data set, to continually test data predictors, to account for bias in your data model, and to ensure that data collection does not inadvertently lead to data discrimination. With proper practices, big data can give you an advantage in the marketing field without being a source of concern.
Lesson #6: Follow The Golden Rule of Marketing
When it comes down to it, the world of marketing would be wise to follow that time-tested golden rule of society. From a marketing standpoint, let’s just all agree to market to others as we wish them to market to us. After all, you’re not just a marketer, but a consumer yourself, and you know the kind of advertisements that you want to see, and what is important to you when it comes to choosing a brand.
When Consumers Trust the Marketing, They Trust the Brand
In a recent study conducted by Havas Worldwide, consumers were very decisive about the core values that they think are most important for a brand to embody. The top three values that were chosen by consumers were quality, reliability/durability, and honesty/transparency, with separate results indicating that most consumers feel that it is important for a company to be transparent.
Image source: MarketingCharts.com
Deception can dampen enthusiasm and consumer confidence not only in your product but also in your brand. After all, how do you expect a consumer to trust you as a brand if they can’t trust the marketing material that you put out?
While the guidelines released by the FTC (and the wording used for explaining those guidelines) may seem complicated, the takeaway is simple: be honest and transparent in your marketing and give your consumers the same type of respect that you’d like from the brands that you use. Follow these simple rules and you will have a friend in the FTC – and the consumer.
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