An AdWeek article described how Lord & Taylor department store paid people to promote its clothes on Instagram. The campaign advertised a new Design Lab Collection and featured 50 women wearing one particular dress.

Lord & Taylor CMO Michael Crotty told AdWeek the purpose of the campaign:

"The program was designed to introduce Design Lab to this customer where she is engaging and consuming content every day. The goal was to make her stop in her feed and ask why all her favorite bloggers are wearing this dress and what is Design Lab? Using Instagram as that vehicle is a logical choice, especially when it comes to fashion."

This photo received more than 13,000 likes-a big number, even for a cute dress, which sold out quickly.

The strategy worked, but critics questioned whether the company "crossed the line" of ethics. According to Federal Trade Commission guidelines, companies and those who promote their products must make compensation arrangements explicit. Just as bloggers need to identify when they're paid, people posting pictures of themselves on Instagram need to reveal their relationship with the company.

An article in Marketing Land tells us more:

"That's a clear violation of U.S. Federal Trade Commission guidelines for digital advertising, says Ted Murphy, founder and CEO of IZEA, a company that acts as middleman between brands and social media influencers. The FTC rules state that when people are paid to post they must disclose that fact in a 'clear and conspicuous' way.

"'There's really no excuse for not disclosing that there's a material relationship there,' Murphy told Marketing Land. 'These FTC guidelines have been out there since 2009.'"

Following Marketing Land's article, some Instagram posts were modified to include "#ad," which could serve as disclosure of the paid relationship. Also, Marketing Land received this statement from Lord & Taylor:

"We are proud of this campaign and our partnerships but want to reiterate that our influencers were compensated by Lord & Taylor, as is customary in these types of programs. We are always looking for ways to improve our process and communications with our customers. We look forward to continuing to build great marketing campaigns."

Discussion Starters:

• What do you see as the purpose of the FTC guidelines? Do you think the guidelines apply in this case?
• How well did Lord & Taylor handle the criticism?