Recently Word of Mouth on NH public radio interviewed Rich Cleland, Assistant Director of the FTC’s Advertising Practices bureau about the revised guidelines on endorsements and testimonials that are expected to be approved this summer. Liz Gumbinner from Cool Mom Picks and Mom-101 provided the blogger’s perspective.
There really wasn’t anything new or unexpected. I’ve written about this topic as has Liz. What was nice was to actually hear it directly from the FTC rather than filtered through another source like AP or BusinessWeek.
Here’s my takeway from the interview:
- The key issues are disclosure of relationships and truthful opinion. FTC believes truth in advertising/transparency should apply regardless of the media.
- FTC isn’t regulating whether bloggers take compensation or not. The occasional review or free product is not the issue. FTC is concerned about blog networks, bloggers that consistently receive products/compensation, and disclosure of relationships.
- FTC believes compliance will be high.
- Enforcement will be subject to the same criteria as it is now — the extent of the injury will determine whether it justifies the expense of enforcement. I have long believed this would be the case. Nice to hear it from the source.
- While bloggers would like the FTC to distinguish between free product and cash compensation, it does not seem inclined to do so. However, as noted above, the occasional free product or review isn’t the issue. The FTC is interested in consistent patterns of behavior, and in blog networks, not in whether an individual blogger got a free mascara or a bag of chips.
What they did NOT discuss on Word of Mouth was affiliate marketing, which the AP story said would be included:
“… the guidelines also would cover the broader and common practice of affiliate marketing, in which bloggers and other sites get a commission when someone clicks on a link that leads to a purchase at a retailer. In such cases, merchants also would be responsible for actions by their sales agents – including a network of bloggers.”
I’ve read the initial draft of the changes to the guidelines, and it does not include an example specific to online affiliate marketing such as Amazon. While I expect changes to draft in the final guidelines, I never made the connection between endorsements & testimonials, and affiliate ads like Amazon. Blog networks that offer free products or compensation to bloggers, absolutely. Campaigns that offer compensation to users for reviews on Amazon or iTunes. Again, clearly subject to the guidelines.
But simple affiliate marketing programs?
After much thought and conversation, I don’t think affiliate marketing should be lumped together with the guidelines on endorsements and testimonials. If the FTC wants to review online affiliate marketing practice, it should do so in a separate effort and allow sufficient time for public comment.
Affiliate marketing is a different type of advertising
A review of a product that is compensated in advance by either cash or free product should be considered a form of advertising. The FTC guidelines should apply.
The affiliate marketing relationship is different.
The blogger reviews or mentions a product on her blog and provides a link to a store that carries the item. For example, Amazon. It’s a referral. The blogger is only compensated if the buyer purchases the product from that link.
The explicit endorsement is of the product, although no one would deny that there is also an implicit endorsement of the store, especially if the blog also shows a search widget for the store in its sidebar.
However, once the buyer is at the store, the influence of the initial mention or review is diluted — by the advertising material on the store, by reviews from other consumers, by alternate product suggestions from the store. The blogger’s original opinion becomes one of many sources of information. If the buyer goes ahead and purchases something from the visit created by the affiliate link, the compensation is really nothing more than a “thank you for telling your friends about us.”
Now, if the blogger received the product for free, it should be disclosed under the guidelines. But it should be the free product that trips the endorsement guidelines, not the affiliate referral.
Affiliate marketing is understood by Internet users
Whether you see an ad like this:
or embedded links within a post like these Sleep Is for the Weak
In the very long FTC guidelines document, a key condition of the additional disclosure requirement is if the consumer would not otherwise understand that an endorsement was compensated or that the speaker had a material interest. If the consumer would understand that the speech or action was compensated, the public interest does not require additional disclosure.
Examples — An athlete wearing name brand sports apparel is assumed to have a contract with the manufacturer. A celebrity on the red carpet is assumed to have borrowed her gown from a designer. A public figure endorsing a product in a TV commercial didn’t do it for free.
Affiliate advertising on blogs is similar. We don’t need additional information to know there’s compensation. It looks far too much like straightforward online advertising for there to be any real confusion.
What should bloggers do if they have affiliate marketing relationships?
The new FTC guidelines are due later this summer. We’ll see then how affiliate marketing is covered (or not) in the document. It wasn’t in the initial draft, so we don’t have an example yet.
In the meantime, if you have affiliate marketing relationships, I suggest disclosing them clearly in your blog policy.
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The Amazon affiliate links used above for illustrative purposes are for books written by friends and use the Amazon affiliate account from my personal blog Snapshot Chronicles. So yes, if you buy a book, a friend gets a sale and I get a teeny weeny commission.