Social media is not just a marketing novelty – it has become the essential tool for running a promotional contest. Have a look at any big brand contest and you’re hard pressed to find one without a social media component. Many Canadian businesses also seek to extend their reach into the US market through promotional contests.

If you are in that category, take note of this recent FTC action against shoe-maker Cole Haan. At the conclusion of their investigation, the FTC warned that the structure of the contest was misleading to consumers since it employed contestants to create Pinterest boards using the #wanderingsole tag, which turned these pins into endorsements for Cole Haan products (…which was the whole point of the contest…). However, FTC rules are clear that the connection between endorsers and marketers should be made clear. While no penalty was levied against Cole Haan, this letter has served as notice to the rest of the industry that the FTC will be watching such contests to ensure that these endorsements are made sufficiently clear.

In Canada, the Competition Bureau oversees false and misleading advertisements, including the apparent endorsement of products by paid endorsers.

The business lessons are clear: a successful social media contest can back-fire if you get more publicity from an FTC or Competition Bureau investigation than from the contest. Not to mention potential penalties. Get advice on your social media policy and contest rules before you launch the next campaign.

Calgary – 07:00 MDT