FTC Tells Bloggers and Advertisers to Come Clean

When a blogger writes favorably about a company's product or service, how can you tell if he or she is getting paid to write a positive review? Did the blogger get a "freebie" media player or baby stroller or digital camera for that glowing post?

These are the kinds of questions bloggers -- and advertisers -- must make clear to consumers following Monday's announcement by the Federal Trade Commission of new guidelines for endorsements and testimonials. The update -- the first to this category since 1980 -- was prompted by the rise of the Internet's influence on marketing , and in particular the growth of social media, paid blog postings and other digital means of pitching products to consumers that now include sponsored messages on the popular social network Twitter.

"These examples address what constitutes an endorsement when the message is conveyed by bloggers or other 'word-of-mouth' marketers," the FTC's statement said. "The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service."

The FTC passed the new rules on a 4-0 vote after taking the summer to consider public input.

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When an A-list celebrity raves about a new product or service on a heavily followed Twitter account, for example, they must also abide by updated rules that previously didn't address such issues. Both endorser and advertiser need to comply with FTC law. "The revised Guides reflect Commission case law and clearly state that both advertisers and endorsers may be liable for false or unsubstantiated claims made in an endorsement -- or for failure to disclose material connections between the advertiser and endorsers," the statement reads. "The revised Guides also make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media."

While the new guidelines call for more transparency on blogs and sites like Twitter, they don't say how that transparency can be established.

"The guidelines don't address that issue other than the requirement that all disclosures must be clear and conspicuous," Rich Cleland with the FTC's Bureau of Consumer Protection told TechNewsWorld. "It could be done in any number of ways -- in the text of the review or blog post, it could be done in a general type of disclaimer on the blog. The important thing is that the message is somehow communicated to the reader about any compensation."

The Blogger vs. the Advertiser

Even though inadequate disclosure of blogger/company relationships are now official violations of FTC law, with possible fines attached, is the FTC prepared to go after the individual bloggers who violate the guidelines? "Our focus from a law enforcement perspective is not going to be the individual bloggers," Cleland said. "As a practical matter, that doesn't make sense. However, where we perceive there is a problem, we may look at the advertiser to see what kinds of instructions or what kind of monitoring the advertiser is doing out there with their bloggers."

The blogger portion of the new guidelines will focus more on education and awareness, Cleland said."Some of these are pretty subtle lines between what constitutes a paid endorsement and what doesn't, so we're trying to get out more information about that."

Twitter and the issue of sponsored tweets also came up during summertime discussions, especially regarding how disclosure can be done in the body of a 140-character tweet. "Again, the disclosure has to fit the audience," he said. "I think it can be made, and if it can't than maybe you can't do the advertising that way. Advertising has to be identifiable as advertising, but I think there are some shorthand ways that disclosure can be made on Twitter. We'll just have to see what they come up with."

Impact on Marketing

You may see fewer marketers engaging with bloggers via free products/services in exchange for reviews, said Eric Weaver, digital strategist for the Vancouver, Canada-based Tribal DDB advertising agency. "The thing that is troublesome is that marketers can't really control bloggers," Weaver told TechNewsWorld. "If a blogger does not fully reveal the connection, the advertisers may be held liable as well. Rather than go anywhere near that, to do blogger engagement, I think we'll probably see a waning in that kind of practice. If they (bloggers) forget to state all the details and they receive something, than the company is at fault, and given how risk-averse everybody is right now, it's just too much of a risk," Weaver said.

"We'll still see people doing it and company getting bloggers to try to talk about their products, but in terms of giving products to sample, that might diminish quite a bit," he added.

"For the most part, I think that the FTC Guidelines are clear, and there are some good examples to help provide additional details/examples," Paul Rand, president-elect of the Word of Mouth Marketing Association (WOMMA), told TechNewsWorld. "I have no doubt that we'll continue to see things that work and don't work, and that brands will get clearer and clearer on best practices for their brand and the marketplace.

"I think it is OK that the FTC not specify exactly how disclosure should happen on social media -- only that it be clear and transparent," Rand added. WOMMA is working on its own best practices regarding social media endorsements and product reviews and will be sharing them at a meeting later this year, Rand said.