This 1 Trick for Going out of Business
Human nature is a very real thing. It’s not some flippant explanation for activities that require greater conscious thought to explain. It actually and accurately describes a wide range of behaviors for which science might prefer to lump into other social psychological hypotheses but for which no better explanation exists. All of that being a fancy way to explain why people do things they know they shouldn’t; from speeding to stealing, it is not meant to explain life’s more egregious transactions, just those that if not discovered or noticed probably do not actually cause any harm. Marketing and many marketers can fall into this bucket. We know we probably shouldn’t say certain things or make certain claims, but we just can’t help ourselves sometimes. It’s the same on the reverse. We know we shouldn’t be suckered into believing get rich quick messages or promises of massive weight loss without doing the hard work. We know it, but for the same reason that we grew up trying to pick our three wishes were we to find a genie, we still can’t help ourselves.
For better or worse, the FTC is here to make sure all parties stay grounded and to curb our human nature. Earlier this week, they announced that they “Permanently Stop[ped] Six Operators from Using Fake News Sites that Allegedly Deceived Consumers about Acai Berry Weight-Loss Products.” You remember these sites right?
Like many marketing tactics these sites were an evolution. Just as internet marketers didn’t invent direct response, fake news site publishers didn’t invent the advertorial. The lack of printing costs and immediacy of the results just meant that purveyors of the online variety could perfect their trade, testing and iterating, at a speed impossible offline. And because their writings did not appear embedded in others publications, they had greater creative freedom on what was said. That along with greater transparency to see what others are doing and a sense of anonymity all enable the proverbial race to the bottom where conversions come before customers. The problem, and this goes back to human nature, is that when you break the rules some people will get caught. In our space, the some people is still a small percentage (just like the percentage of speeders who get caught). Complicating matters, in the case of the FTC, it’s like a red light camera without a flash that sends the ticket two and half years later.
This week has been among the largest public announcements with regards to the FTC’s crackdown on fake news sites, but a look through acai related announcements on the ftc.gov site shows a relatively active and lengthy history of investigating the space. Among the earliest was August 2010 when Rachel Ray, Oprah, and Dr. Oz began a crackdown. Interestingly enough, that was among the catalysts that drove the marketers from the fake blog format to the fake news format. It was 2011 when the FTC started to announce continued headway against the marketers with announcements containing phrases like, “Temporarily Halts,” “Cracks Down,” and this week’s “Permanently Stops.”
The problem with the FTC is the same problem with officers in the military that run afoul of the rules and run into the JAG officers. Uncle Sam has an army of lawyers with time on their hands who don’t have clients scrutinizing their hours. As such, the government only need assert might over right, and much like commercial lawyers, about as much time is spent on the actual matters as it is on figuring out what money a company could reasonably pay. The government knows that they can most likely outlast, but why go through a protracted legal battle if they can figure out a number, that while egregious, is just a notch more palatable than an actual court battle. This explains why almost all settlements come with the provision of not admitting guilt. In this most recent round, the government is basically saying to six marketers, you owe us x, but if you pay us a percentage of it, we’ll call things even, e.g., “Lee’s $204,000 judgment will be suspended when he pays $13,000 plus the proceeds from the sale of a BMW.”
While this announcement was being issued by the FTC, those in our industry received another related announcement. Industry pioneer Copeac ceased operations. They were not part of this formal FTC announcement, but they were nonetheless a casualty of the continuity health marketing industry and mentioned in an April 2011 release by the FTC. Theirs is a lesson in humility for any in this industry. While they were allegedly involved in false and misleading advertising, the people behind the company are among the most respected and best examples of the performance community. That a company without a lasting presence goes down is fine, but that a company like Copeac could close up shop after getting ensnared will hopefully help all of us act with the appropriate balance of caution and creativity. This is about more than a few companies now. It’s about our industry.
