How to manage ad partners in regulated industries: Education (Part 4 of 5)
Columnist Lori Weiman takes a look at several recent lawsuits against educational advertisers and offers tips on how you and your affiliates can operate safely in this highly scrutinized industry.
Welcome to Part 4 of my five-part series on how to work more effectively with ad partners in highly regulated industries.
The series is designed for advertisers who feel overwhelmed by government ad regulations and want tips on avoiding costly lawsuits. In these industries, a simple marketing mistake that ignores these regulations can lead to a federal-level, multi-million-dollar lawsuit for your advertising partners and you as the brand holder.
An important note before I jump in. When I say “ad partners,” I’m referring to the full partner spectrum, including:
- individual bloggers paid with free products;
- commissioned affiliate marketers; and
- more established resellers.
As the CEO of The Search Monitor, I help advertisers find examples of ad violations from these groups. I mostly hear that partners “just didn’t know the rules” and “the brand holders never told us to stop what we were doing.” It’s the perfect time of year for us to go back to school on this complex subject.
The Federal Trade Commission (FTC) is the government agency responsible for regulating ads for educational products and services. Its Truth In Advertising laws describe how “when consumers see or hear an advertisement, whether it’s on the internet, radio or television, or anywhere else, federal law says that ad must be truthful, not misleading, and, when appropriate, backed by scientific evidence.”
As an advertiser, make sure you, your team and your ad partners all know these laws backward and forward.
Educational advertising lawsuits
Before I get into the regulations themselves, let me discuss the serious consequences if they’re broken. It’s crucial to remember that in the eyes of the FTC, your partners’ actions represent you. Therefore, both names will appear on their lawsuits. Lawsuits do happen and have been occurring on a stepped-up basis in the last few years.
Here are a few costly examples that involved both advertisers and their affiliates.
- In 2016, the FTC filed a $200,000 lawsuit against LearningRx, a maker of “brain training” programs.
- In 2011, the FTC filed a $250,000 lawsuit against Legacy Learning, a provider of educational guitar programs.
Unproven performance claims
The FTC is concerned with educational advertisers who claim their product or service delivers a benefit that has not been backed by data. Let’s look at two examples that have caught the FTC’s eye in recent years.
Your Baby Can
Your Baby Can was a company offering programs to help babies as young as nine months old learn to read. The FTC filed an official complaint with the company in 2012 that they used ads on websites including YouTube, Facebook and Twitter to make deceptive claims about their program’s effectiveness.
The complaint alleged that Your Baby Can failed to provide “competent and reliable scientific evidence” to back their claims.
My advice for you and your ad partners is pretty clear: It is illegal to misrepresent the benefits, performance or efficacy of a product or service, and to misrepresent any scientific evidence.
The FTC explained that competent evidence “means tests, analysis, research, or other studies that have been conducted and evaluated in an objective manner by qualified persons and are generally accepted in the profession to yield accurate and reliable results.”
Another example concerns DeVry, a well-known for-profit educational institution founded in 1931. The FTC filed a lawsuit against DeVry in January 2016 for making performance claims about their graduates’ success — the percentage landing jobs after graduation and their average income — that were backed up by faulty calculations and inaccurate data.
As part of the suit, the FTC chairwoman stated that “educational institutions like DeVry owe prospective students the truth about their graduates’ success finding employment in their field of study and the income they can earn.”
The DeVry lawsuit shows that the FTC now cares about future performance claims made by educational institutions. Make sure your claims are backed up by sound data, and then ensure that any ad partners using these claims do not alter them in any manner to generate more traffic or commissions.
Will they be tempted to do so? Yes, and my company’s ad-monitoring platform has seen it from every type of ad partner.
The second hot button for the FTC concerning educational ads is deceptive product endorsements. The FTC created a Guide Concerning Use of Endorsements and Testimonials In Advertising that I suggest you review.
The most important lesson is that your ad partners must clearly disclose if any of their endorsers are being compensated for their reviews; otherwise, they risk deceiving consumers.
Here are a few more items about endorsements to keep in mind:
- The endorsement must be truthful and not misleading.
- Connections between endorser and advertiser must be disclosed.
- Compensation between endorser and advertiser must be disclosed.
- Endorsement disclosures must appear in a “clear and conspicuous” manner, before the review, and use language that a reasonable consumer would understand.
- Small spaces (i.e., social media) are no excuse for skipping disclosures.
A great example of an endorsement-gone-wrong, according to the FTC, is Luminosity, which sells brain-training programs to help improve consumers’ cognitive abilities. In 2016, the FTC took issue with how Luminosity solicited consumer endorsements using contests offering prizes and failed to disclose this to consumers. Prizes were significant, including a free iPad, a lifetime Luminosity subscription and a round-trip to San Francisco.
The company then used these endorsements to discuss how their product could help improve certain health conditions such as memory loss, dementia and Alzheimer’s. The endorsements appeared across all major ad channels, including websites, Google AdWords, emails, blogs and social media.
To be FTC-compliant, make sure you and your ad partners disclose any paid endorsements in a clear and conspicuous manner, no matter how the endorsers are compensated. It’s that simple.
Next steps for education advertisers
This article isn’t intended to scare education advertisers away from using partners. It’s meant to show you how to operate safely in a highly scrutinized industry. Here’s your study sheet:
- Train your affiliates. Here’s your chance to be a teacher. Share this article and its links, and follow up with training. Get confirmation the rules are understood.
- Monitor your bloggers. While not every student needs to be closely monitored, many do. Use ad-monitoring technology to alert you if your affiliates’ ads don’t include required disclosures or are making unsubstantiated claims. Let the technology do the heavy lifting, as it’s impossible to do a thorough job manually. Also, require your affiliates to monitor their own ads as a backup.
- Enforce FTC rules. Don’t stand for repeat violations. Terminate contracts with any partner who breaks your rules.
The FTC has put educational advertisers on notice that they will be subject to more stringent rules for both themselves and their partners. No more overhyped and unproven health and scientific claims!
The answer is increased education, closer monitoring and stricter enforcement. Educational advertisers should not let a few bad apples ruin their whole class of successful ad partners.
Stay tuned in two weeks for the final article in this series, which focuses on managing ad partners in the pharmaceutical industry.