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Ad Age Article re the Terror of Tech Toys

Forget Chucky. Today’s Tech Toys Are Much Scarier (for Marketers)

By . Published on .

They’re cute and fun, they answer “Why” questions with more patience than most parents, and they keep kids occupied for hours on end. But are tech toys a danger for kids?

As internet-connected products gain in popularity with both children and parents, toy marketers are grappling with the challenges of selling products that could be hacked, opening the door to privacy concerns and PR disasters. 

“If you’re traditionally a toy company and now you’re adding this layer of connectedness, you’re wading into areas you know nothing about,” said Michele Martell, an attorney who runs consultancy Martell Media House. “You’re not a tech company, but you’ve become one because now you’re an Internet-of-Things company.”

Security pitfalls aplenty

There’s already been fallout. When El Segundo, Calif.-based Mattel this year released Aristotle, a smart baby monitor that grows with a baby to become an AI-type friend for children, the Campaign for a Commercial-Free Childhood public service group immediately denounced the $300 device as a “data-collecting intruder.” Mattel declined a request for comment.

Aristotle follows in the footsteps of My Friend Cayla, a talking doll made by Genesis that records conversations. It was banned in Germany amid spying anxiety. VTech and Mattel’s Hello Barbie have also had security issues in recent years.

“Most of the really hot tech stuff is interactive,” acknowledged Chris Byrne, a toy industry consultant and content director for TTPM, which stands for Toys, Tots, Pets & More. “Whenever you have something that’s about data and people are connecting data, there’s a vulnerability there.”

 Some brands say that fully interactive toys are not always needed, especially for the youngest of consumers. Wicked Cool’s Teddy Ruxpin, which connects to an app via Bluetooth, engages with kids via LED eyes and is primarily a storyteller, said Jeremy Padawer, a partner at the Philadelphia-based company. Wicked Cool also makes Baby So Real, a Cabbage Patch doll equipped with 40 different facial expressions to communicate emotions. Neither exist in an “open universe” connection that could fall prey to hackers, Padawer said.

“The more open the architecture, the more risk you introduce to the kid,” he said. “Baby So Real is a baby doll that’s not going to engage with a 12-month-old on policy.”

A CogniToys Dino, a smart toy that talks with kids.
A CogniToys Dino, a smart toy that talks with kids. Credit: CogniToys

Robots in the family

Of course, the older children get, the more they expect. And tech-hungry youths, who are increasingly accustomed to having a robot in the family — whether Siri, Alexa or Google Home — can become disinterested in dumbed-down devices. That poses another hurdle for marketers, noted Martell. She suggests brands be more transparent on packaging, making disclaimers much like “Batteries not included,” about the risks associated with certain devices, or at least direct consumers to more details online. In addition, industry guidelines with a set of best practices could also help manufacturers.

“Toy companies need to lean forward into this and be super transparent with parents,” she said. “That’s a selling proposition [for marketing] as opposed to making it all about the shiny bells and whistles of the product.”

Higher pricetag

CogniToys, a three-year-old brand, tackled the issue head-on with a blog post in the recent holiday season. In the post, company executives sought to reassure consumers concerned about privacy around Cogni’s core product Dino, a speech-enabled smart dinosaur that converses with kids, by spelling out exactly how the device functions. Each Dino is individually encrypted, separate from the rest, which helps shield it from hackers. The security helps justify its relatively stiff $99 pricetag.

 “We wanted to get ahead of the questions, because inevitably a bunch of questions come with this,” said JP Benini, who co-founded Cogni parent company Elemental Path. “We wanted to state our policy and say this is what we’ve done to ensure and build it out.”

The action was well-received by both customers and the tech community. The company, which generated around $2 million in sales last year, will continue to work with security researchers to protect its products. But not all brands are proactive.

“Most of these toys aren’t toys — they’re consumer electronics that have more in common with a Canary camera or Rumba than a classic consumer toy,” said Benini. “As soon as you give an address, you’re inviting anyone out there to poke and prod and mess with it.”

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FTC Cracking Down on Compliance with Disclosure Rules for Influencers

A new report by influencer marketing agency, MediaKix, revealed that as many as 93% of top celebrity endorsements are in violation of the Federal Trade Commission’s rules regarding disclosure and truth-in-advertising.

It has clearly not escaped the FTC’s notice, as they recently sent 90 letters to influencers and their brand partners in April 2017, warning them to comply with existing regulations.

The FTC has previously issued Endorsement Guidelines and Native Advertising Guidelines that require clear and conspicuous disclosures to help consumers understand when a communication is actually an advertisement. The area that most affects social media influencers is endorsements (or testimonials).

An endorsement is “any advertising message that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.”

Disclosure is required whenever an endorser is:

  • Given an incentive – whether financial or other (such as money, gift, free products, experience, etc.)
  • And where knowledge that the endorser has received such incentive would affect the weight and credibility of the endorser’s statements or actions

An endorser can’t talk about their experience with a product unless they’ve tried it:

  • You must be a bona fide user
  • If giving a positive review, you must have had a positive experience

An act or practice is deceptive if it misleads “a significant minority” of consumers – even if some followers are aware of the sponsorship, many might not be.

Simply tagging a post #sp or #spon is INSUFFICIENT to provide adequate disclosure.

The recent FTC letters further clarify these requirements, noting that disclosure is required if there is a “material connection” between the influencer and the brand. Material connections could consist of a business or family relationship, monetary payment, or the provision of free products to the endorser.

In addition, with respect specifically to Instagram posts, the FTC letters specify that the clear and conspicuous disclosure should be placed in the first three lines of the post, so that a consumer does not have to click “More” to see the disclosure.

With influencer marketing on Instagram alone a $1 Billion business – both influencers and brands should make compliance with FTC rules part of their authentic relationship with their fans.

Questions? Contact me to find out more.