Lessons from Juul Labs’ Social Media Advertising Scare

Juul Labs, the maker of the most popular U.S. e-cigarette, announced earlier this month that it would be shutting down its Facebook and Instagram accounts (arguably two of the best ways to promote consumer brands to the masses) to stop advertising to teens.

Seems like everyday now, we hear about another big retailer declaring bankruptcy or closing down a large percentage of their brick and mortar locations, transferring that capital to the online strategy. Some are calling it the retail apocalypse…Radio Shack, Payless Shoes, Kmart, Michael Kors. JC Penney…and so many more – in 2017 alone, more than 6000 stores have been closed.

Snapchat was arguably the first social media player to introduce the use of temporary/short-lived or "story" content. When others like Instagram and Facebook picked up on the tactic, it quickly became the new trend in the marketing sphere, boasting the highest engagement rates of all social content. But marketers may be missing a very important piece of the puzzle when using this tactic, that could put them in trouble with the law.  Before we get to it, let’s learn a little more about what temporary online content is and some behaviours that brought it to popularity:

Ever since video killed the radio star, it has rapidly evolved into a must-have marketing, branding and PR tool and continues to change the way we connect to each other and make decisions. Let’s take a look at some of the most recent changes in video that are shaping our online world as we know it today.

FTC 101 The Federal Trade Commission aims to prevent business practices that are anticompetitive, deceptive or unfair to consumers and its regulations affect businesses trading in every industry. One of its most sweeping regulations is Section 5 of the Federal Trade Act, which addresses appropriate commercial speech to help put an end to deceptive advertising. The FTC has evolved its rules under the act to apply to the ever-evolving world of online advertising. What many companies, review sites, bloggers, and celebrities don’t realize is that if they share content with commercial messages that convey personal enjoyment of a product/service with followers and get compensated for it, their actions are considered endorsements. These endorsements require clear disclosures of the relationship with the product/service provider. To provide guidance on complying with these rules, The FTC released the Guides Concerning the Use of Endorsements and Testimonials in Advertising to serve as a framework for complying with the relevant FTC regulations. Here is an overview of some expectations: Endorsements apply to social media and new technology as it evolves. For Twitter, with a 140 character count limit, the use of hashtags #ad #paidad can be sufficient. Disclosures for videos are not sufficient in the video descriptions or only at the beginning of the video. Disclosures must be displayed throughout the video for all to see at any point they tune in. Social media contests that require entrants to tweet or share for a chance to win must incorporate disclosures as part of the contest share messaging and contest terms. Free products given to customers for online reviews (positive or negative) are considered endorsements. This should be mentioned on review pages. Consequences of Non-Compliance While these guides are not considered formal regulations, the FTC has warned that it will be leading investigations and taking immediate action for practices that fall outside of the guidelines in a way that violates the rules in the Federal Trade Act. Penalties for non-compliance can range from a written warning letter to a fine of $11,000 per incident. In other cases, these fines have been much higher; as in the case of Legacy Learning Systems, a popular provider of guitar-lesson DVDs, charged with $250,000 for advertising products through paid online affiliate marketers, and having them falsely pose as objective customers. Machinima also settled similar charges with the FTC for paying YouTube video creators up to $30,000 for their video reviews without disclosing so.