The rise of social media for contests and marketing campaigns has captured the attention of the Federal Trade Commission (FTC), particularly campaigns that provide for contest entry based on what amounts to social media endorsements. “Like Company XYZ now to enter!” The FTC is taking stock and beginning to weigh in on this relatively recent practice. Just ask Cole Haan. Late last month, the FTC sent the popular shoemaker a letter marking the end of its investigation into a marketing campaign that turned on “pinning” Cole Haan products for entry into a contest. In it, the FTC concluded that Cole Haan needed to do more to disclose the connection between the contestants’ “pins” and the company’s contest.
It all started last year when Cole Haan launched its Wandering Sole marketing campaign. Cole Haan encouraged consumers to create Pinterest boards that included five shoe images from Cole Haan’s own Pinterest board and another five images of the contestants’ favorite places to wander. Whoever created the board that the company dubbed most creative would win a $1,000 shopping spree. To identify the contestants, Cole Haan asked that the Pinterest users include the hashtag #WanderingSole in the description of their images.
According to the FTC, Cole Haan allegedly created a “deceptive” situation with its Pinterest campaign because consumers may not have realized that the authors of the pinned content were receiving incentives for their endorsements, even if that incentive was the mere chance to win a contest. Notably, the FTC determined that Cole Haan’s request that contestants include the contest-specific hashtag was insufficient to overcome the potential for deception.
The foundation for the FTC’s letter lies in 16 C.F.R. Part 255, Guides Concerning the Use of Endorsements and Testimonials in Advertising. In § 255.5, the FTC explains that companies must “fully disclose” any connection between the company and an endorser of its products when that connection “might materially affect the weight or credibility of the endorsement.” As for social media uses, the Guides specifically acknowledge the difficulty of determining the link between an individual’s Internet activity and a manufacturer’s marketing activity. The FTC specifically points out that the marketer “presumably would not have initiated the process that led to the endorsements being made in these new media had it not concluded that a financial benefit would accrue from doing so.” The importance of the FTC’s Cole Haan letter is that it explicitly states that a pin on a Pinterest board constitutes an “endorsement” and a contest entry constitutes a “connection” between the company and the endorser under § 255.5. The FTC deliberately publicized its closing letter as a means to put companies on notice of its interpretation of the endorsement guidelines in connection with Pinterest contests. The message is not that social media contests need to stop, but rather that they must be plainly disclosed for what they are. What the FTC considers an adequate disclosure, however, remains to be seen. #StayTuned.
Cheryl A. Falvey of Crowell & Moring, LLP contributed to this post.