Marketing Roadmaps

Susan Getgood

Companies’ obligations under FTC endorsement guidelines

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As I noted in last week’s post, companies using social media marketing tactics have an equal, if not greater obligation, than bloggers under the revised FTC guidelines. It just hasn’t gotten as much media coverage. In part because the story isn’t as  provocative as “Bloggers are Shills! Big fines!” and in part because it’s not news. The advertiser has ALWAYS had liability under the deceptive advertising statues.

In short, companies using word of mouth marketing and their agencies are required to:

  • Disclose their relationships when posting, commenting or tweeting. Including reviewing products on websites. Let’s call this the anti-astroturfing provision;
  • Provide guidance to people participating in their campaigns about their obligation to disclose;
  • Monitor to ensure both compliance with the disclosure requirements and accuracy of information;
  • Take steps to correct inaccurate or misleading information.

What does this mean in practical terms?

Companies must revise their social media policies to require employees to identify themselves as interested parties when posting or commenting about the company and its products. This does not preclude the ability to post anonymously. It’s not the employee’s name that’s important. It’s the fact of employment. What you are — an employee — is more important than who you are — your name. The same requirement applies to agencies acting on the company’s behalf. If you work for Brand X’s PR firm and leave a comment on a review site, you’d better identify yourself. Companies also must train all employees about the disclosure requirements and their responsibilities.

Companies engaged in blogger outreach and word of mouth marketing programs must inform participants about the obligation to disclose. In my opinion, this advice must be specific to the program, not a generic statement about the need to disclose.

Updated to add: I think affiliate marketers are obliged to provide disclosure guidance to their affiliates, and expect responsible affiliate programs will be making changes to their agreements to reflect both the disclosure requirement and the affiliate’s (the blogger’s) responsibility. Assuming, as I do, that affiliate marketing will be under the FTC’s microscope, I would not be surprised to see non-compliance as grounds for removal from the program.

The company’s monitoring program must be fine-tuned to look for the proper disclosures as well as the mention of the brand. Processes must be developed to surface and correct inaccuracies and other misleading statements, including,  I imagine, missing disclosure statements.

And, of course, all of this must be carefully documented should it be needed as a defense in an enforcement action. You can’t just say you did it. You have to be able to prove it.

Blog with Integrity goes to Washington

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The Washington Monument landmarkWe are fortunate to have a top notch pair of Washington lobbyists, Elizabeth Frazee and Sharon Ringley of TwinLogic Strategies, helping Blog with Integrity on a pro bono basis.  They made the initial connection to the FTC for the Town  Hall webinar on the 10th, and earlier this month when I was in DC on other business, they set up a day of meetings  on Capitol Hill.

Our goal was to let policymakers know that, at the grassroots level, bloggers are committed to transparency, disclosure and self-regulation.

We also wanted to show our support for the common sense approach of applying existing law, combined with self regulation, to new technologies, rather than rushing to new, possibly unnecessary legislation. Only if the existing laws cannot adequately address the public’s interest, should we look to new laws.

This is exactly what the FTC has done with the endorsement guidelines. It intends to apply existing law about a certain type of content — a commercial endorsement — to a new form, blogs and social media. We need to let it play out.

On the Hill, we met with staffers for key congressional committees, including commerce and small business. At the FTC, we met with members of Chairman Leibowitz’s staff, and were honored when the Chairman made time to spend a few minutes with us as well. Everyone seemed genuinely interested in the campaign and our ongoing educational program.

Of course, the cynic in me knows it didn’t hurt that we weren’t actively lobbying for something specific.  Most of the time, congressional and agency staffers juggle meetings with interested parties looking for a specific outcome.

We just wanted to make the connection.

Once More, with Feeling: FTC guidelines, bloggers and companies

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Every time I post about the FTC’s guidelines for endorsements and testimonials, I hope that, this time, the misinterpretations and disinformation will stop. So far, I remain disappointed, but ever optimistic, here I go. Once More, with Feeling.

