Julie Medeiros thinks her taste in fashion is worth something. Turns out it is: about $50 a month.
Medeiros is not a style pro; her day job is at a talent agency in Manhattan. But in a little-known practice, social media shopping sites are offering payments to shoppers who post product links that drive Web traffic and sales to retailers. In the case of Medeiros, it is the sneakers and lipstick she added to Pinterest and the night life collection she posted on the shopping site Beso.
Favorable mentions on blogs have been for sale for years. Product reviews can also be bought. Now social media sites are taking citizen marketing to a new extreme, turning anyone’s Twitter message, Facebook post, Pinterest image or email into a possible paid promotion.
The shopping sites are upfront about the moneymaking mechanics and argue that readers no longer expect everything online to be commercial-free. But the Federal Trade Commission says the practice blurs the line between a recommendation and a paid endorsement and needs to be flagged to readers.
“It’s turning word of mouth into a revenue opportunity,” said Mary Engle, who directs the commission’s division of advertising practices. “Since they’re getting compensated, in a sense, for their endorsement, then they should disclose that.”
Social media shopping sites let users curate items from across the Web and share and comment on other users’ selections. They don’t sell anything themselves but make money by taking a cut from retailers on their sites.
A popular site, Beso, formally introduced a program on Tuesday that Medeiros has been trying, which pays users to send clicks to hundreds of major retailers, like Target and Gap.
“It’s fully democratized,” said David Weinrot, the chief marketing officer for Shopzilla, the parent company of Beso. “If they drop a link onto Twitter about a pair of shoes that they’re dying for, or a new handbag they’re coveting, and they refer users to Neiman’s or whoever sells that item, they could actually be rewarded.”
Other large social shopping sites and apps, including the Fancy and Pose, recently introduced similar programs, and Referly, a site introduced in May, is entirely based on people referring products to friends and receiving money in return. Referly says 10,000 people have already signed up. The programs are too new to evaluate their financial success, but Web marketers say consumers should expect more similar programs, in part because visitors are no longer offended by the idea.
“The economic maturity of consumers is, businesses need to make money somehow if they’re going to survive — it’s so ubiquitous now that it’s expected,” said Alicia Navarro, co-founder and chief executive of Skimlinks, which automates referral links for publishers.
The sites determine who gets paid through unique links created for each participant. When someone uses a link to visit a retailer’s site, or buys a product, a payment is deposited into the referring user’s account. The practice is known as affiliate marketing. Bloggers already use the system and almost all major online retailers are willing to pay for traffic or purchases, Navarro said.
Links can be tracked no matter where a post occurs, meaning a Twitter message, a photo on Pinterest or a Facebook entry can all generate revenue. The social media shopping sites act as a middle man, collecting fees from the retailers and depositing payments into the users’ online accounts — after taking a cut. (Sometimes, sites cut out consumers, too. Earlier this year, Pinterest got into hot water when it quietly adjusted some users’ links to become affiliate-marketing links, and seemed to be collecting all the revenue for itself. It says it has ceased using affiliate links and declined to comment on whether it would offer users fees from such links in the future.)
Beso pays users an average of 14 cents for each click they send to participating retailers, while other companies, like Pose, pay only when a purchase is associated with a link. Payments for purchases average about 5 percent of the price, Navarro said. The sites and the retailers monitor for spamlike behavior, like tons of clicks from a single IP address, and do not pay in those cases.
Lynsey Eaton, a Pose user who runs the blog Law of Fashion, said switching to the paid model for Pose images had made her more likely to post Pose links, and had made the service more useful.
“Instead of just making it an Instagram for fashion, it’s now shoppable as well,” she said.
The FTC issued guidelines in 2009 saying bloggers must disclose any paid endorsements, and recently updated them. The guidelines apply to these commission-based links, Engle of the commission’s advertising division said, whether they are in a post or a 140-character Twitter post. “They can use a hashtag and then ‘ad,’ and that’s only three characters,” Engle said.
But there is some disagreement about whether a Twitter post should be treated like a blogger’s recommendation and about the changing expectations of financial disclosure on the Web.
Linda Goldstein, a lawyer specializing in advertising, said when the FTC issued its blogger guidelines, “consumers were much less sophisticated” that they are today.
“Consumers are now being used to generate leads — I don’t know if that raises the same concerns as an endorsement,” said Goldstein of Manatt, Phelps & Phillips. “You’re not expressing an opinion about the product, you’re sending it to someone you think might be interested.”
Twitter and Facebook policies allow individuals to post referral-based links, but both companies say users should disclose that they are getting paid.
So far, the social media companies and their users seem to be largely unaware on how the guidelines apply to them.
Dustin Rosen, chief executive of Pose, said he was not entirely clear on whether the guidelines would apply. Beso says its users should add hashtags like #spon, for sponsored, or #paid to links, but stops short of requiring it. Eaton, the Pose user, says she follows the disclosure guidelines on her blog, but has not yet done so on her Pose posts.
“I think this is so new that I haven’t really honestly thought about how users perceive the fact that people are making money,” she said.