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3 lessons from the FTC to guide marketing efforts in 2017

January 9, 2017
by Abhilash Patel
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At first glance, rulings from the Federal Trade Commission (FTC) on native advertising might not seem entirely relevant to the addiction space. But for those interested in their facilities’ ethics and compliance with federal guidelines, the new directives are extremely pertinent.

For those not familiar, native advertising is a form of promotion designed to look like the content around it, i.e., an article or feature story produced by an advertiser that appears on a news website. The FTC closed out 2015 by issuing a new ruling on its native advertising guidelines to ensure greater transparency in the practice, and this year, it has cracked down on brands—Ciroc Vodka, Xbox One and Lord & Taylor, to name a few—not playing by the rules. In particular, the disaster for Lord & Taylor reveals exactly why that knowledge is so important, and teaches us valuable lessons about transparency and better business practices.

Role of FTC

First, though, it’s necessary to understand exactly what the FTC does. Its main goal is to protect consumers from businesses who may conduct unfair or deceptive practices. Its rulings are meant to guide the competitive process in such a way that consumers are empowered to make informed decisions in the marketplace. State governments also regulate business activity at the state level.

In December 2015, the FTC released a new ruling to govern business’ native advertising practices. This particular ruling came about due to concerns with consumers’ abilities to identify and differentiate native advertising content from “earned” or “organic” content. Essentially, this means that the FTC will find an ad to be deceptive if it promotes the benefits and attributes of goods and services, but is not readily identifiable to consumers as an ad.

Consumers must be aware of what is and isn’t an advertisement. Seems pretty simple, right? Not quite. Even mega-corporations with countless compliance resources find themselves falling prey to criticism (and hefty financial penalties) from the FTC.

Lord & Taylor was just one notable victim of the FTC crackdown. As part of the launch of a clothing line, the company paid social media fashion icons to promote its new products. However, the company did not require these individuals to note that they had been paid by the company for their promotions, making the business relationship unclear for consumers—an FTC violation. The luxury department store chain reached a settlement with the FTC in March.

While Lord & Taylor has no relevant ties to the addiction treatment industry, its run-in with the FTC offers a cautionary tale: You are responsible for your business relationships. It is your job to ensure that your marketing efforts are compliant across all channels, and frankly, the FTC won’t have any mercy otherwise.

Here are three overlooked areas that could leave your treatment facility open to criticism and/or potential crackdown from the FTC:

  1. Calls. If you’re currently working with any companies to pay for calls, make sure you understand what practices are employed.
    1. Do consumers understand that they are responding to an ad?
    2. Do consumers know who they’re calling or where they’ll be directed?
      These are critical questions to ask. Not to mention, you’re doing yourself a disservice if you blindly engage in business with someone without a firm understanding of the aforementioned areas. The practice of bidding for calls (or vendors “filtering” them and thereby taking control of consumer decision-making) in the addiction treatment space is potentially illegal in a lot of states. Facilities need to know if they’re involved in such processes.
  1. Websites. It’s important to establish disclosures and inform consumers as to who is running a site. If you are advertising across other third-party sites, make sure that these types of disclosures exist. Beyond checking for disclosures, have conversations with these companies to understand their site evaluation process. Make sure they have a set process in place to regularly audit their site for this type of information.
  2. Affiliates. Are you working with third-party marketers to advertise your business? Similar to call-based activity, make sure you understand the practices that these companies employ. Remember, you are responsible for your relationships. Even if someone else is executing your tactical marketing efforts, you still have work to do. Make sure that any third-party services or providers are clearly defining ads to consumers across all mediums.

As demonstrated via the FTC ruling in Lord & Taylor’s case, it’s important for consumers to understand when they are responding to an ad and to whom they’re being connected. With transparency remaining a key area of concern for the addiction treatment industry, it’s critical that FTC rulings and guidelines are consistently monitored by key decision makers. Let’s not forget that as marketers (in-house or third-party), we are supposed to serve consumers and facilities.

Read: We are not supposed to influence who goes to what facility based on a financial consideration. Our primary concern must always be the well-being of those who need care, and for that to happen, they must be informed, educated, and in charge of their own journey.

In terms of setting standards for ethical and compliant business practices, the FTC undoubtedly leads the way. While not all cases may be specific to the addiction treatment industry, there is a lot to learn by way of example.

Abhilash Patel is co-founder and president of Recovery Brands.

 

 

 

 

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