Last week, Blog with Integrity hosted a webinar featuring Mary Engle from the FTC’s Bureau of Consumer Protection. We had the opportunity to ask Mary a number of questions about the guidelines. Here are  some highlights of the conversation:

  • The FTC does not intend to pursue individual bloggers. Its focus is on the companies and advertisers who are engaging with word of mouth marketing in ALL its forms, not just blogs. This includes Twitter, Facebook, review sites and word of mouth programs that use street teams.
  • The FTC wants the companies to provide guidance to the people working with them on word of mouth marketing programs.
  • The guidelines do not carry penalties or fines.
  • The guidelines affect all bloggers who directly participate in marketing programs, not just mom bloggers as has often been portrayed in the media.
  • Disclosure statements need to be clear and prominent. A blanket statement might be okay, depending on the circumstances, but it shouldn’t be at the bottom of the page, as the reader might not get that far.
  • If a blog operates like a magazine — with clear editorial guidelines, editors, assignments, etc., the FTC likely will treat it the same way as a mainstream media magazine.
  • The contents of swag bags at conferences, distributed to all attendees, are more like the example in the guidelines in which the blogger received a grocery coupon for a free bag of dog food. Recipients aren’t selected individually and personally, so there is no relationship to disclose.
  • The FTC cannot provide specific guidance as that might compromise ongoing investigations.
  • The consumer’s understanding of the commercial message is the crux of the matter.  Mary’s final slide stated: “Does the reader/audience understand the relationship between the reviewer and the company whose products are being reviewed?” If not, disclose.
  • The FTC will continue to add resources to its website to help consumers and companies understand the guidelines, and questions can be emailed to endorsements@ftc.gov

Bloggers and journalists

We didn’t reach as much clarity about bloggers being held to a different standard than journalists.  Mary tried to explain the FTC’s position, but from the questions both during and after the session,  folks are still reacting to this as a statement about an ethical difference between a blogger and a journalist. It’s not. It’s about the consumer’s understanding of the different channels. Here’s the text:

The Commission acknowledges that bloggers may be subject to different disclosure requirements than reviewers in traditional media. In general, under usual circumstances, the Commission does not consider reviews published in traditional media (i.e., where a newspaper, magazine, or television or radio station with independent editorial responsibility assigns an employee to review various products or services as part of his or her official duties, and then publishes those reviews) to be sponsored advertising messages. Accordingly, such reviews are not “endorsements” within the meaning of the Guides.  Under these circumstances, the Commission believes, knowing whether the media entity that published the review paid for the item in question would not affect the weight consumers give to the reviewer’s statements. Of course, this view could be different if the reviewer were receiving a benefit directly from the manufacturer (or its agent).

In contrast, if a blogger’s statement on his personal blog or elsewhere (e.g., the site of an online retailer of electronic products) qualifies as an “endorsement” – i.e., as a sponsored message – due to the blogger’s relationship with the advertiser or the value of the  merchandise he has received and has been asked to review by that advertiser, knowing these facts might affect the weight consumers give to his review. (page 47, Federal Register Notice)

I wrote about this at some length in an earlier post, and won’t repeat everything here, but I’d like to suggest that we stop worrying about the semantics of journalists versus bloggers, and instead turn our attention to the issue of form versus content. Discussing the issues in the context of mainstream media or blogs focuses on form. But forms are fluid. They change. We need to stay focused on content. Is it a commercial message? If so, and the commercial nature is not clear from the context,  it needs to be disclosed, regardless of form. An ad that looks like the front page of the New York Times is an ad, regardless of form. A website that offers editorial content mixed with advertisements is more like a magazine than a personal blog, even if it happens to be published using blogging software.

Was the FTC as clear as it could have been on this issue? No, but I am hopeful that its workshop in early December on the Future of Journalism will move it, and us, closer to a better understanding.

[11/17 – update on this issue below]

Affiliate marketing

Our discussion during the webinar also made it clear that we — consumers, bloggers, policymakers and regulators alike – need a much better understanding of affiliate marketing. Clearly, there is a commercial relationship between a seller and its affiliates, but there are many variations on the theme, and more than a few different types of affiliate ads, from entire websites that are nothing more than an advert to display ads on blogs to deep links within posts. There were many many questions about this both during and after the session. Understandably, bloggers want specific guidance from the FTC,  and that just isn’t going to happen. Blog with Integrity may do a webinar next year on affiliate marketing, and we would love your feedback on the idea.

