FTC takes on blogger compensation, among other things

Brandweek has a heads up on some interesting developments going on at the FTC. As you know, the EU implemented some rules back in 2007 regarding fake bloggers and astroturfing, with fines and possible jail time as a consequence for engaging in devious practices. Don’t look now, but the FTC is looking to take actions regarding endorsements, including paid and earned blogger relations campaigns:

For consumer testimonials, the general rule is that an advertiser cannot pay or otherwise compensate a person to give an endorsement without disclosing the material connection. Bloggers who receive compensation—or even free products from advertisers—may now have to disclose that connection with the advertiser if they provide a positive review of those products. Similarly, an employee of an electronic game manufacturer who posts messages promoting the manufacturer’s product on a third-party message board must disclose his relationship with the manufacturer. “Street team” programs in which members gain points every time they talk to their friends about a particular advertiser’s products could also run afoul of the FTC Guides.

Comments on this issue to the FTC are open for two more days until January 30th. However, the debate can certainly rage on here as long as we’d like.

Paid and unpaid placements

As a long time proponent of the WOMMA ethics code, I’m in favor of full disclosure as it relates to paid placements. A recent Izea campaign for Kmart got Chris Brogan in some hot water with his readers, but as I’ve said before it’s not unethical as he did disclose that he was compensated financially.

Unpaid placements, however are another story. If I pitch a product or story to a blogger and they choose to write about it then they clearly felt strongly one way or another about it. Does it matter that they got it for free? What about bloggers that pick up a press release, video, advertisement or other materials from a company’s web site? Are they liable for not disclosing that they found it on a company’s site (copyright issues aside)?

Additionally, as someone who has tackled this issue head on through WOMMA the conclusion is simple: I don’t control a blogger’s blog nor control what they do or do not write. Now the government is going to try and mandate what bloggers write? I smell a revolt…

Street teams

Another matter that is clearly not cut and dry is street teams. Can this be expanded to anyone with a financial interest in a company? For example, let’s say that I’m an Apple shareholder and I convince a friend that they should buy a Mac. Technically I am being financially rewarded for doing so. Even worse, suppose we’re out in public. Too murky to regulate, IMO. You may recall this report from Dr. Walter Carl where consumers really don’t care about disclosure when it comes to offline agents — just 5% said there was a negative backlash when they found out someone was being compensated. I’m not going to say it’s all on the consumer. But the argument can be made that they really don’t care if someone’s being compensated and that they use their best judgment to determine that person’s credibility.

So… what’s the answer?

Clearly, there are several verticals online where transparency is not the policy. How many times have you looked at the reviews on iTunes, gaming and travel sites and wondered if they were real? What about the astroturfing I uncovered in the beauty blogosphere? Ultimately the companies engaging in unethical practices are those that suffer. Consumers lose trust with that company or brand and stop buying the product. That’s how you punish unethical companies, not through blanket government regulation over entrepreneurial individuals trying to run a web site.

Similarly, if a blogger’s readers truly feel duped then their brand and business will suffer through decreased readership.

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  1. I am all for bloggers having a disclosure page where how they review products is laid out…but here is my 2 cents:

    Magazines don’t do this, yet we all know that we in PR are pitching them and that the editors are not just raving about something they truly love or stumbled upon themselves. Often times magazines have that unspoken rule that you get special attention if you advertise with them for that issue. Just pick up any beauty magazine and I can guarantee that if they are talking about the greatest new lipstick by Brand X, that Brand X has at least one ad in said magazine that month. When a beauty editor raves about the newest beauty find, I have never seen them disclose which PR firm sent it to them. So why as bloggers should we have to disclose that the brand or their PR firm sent us the product for free to review? Also, if you are being monetarily compensated…in which I would consider it an advertorial…there definitely should be full disclosure.

    Another thing is that many of these PR press release sites have blogs set up to aggregate their press releases. Specifically speaking on beauty–they have the look of a beauty blog and the press release is posted as if it is a blog post, but there is no disclosure page saying they are connected to that newswire. The typical reader may not realize this just browsing the blogosphere, but obviously those of us in PR know who they are. Will there be mandated disclosure for this as well?

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