The FTC Wants to Scare Online Liars Away from Paid Advertising– But Does This Law Mean Anything?

In a long-awaited, long-anticipated ruling that surprised no one who was watching, the FTC today decided to recognize the fact that bloggers and other social media types can be celebrities, that celebrities can be social media users, and that both can be paid endorsers without being acknowledged as such online (or off). Without providing any concrete details, the new guidelines legally require bloggers to clearly disclose any “material connection” to an advertiser, including giving actual payments or free samples for an endorsement. They also hold bloggers and others responsible for telling the (gasp!) truth about their product experiences.

Truth? Online? So those Pay-per-post types who get paid for mentioning a given product or service on their blog could, theoretically, be held to task for flogging those deluxe granite countertops that they don’t actually own? What about all the people on dating sites who hang out 20 year old pictures of themselves as how they really look? Can we fine each of them eleven grand?

After consulting with a range of marketing associations, including the WOMMA, the Word of Mouth Marketing Association, the FTC drafted their brand new rules for this brave new online world. WOMMA and many of the other word of mouth firms and groups have long had a code of ethics that encouraged member companies to encourage (but not always require) that bloggers and others reveal their endorsement type connection.

But I have to wonder whether this law means anything after all?

Is it really enforceable in the online space? With some many people posting so many things about so much, who is going to monitor it? What about anonymous ranking and ratings–still the bulk of online recommendations, I’d think. And if I post something about the great new and fresh Halloween Flavor of Reese’s Peanut Butter cups, am I really going to be held to task for having tried and appreciated said yummy bits? Come on? Really? What if I just liked the sound of them? Or the color, or package? Is the FTC really interested in me that much?

And what about if I post that I hate a product? Is that automatically okay? Will this now unleash a firestorm of paid anti-blogging, where the competition can legally pay bloggers to diss every product but their own?

It’s a big scare, people. I’ll be surprised if many average people get stuck with cease and desists over this one. Maybe a few high-profile, large-scale cases, but that’ll be it. It seems pretty symbolic to me.

What do you lawyers think?

From where I stand as an online marketing researcher, something is definitely going on that prompted this action. Have no doubt about that. My student, Ron Ruslim, noted last night that positive reviews outweigh negative ones on the Internet by a ratio of 5-to-1. That’s just not realistic. And it goes against everything we know about offline word-of-mouth, where people talk a lot more about their negative, expectation-disconfirming experience than their positive ones.

Personally, I think the big perps in this space are the operators like Pay-per-post and their ilk, companies that try to get bloggers to post about products for money, or who hire shills to post falsely positive messages. Those companies, not the bloggers or individuals who get suckered by them, are the ones to go after. So why is the FTC seeming to target the little blogger instead? Are they? Maybe it’s all part of the scare.

My co-authors and I just completed a piece of research on word-of-mouth marketing that complicates this finding even more. In our study of the way that 90+ bloggers responded to a free promotional giveaway, we find that there are a number of ways that people react to the promotion. Most (but definitely not all) disclose their involvement. But the way that they do so can vary widely, and the effect on their audience base also varies widely. As a cultural phenomenon, it is considerably more complex than a simple statement of disclosure can be. Blogging is not TV or radio, where a few lines of legal disclaimer suffices. Blogging is an ongoing conversation, and (non)disclosures can happen in any of a million different ways. I”ll pass that research on to you readers in a little while.

So, while other news stories, like AdAge and YahooNews are trumpeting this as an event, you, oh Faithful Brandthroposophists now know what really happening. The FTC just wants to scare us into being a bit more careful about what we take from who, and why we do it.

But, really, this isn’t all that scary.

This entry was posted on October 6, 2009 at 3:04 pm and is filed under Social Media, Social Media Marketing, Economy and General Business Management, Word of Mouth Marketing, Marketing News & Insights, Communities and Tribes, Branding. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.