Did you know – COMPANIES are liable under the guidelines too!

The FTC has been pretty clear where it thinks specific guidance should be coming from —  the advertisers. Companies also have specific disclosure and monitoring responsibilities. Unfortunately, that part of the guidelines hasn’t gotten nearly as much media attention as the blogger liability. Here are the specific examples, emphasis mine:

Example 5: 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 also is subject to liability for misleading or unsubstantiated representations made in the course of her endorsement. The blogger is also liable if she fails to disclose clearly and conspicuously that she is being paid for her services.

In order to limit its potential liability, the advertiser should ensure that the advertising service provides guidance and training to its bloggers concerning the need to ensure that statements they make are truthful and substantiated. The advertiser should also monitor bloggers who are being paid to promote its products and take steps necessary to halt the continued publication of deceptive  representations when they are discovered.

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Example 7: A college student who has earned a reputation as a video game expert maintains a personal weblog or “blog” where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review. Because his review is disseminated via a form of consumer-generated media in which his relationship to the advertiser is not inherently obvious, readers are unlikely to know that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact likely would materially affect the credibility they attach to his endorsement. Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge. The manufacturer should advise him at the time it provides the gaming system that this connection should be disclosed, and it should have procedures in place to try to monitor his postings for compliance.

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Example 8: An online message board designated for discussions of new music download technology is frequented by MP3 player enthusiasts. They exchange information about new products, utilities, and the functionality of numerous playback devices. Unbeknownst to the message board community, an employee of a leading playback device manufacturer has been posting messages on the discussion board promoting the manufacturer’s product. Knowledge of this poster’s employment likely would affect the weight or credibility of her endorsement. Therefore, the poster should clearly and conspicuously disclose her relationship to the manufacturer to members and readers of the message board.

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Example 9: A young man signs up to be part of a “street team” program in which points are awarded each time a team member talks to his or her friends about a particular advertiser’s products. Team members can then exchange their points for prizes, such as concert tickets or electronics. These incentives would materially affect the weight or credibility of the team member’s endorsements. They should be clearly and conspicuously disclosed, and the advertiser should take steps to ensure that these disclosures are being provided.

In short, companies using word of mouth marketing and their agencies are required to:

  • Disclose their relationships when posting, commenting or tweeting. Including reviewing products on websites. Let’s call this the anti-astroturfing provision;
  • Provide guidance to people participating in their campaigns about their obligation to disclose;
  • Monitor to ensure both compliance with the disclosure requirements and accuracy of information;
  • Take steps to correct inaccurate or misleading information.

Are companies and agencies doing this? How about the big blog networks? If they aren’t doing it now, they’d better be by December 1, 2009, because that’s where we are likely to see the first enforcement actions. The FTC has said so more than once.

Bet that’ll get a little media attention.

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Some additional reading

Blogging Moms Wooed by Food Firms – My rambly two cents on the LA Times Article (Mom 101)
Using Bloggers as Means, Not Ends Unto Themselves (Jeremy Pepper)
Clarification and commentary on new FTC advertising and endorsement rules (The Practical Nomad)

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11/17 Update – We are forwarding post-webinar questions we get about the FTC guidelines to the endorsements@ftc.gov email address. I sent one this morning, and got an automated reply with five FAQs, including this one, which should clear up the blogger/journalist confusion:

3. “Aren’t you holding bloggers to a higher standard than people who review products for newspapers or on TV?” No, the Endorsement Guides apply across the board. The issue is – and always has been – does the audience understand the reviewer’s relationship to the company whose products are being reviewed? If yes, then a disclosure isn’t needed. If no, then a disclosure is needed. Here’s why that’s the case. For a review in a newspaper, on TV, or on a website with content similar to what you’d find in a publication or on TV, it’s usually clear to the audience that the reviewer didn’t pay for the product being reviewing. It’s their job to write reviews and no one expects that they paid for what they’re reviewing. But in other instances – for example, on a personal blog or social networking page – the reader wouldn’t expect the reviewer to have a relationship with the company whose products are mentioned or reviewed. Disclosure of that relationship helps the audience evaluate potential bias and avoid deception. That’s the long and short of what the Guides are all about. And, as usual, we’ll be focusing our enforcement efforts on the advertisers, not on individual endorsers.

