News

Sharing on a Pinterest board is a hobby millions of people enjoy. Many marketers, especially national brand marketers, quickly followed the passionate pinners online and began doing what marketers do best.  They did everything possible to encourage people to pin information about their brands.  So far, so good except now the Federal Trade Commission (FTC) says some of the activity can seem a little too much like an undisclosed endorsement.  That is a huge blow for organizations running social media contests.

In a March 20 letter to the attorneys for shoe manufacturer Cole Haan, the FTC’s Mary Engle wrote that a contest Cole Haan had sponsored created a situation where “…participants’ pins featuring Cole Haan products were endorsements of the Cole Haan products, and the fact that the pins were incentivized by the opportunity to win a $1000 shopping spree would not reasonably be expected by consumers who saw the pins.”

Engle, the FTCs Associate Director for Advertising, said the agency would not recommend enforcement action because they had not previously addressed whether a contest entry is a form of material connection.  They also had not yet commented on “whether a pin on Pinterest may constitute an endorsement”.  Cole Haan apparently worked with the FTC and adopted a social media policy that would similarly address any similar promotions in the future.

This is important. Read the words again.

The FTC has publicly said that “entry into a contest to receive a significant prize in exchange for endorsing a product through social media constitutes a material connection”.

You already know that people endorsing your brand for an incentive must disclose the relationship. Now the FTC is saying that requiring one of your products to be pinned on a Pinterest board for a contest entry requires that same disclosure. Guidance for other social media contests may be issued, and that is something you should watch for.

Your takeaway as a small business leader is to understand how even innocuous-seeming contest entries in social media channels can create the “material consideration” relationship the FTC warns everyone about.  You should talk with your attorney once and have that person help you create boilerplate you can repurpose later. Not doing so is to create a lot of risk for not much reward.

The link to the FTC’s letter to Cole Haan is in PDF at their site.

Case Studies

Moms Clean Air Force faced a daunting task. The organization wanted to harness the power of mothers throughout the United States to advocate for clean air to local, state and federal governments.

Why mothers?

The group knew that unclean air—whether in homes, schools, or outside—causes disproportionate health hazards to children.

Moms Clean Air Force logoHarnessing a crack editorial and social media team, the organization received funding from the Environmental Defense Fund and many celebrity endorsements.

Digital Director Shaun Dakin knew early on that the group would have to advertise in addition to reaching beyond traditional editorial channels. A skilled marketer in the public-private sector, Dakin also knew that stories were important to connect with audiences, but successful organization leaders rely on metrics, not just anecdotes.

“I asked Silver Beacon Marketing to help us solve advertising on search engines, on Twitter, Facebook and other social media,” said Dakin. “I worked with them in the past and knew that they don’t present fluff or fake numbers. Everything they do is strictly ROI driven.”

Silver Beacon’s passion for return on investment paid off handsomely for Moms Clean Air Force.

“We collaborated on powerful tracking reports immediately,” Dakin said. “Those reports helped the organization decide our priorities. Then Silver Beacon began advertising and found ways to match actions through multiple channels. Using analytics methods that most organizations can’t create for us, Silver Beacon showed us which channels worked for building community and the actual costs of adding a new community member and having that community member convert to our mailing list. The bottom line success metric is moving people from the web to our email list.”

Silver Beacon’s focus on return-on-investment (ROI) gave Moms Clean Air Force the confidence it needed to build a Facebook community that engaged with decision makers and also joined the group’s mailing lists for local and federal activity. The company continued weekly reporting to the leadership team on costs and ROI.

More responsibilities followed. A request to audit the organization’s website found more opportunity for improvement, and Silver Beacon Marketing built a new website for the organization while assuming responsibility for search engine optimization, website analytics and web development.

Successes of the Social Media Case Study, Advanced Search Optimization & Advertising

  • Cost-effective social media and search engine advertising opportunities
  • Search engine optimization of the organization’s website
  • Analytics reporting and analysis to organization leaders
  • Rebuilt and hosted the organization’s website

 

Articles

Groupon is enduring some well-deserved criticism this week for its edgy Super Bowl commercial featuring actor Timothy Hutton that made light of Tibet’s struggles with China.  American consumers overwhelmingly rejected the ad while continuing to use the service (herein called The GoDaddy Effect) and the company best known for being the startup that earlier spurned $6 billion of Google’s money created another head-scratching moment.

But what impact does this company have on a small business, maybe your small business, when one of those 50% offers launches? Almost all Groupon customers ask for a second promotion according to a video on the company’s website.   Local merchants now receive mobile applications, free marketing copywriters and tools like a capacity planner.

But business owners often go online to complain about margins or are cautioned about exceeding capacity and cutting into margin.   WebProNews did a splendid piece about Groupon tackling the capacity issue head-on and suggested that Groupon should be able to help a small business plan for lots of new customers.

Capacity was the issue I experienced with local merchants.  The worst was a camera store with an offer that swayed me to convert some old film to DVD .  My son picked up the order and paid with the Groupon, which was about $6 more than the cost.  The cashier did not offer a store credit or offer to sell a second conversion and apply a $6 credit.  Nearly half of the $15 savings evaporated so I called the store. Pause and reflect.

Groupon brought me in when I wouldn’t have looked around for that old birthday party footage.  Then the store had a chance to wow me with their services and pick up a second conversion plus who knows how many more future orders? Instead the clerk said no.  The manager went further, telling me that “Not everything is free just because you have Groupon”.  Those frustrated line staff comments are common on web complaint boards.

But now I had a mission so I called the small chain’s headquarters and was told there was no customer service department and “these questions”  were best handled at the store level.  But now I was more focused on the store manager’s attitude and I ended up in the voice mail of someone in store operations.  That person never called back even after a second message was left.

So the fallout for the store is even worse.  Now I’m not only dissatisfied, but when someone comments on the DVD, I tell them to buy online because the local chain has “awful service”. That is the essence of a merchant’s Groupon dilemma.  The company says all will be well if the merchant is “honest” about their ability to handle big volumes and convert casual consumers to long-term customers.

Your takeaway as a small business leader is to think strategically, not about cash flow or other tactical matters, when considering any coupon service.

If you don’t have an upselling, customer-centric culture and your business has tight margins, inviting a horde of discount-loving customers who have no loyalty to your business is an ineffective strategy.

Source:  “Groupon.com“, ComplaintsBoard.com, 1/26/2011

Source:  “Hey, Ellen, Should We Do Groupon?” Restaurant Intelligence, 9/18/2009

Source: “Groupon Talks Managing Capacity…“, Web Pro News, 1/17/2011

Source: “Groupon Rejects $6 Billion Offer From Google“, MSNBC, 12/4/2010

Image:  Eugene Peretz via CC 2.0