I admit I was a late adopter to the Instagram craze, but it didn’t lessen the excitement of finally discovering a social media platform I actually love. Scrolling through hundreds of photos can be incredibly therapeutic, but truthfully, the business side of Instagram is the most intriguing part. You can find hundreds of articles highlighting entrepreneurs who have made a successful career of being a high-profile Instagrammer. The formula for success seems fairly simple, right? You launch an Instagram account, you develop an impressive following, businesses start approaching you to pitch their product and, in return, you collect a pre-negotiated fee. Seems like a win-win for both parties.
So, is there a downside to this incredibly popular, lucrative business model? Well, it depends on whether the Instagrammer and the company are transparent about their partnership. Earlier this month, Lord & Taylor reached an undisclosed settlement with the FTC over native advertising, which is advertising passed off as editorial content. According to the Wall Street Journal, last year the retailer launched a social media campaign to promote a new clothing line and asked top Instagrammers to wear a dress on a particular day and post it as their #OOTD (outfit of the day). By contract, the Instagrammers were required to tag Lord & Taylor in the post but they were not required to acknowledge their compensation. The campaign reached 11.4 million users, resulted in 328,000 brand engagements and the dress sold out. If you only look at the numbers, this was a highly successful social media campaign…if only consumers had known Instagrammers had been paid. From the moment the retailer found out about the snafu, it worked to ensure all social media partners understood the guidelines but unfortunately this PR glitch left a little financial sting.
In the past few months, the FTC has definitely tightened protocols around native advertising and, in December, released new guidelines to help regulate native advertising and prevent consumers from being misled. I think all businesses can benefit from a general understanding of what the FTC now requires and I encourage everyone to read up.
It honestly makes no difference to me if my favorite Instagrammers are being paid for promoting products. I enjoy browsing their posts and several have resulted in a purchase, so I think they deserve to be paid for their endorsements. There is just that one small catch…be sure to be transparent with your devoted followers.
Robin Embry is a Vice President at Lovell Communications. Connect with Robin at email@example.com.
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