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A clever, but ultimately disastrous, marketing ploy

By Neil Pascale

The blur between clever and illegal can be a pretty interesting dynamic to watch, even as the first usually bleeds into the second.

My son, a fourth-grader, recently discovered that. He used a reference book to write half of his school report, thinking it an efficient way to get his work done. And really, it was a clever move, even if it’s wrong for a whole slew of reasons.

A small California bicycle business fell into the same type of trap. They wanted to stretch their marketing dollar, so they went ahead with a pretty creative solution: Put stickers touting their business on city bicycle racks. What a terrific concept — advertise where your potential customers are sure to be. Only problem: It’s against the law. Seems some municipalities value cleanliness over creativity.

The blur between clever and illegal also has made waves in the online retail world. Those of us in the industry who are just now realizing what type of impact consumer ratings have on our online presence and ultimately our bottom lines may have missed this. See, last spring a company selling guitar-lesson DVDs got the idea of essentially paying a company to provide positive online reviews of those DVDs. (Source: http://www.ftc.gov/opa/2011/03/legacy.shtm).

Right or wrong, it’s a clever notion. After all, consumer ratings on online sites are having dramatic impacts on buying decisions. A global market research firm, Opinion Research Corporation, found more than 80 percent of Americans said online reviews influence their purchasing decisions. The 2009 survey also discovered many of these consumers relied on these reviews during the first stage of their buying cycle.

So when people are really into the shopping-rather-than-buying mode, they’re most at-risk of fleeing a particular brand or business because of a negative rant or rating by a fellow consumer, which is exactly why the DVD company paid a third party to blog and post other positive editorial content online about its guitar courses.

Clever, but illegal. And costly.

The Federal Trade Commission (FTC) discovered the DVD company, Legacy Learning Systems Inc., was behind the misleading advertising and promptly fined it $250,000. Plus, who knows how much more the company will have to pay due to monthly reports and monitoring it’s now required to do as part of the FTC ruling.

If the fee and reporting isn’t staggering enough, can you imagine how bad that looks on a public relations front? We, the company, don’t have enough faith in the quality of our product or the depth of our customer service to actually stand behind those time-tested retail principles. Instead, we’re going to hire folks to write fiction about their experience with us and our product.
Of course, with the newness of all of this social and online marketing surrounding us, it’s certainly possible the DVD company, like the fourth-grader mentioned above, did not set out to mislead but rather find a new, alternative approach to communicate with the end user.

Regardless of the motivation behind the move or its cleverness, it’s illegal.

In another public relations disaster involving a separate deceptive advertising case, Mary Engle, director of the FTC’s Division of Advertising Practices, laid out the letter of the law. “Companies, including public relations firms involved in online marketing, need to abide by long-held principles of truth in advertising,” she said in an online report. “Advertisers should not pass themselves off as ordinary consumers touting a product, and endorsers should make it clear when they have financial connections to sellers.”

We as an industry, both dealers and manufacturers alike, need to keep this in mind as we grapple with the effects of online consumer ratings. Any dealer principal who has claimed their Google Places website, or any other third-party website that highlights consumer ratings, can attest to the impact that a single negative consumer review can have on business.

While the idea of having a staff member or other paid third-party counter that negative review with a positive one may seem a clever ploy, it’s also against the law.

And as the DVD company discovered, potentially very expensive.

Neil Pascale is the business development manager for Dominion Powersports, the parent company of PowerSports Network, Cycle Trader, Traffic Log Pro, Ziios and Dominion Insights. He can be reached at neil.pascale@dominionpowersports.com. 

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