Yup, that’s what I thought. Nice to hear it directly from the FTC.

A brief diversion: the LOL Bad Pitch of the Day

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Marketing Roadmaps has been pretty serious of late, and likely will be so again as I continue to dig into topics related to the FTC endorsement guidelines. But today, my friends, I received an email pitch I just have to share with you.

Here’s the pitch:

underwearpitch1

And here’s the accompanying picture:

underwearpitch2

I guess someone thinks I’ve got a set….

FTC Guidelines on Endorsements: Analysis of the Examples

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As promised here is a brief analysis of the examples that pertain to social media and blogging in the revised FTC Guidelines on Endorsements and Testimonials in Advertising, published on October 5th. These revised guidelines take effect on December 1, 2009. My previous posts have covered the broad  issues under public debate about the guidelines, and I’m not going to revisit that material here.  This is a dive into the examples.

If you have questions about the guidelines, Blog with Integrity is holding a free webinar next Tuesday November 10th at noon featuring special guest Mary Engle, the FTC’s Associate Director for Consumer Protection. She’ll be answering questions submitted by the community; submit yours by Friday November 6th to blogwithintegrity@gmail.com and then join us on the 1oth. She will also take questions live, but the best way to ensure that yours makes the cut is to get it to us in advance.

Examples:

Example 8 (Section 255.0): A consumer who regularly purchases a particular brand of dog food decides one day to purchase a new, more expensive brand made by the same manufacturer. She writes in her personal blog that the change in diet has made her dog’s fur noticeably softer and shinier, and that in her opinion, the new food definitely is worth the extra money. This posting would not be deemed an endorsement under the Guides.

Assume that rather than purchase the dog food with her own money, the consumer gets it for free because the store routinely tracks her purchases and its computer has generated a coupon for a free trial bag of this new brand. Again, her posting would not be deemed an endorsement under the Guides.

Assume now that the consumer joins a network marketing program under which she periodically receives various products about which she can write reviews if she wants to do so. If she receives a free bag of the new dog food through this program, her positive review would be considered an endorsement under the Guides.

I was thrilled to see this example. It covers three common scenarios under which bloggers might acquire goods, and clearly differentiates among purchase, a mass distribution of samples without any relationship (the supermarket coupon) and a relationship under which a disclosure is required (the marketing program.)  This third scenario is clearly the situation referred to when the FTC’s Mary Engle commented on P&G’s program:

Moreover, Engle said the revised guidelines are aimed at advertisers and marketers, not individual bloggers. She cited a Procter & Gamble campaign called “Vocalpoint,” which provided “400,000 moms” with free products in exchange for endorsements made via blog posts and tweets.

“If these moms are posting about how great Tide is or Febreeze, that wasn’t just because they tried it and they loved it; it’s because they are part of P&G’s marketing campaign and that relationship needs to be disclosed,” said Engle, who also admitted, “We probably could have done a better job of describing the distinctions between people who write blogs about books and the moms who are part of P&G’s team.” (Publishers Weekly)

I think it also applies to pay-per-post and sponsored post programs under which bloggers regularly receive offers as a result of participation in the program.  I also think that mass distributed SWAG bags, regardless of the value of the merchandise, may not be included as there is no specific relationship with the blogger. Am I right? We’ll ask Mary on the 10th.

Example 5 (section 255.1): 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 also is subject to
liability for misleading or unsubstantiated representations made in the course of her endorsement. The blogger is also liable if she fails to disclose clearly and conspicuously that she is being paid for her services. [See § 255.5.]

