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October 5, 2009

FTC Sets New Guidelines for Blogger Endorsements and Word-of-Mouth Marketing

The Federal Trade Commission (FTC) has issued new regulations regarding blogger endorsements and word-of-mouth marketing campaigns. If a blogger is paid to do a review - either through money or product/service - said blogger must reveal said payment.

Ever been annoyed by posts in message boards that ended up being written by a company employee? The new guidelines crack down on such behavior as well.

The word-of-mouth guidelines don't just extend to employees. They involve anyone who has signed up for a word-of-mouth marketing program, such as a Street Team.

To be clear, bloggers can post paid endorsements and people can post in message boards and join street teams or similar efforts. But if there is a relationship between marketer and company, it must be disclosed. If you don't, get ready to pony up $11,000 when you're caught.

How it must be disclosed was not defined by the FTC. But, if you're a blogger, I recommend something like "Acme video game company sent me a free copy of this hot new game and here is my review."

Consumers like it when they know the relationship you have with the product you're pushing. If I had to guess, I'd say transparency begets loyalty.

However, the new guidelines opened up a can of grey areas the FTC needed to tackle. One such scenario is a blogger who already writes glowing reviews of Acme Video Game company. If all of a sudden, the blogger receives a free copy of a new video game and writes a review of the game, s/he needs to disclose the receipt of the game from Acme.

Another funky area of the new guidelines is the issue of liability if/when/should these regulations be enforced. If you're an advertiser engaged in digital public relations, reaching out to bloggers or word-of-mouthers, you could be liable if the endorsers make false or misleading claims about your product/service.

The FTC said that they would consider reasonable effort on the part of the advertiser to keep the endorsers in line. But then they offered up this scenario:

A skin care products advertiser participates in a blog advertising service. The service matches up advertisers with bloggers who will promote the advertiser's products on their personal blogs. The advertiser requests that a blogger try a new body lotion and write a review of the product on her blog. Although the advertiser does not make any specific claims about the lotion's ability to cure skin conditions and the blogger does not ask the advertiser whether there is substantiation for the claim, in her review the blogger writes that the lotion cures eczema and recommends the product to her blog readers who suffer from this condition. The advertiser is subject to liability for misleading or unsubstantiated representations made through the blogger's endorsement.

The blogger is also liable (in addition to any liability gained if the relationship was not disclosed). But the FTC says advertisers need to provide training and then keep a close eye on the ramblings of bloggers and other endorsers.

The guidelines should serve as a warning for companies hiring interns and other young people to head up your social media efforts. The FTC isn't really proposing anything here that isn't already frowned upon by the general public.

Sponsored blog posts are pretty easy to detect and kill reader loyalty. Many companies have had to repair damaged reputations after they engaged in blogging or forum posting efforts pretending to be random people when a PR effort was really transpiring.

Social media has always been best implemented under these guidelines unspoken rules. Use today's news as a means of lining up your core social media values with how consumers truly wish to interact with your company.

Posted by Nathania Johnson on October 5, 2009 1:26 PM

Comments

Gogo | Denver Marketing Consultant  October 5, 2009 8:59 PM

Mike  October 5, 2009 9:00 PM

Ted S  October 5, 2009 11:31 PM

Selma  October 6, 2009 8:25 AM

Jay Estis  October 6, 2009 12:43 PM

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