In order to limit its potential liability, the advertiser should ensure that the advertising service provides guidance and training to its bloggers concerning the need to ensure that statements they make are truthful and substantiated. The  advertiser should also monitor bloggers who are being paid to promote its products and take steps necessary to halt the  continued publication of deceptive representations when they are discovered.

This example is unchanged from the proposed guidelines. Key points:

For bloggers: Take care in making product claims; stick to your own experience and stay away from highly evocative words like “cure;” educate yourself on the features/benefits of the product; disclose the relationship.

For companies: Make sure you have properly informed bloggers about your product and stay on top of their posts. You need to fix errors asap.

Example 3 (section 255.5 disclosure of material connections) : During an appearance by a well-known professional tennis player on a television talk show, the host comments that the past few months have been the best of her career and during this time she has risen to her highest level ever in the rankings. She responds by attributing the improvement in her game to the fact that she is seeing the ball better than she used to, ever since having laser vision correction surgery at a clinic that she identifies by name. She continues talking about the ease of the procedure, the kindness of the clinic’s doctors, her speedy recovery, and how she can now engage in a variety of activities without glasses, including driving at night. The athlete does not disclose that, even though she does not appear in commercials for the clinic, she has a contractual relationship with it, and her contract pays her for speaking publicly about her surgery when she can do so. Consumers might not realize that a celebrity discussing a medical procedure in a television interview has been paid for doing so, and knowledge of such payments would likely affect the weight or credibility consumers give to the celebrity’s endorsement.

Without a clear and conspicuous disclosure that the athlete has been engaged as a spokesperson for the clinic, this endorsement is likely to be deceptive. Furthermore, if consumers are likely to take away from her story that her experience was typical of those who undergo the same procedure at the clinic, the advertiser must have substantiation for that claim.

Assume that instead of speaking about the clinic in a television interview, the tennis player touts the results of her surgery – mentioning the clinic by name – on a social networking site that allows her fans to read in real time what is happening in her life. Given the nature of the medium in which her endorsement is disseminated, consumers might not realize that she is a paid endorser. Because that information might affect the weight consumers give to her endorsement, her relationship with the clinic should be disclosed.
[…]

The bolded section, about the celebrity endorsement on a social networking site, is a new addition to the guidelines. It is important because it extends the disclosure responsibility to celebrities. IMO, this applies to anyone who can be deemed to a celebrity in the mind of the average consumer of the web content. Even web celebrities who are relatively unknown outside the net. If the reader would NOT understand that the review was a paid endorsement, there is an obligation to disclose.

Example 7 (section 255.5 disclosure of material connections): A college student who has earned a reputation as a video game expert maintains a personal weblog or “blog” where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review. Because his review is disseminated via a form of consumer-generated media in which his relationship to the advertiser is not inherently obvious, readers are unlikely to know that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact likely would materially affect the credibility they attach to his endorsement. Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge. The manufacturer should advise him at the time it provides the gaming system that this connection should be
disclosed, and it should have procedures in place to try to monitor his postings for compliance.

Example 8 (section 255.5 disclosure of material connections): An online message board designated for discussions of new music download technology is frequented by MP3 player enthusiasts. They exchange information about new products, utilities, and the functionality of numerous playback devices. Unbeknownst to the message board community, an employee of a leading playback device manufacturer has been posting messages on the discussion board promoting the manufacturer’s product. Knowledge of this poster’s employment likely would affect the weight or credibility of her
endorsement. Therefore, the poster should clearly and conspicuously disclose her relationship to the manufacturer to members and readers of the message board.

These two examples are unchanged from the preliminary document. The first relates to the reasonable expectation of the reader, the second is about astro-turfing, the practice of not revealing a paid employee relationship with the company. In both cases, disclosure is required so the reasonable person understands that there is a compensated relationship between the reviewer and the company.

As I wrote in last week’s post, I would like to see some additional examples from the FTC covering the difference between bloggers and journalists, and the distinction between personal blogs and those that operate like magazines. Overall, however, I don’t think the FTC did a bad job understanding the social media space.

Certainly a much better job than Congress did about 13 years ago when it mucked about with the Communications Decency Act.

Disclaimer:  Still not a lawyer.