Marketing Roadmaps

FTC

FTC Update: Operation Full Disclosure; Disclosing a compensated trip

by

Last Thursday, the Federal Trade Commission issued a press release about its Operation “Full Disclosure.”
The most important thing for bloggers to know about Operation “Full Disclosure” is that it has NOTHING to do with sponsored posts on blogs.  It was aimed squarely at national television and print advertisers that failed to make adequate disclosures in their ads. More than 60 companies received FTC warning letters, largely focusing on disclosures that were in fine print, easy to miss or hard to read.

The FTC Guidelines apply to ALL advertising claims and endorsements – traditional media, social media, even direct word-of-mouth. While its publications and hearings over the past few years have focused on defining and clarifying the guidelines’ impact on social and online media, the FTC clearly hasn’t lost sight of its mandate to protect the consumer from ALL misleading advertising.As the press release clearly summarizes:

“The FTC’s longstanding guidance to companies is that disclosures in their ads should be close to the claims to which they relate – not hidden or buried in unrelated details – and they should appear in a font that is easy to read and in a shade that stands out against the background. Disclosures for television ads should be on the screen long enough to be noticed, read, and understood, and other elements in the ads should not obscure or distract from the disclosures.

The staff letters advised advertisers that to meet the “clear and conspicuous” standard, their disclosures should use clear and unambiguous language and should stand out in the advertising – consumers should be able to notice disclosures easily; they should not have to look for them.”

The purpose of the FTC guidelines is to avoid consumer confusion about advertising messages. By making sure that advertising does not contain misleading statements or hide important facts or conditions, and that any interest, such as compensation or affiliation with a company, an endorser might have in a product she recommends be clearly disclosed.

Store these 3 principal FTC requirements permanently in a room in your mind palace:

  1. Disclosure is required when you are compensated, and you endorse (write or speak about) the entity that compensated you. If you are not compensated, either in cash or goods, there is nothing to disclose.
  2. Claims must be true and the source disclosed (my opinion, scientific research showed…, the company said….)
  3. Disclosures should use clear unambiguous language that stands out and is positioned close to the claim or endorsement.

Speaking of confusion….

There seems to be some confusion in the blogosphere of late as to how the guidelines apply to compensated trips. Here’s my take.

  • If you are PAID to go on a trip, you must disclose whenever you endorse/write/speak about the entity that compensated you. Compensation can be cash, product or service. In your blog posts. In your tweets and Facebook posts. You write about the sponsor, you disclose you were sponsored.
  • If part of a compensated assignment includes a certain number of social shares about the experience but not necessarily about the sponsor, and you are asked to use a specific hashtag and/or link to a website for the sponsor, you must disclose. Including the hashtag or link is a promotional activity for which you were compensated.
  • If you want to tweet about the sunset, or say how tasty the orange juice was at venue that is NOT the sponsor, or whatever,  you don’t need to disclose. You are not endorsing the sponsor, so you don’t need a hashtag or a disclosure. Where there is no compensation, no disclosure is required.
  • That said, if you write an unrelated blog post about elements of the trip that does not include the sponsor, you should still disclose that you were sponsored. Not because the FTC requires it, but because you should give your sponsor the love.
  • When in doubt err on the side of disclosure.

Here is an example, completely made up.

SuperChic Hotel sponsors you on a trip to the Mexican Riviera. They pay your airfare, comp your hotel, restaurant meals and rental car, and give you an allowance for sightseeing and incidentals. How should you disclose:

  • Any time you mention SuperChic Hotel, your readers should know you were sponsored. Blog posts, Twitter, Pinterest, Facebook, Instagram, videos. Whatever.  Even if you were not specifically compensated for an activity, such as a pinning. Disclose.
  • Mention the airline, the car rental company, restaurants and boutiques not affiliated with SuperChic Hotel, sightseeing attractions? Unless SuperChic Hotel provided specific instructions on where to go/vendor to use, you do NOT need to disclose a compensated relationship with the vendors. Your relationship is with SuperChic, not with them. That said, as a best practice,  I recommend you disclose that your overall trip was sponsored.
  • Want to tweet about the sand on the beach or the gorgeous sunset. Unless your sponsor is the beach, which is possible, or the sun, which is not, no disclosure required.

This scenario gets a little more complicated if the sponsor is the regional tourist authority, especially if it plans the details of your trip. In that case, I would make the call that anything in the region is supported by the tourist authority, and the relationship should be disclosed with every endorsement. Even the beauty of the beach.

What about a compensated speaking engagement that also pays your way — any or all of fee, comped registration, airfare, hotel? Your presence on the roster of the event is a clear notice of your affiliation with the event. Any reasonable consumer of the conference content understands that you have a relationship with the conference.

The amount of your compensation is not relevant. When it comes to  FTC disclosure, it doesn’t matter if it is a liptstick or a Lamborghini;  a free lipstick is the same as a car, comped airline ticket or $1000 fee.  In my opinion, to double down on disclosure, if you decide to write a glowing post about the conference, or tweet props to the conference organizers, you should disclose your affiliation, but you don’t need to preface every tweet about the conference content with the hashtag #ad unless you were specifically compensated to promote the conference content.

A note about hashtags in social posts: Never use #spon. It is not at all clear. Use  #ad or #hosted or #sponsor or #sponsored, and don’t bury the hashtag at the end of your social post. I prefer to see them in context if possible or at the very front of the post if not.

Examples:

Having a great time on trip to Mexico #sponsored by #SuperChic.
Rooms at #sponsor #SuperChic are gorgeous. Now off to the spa.
#ad Don’t miss the regional tasting menu at #SuperChic restaurant

Lastly, a word of advice. The FTC guidelines are pretty simple.  Disclosure is required so the consumer of the advertising can put your endorsements in the proper context. It’s common sense — Wouldn’t you want to know if the writer of a glowing blog post about a product you intended to buy was compensated by the company? If it was someone you trusted, you’d still take the advice, but you would want the context of the compensation. The FTC provides guidelines and advice about proper disclosure, and will from time to time go on the record about what it considers inadequate disclosure (like #spon), but it doesn’t dictate a specific way to disclose. When you read articles or blog posts that report that there is a specific, correct way to disclose, take them with the grain of salt. What you are reading is someone’s interpretation of the guidelines cast as an absolute.

Related articles

Travel blogs, ethics and the FTC endorsement guidelines

by

IMG_8919This past weekend, I was in New York for the Travel Blog Exchange conference (TBEX). The primary reason I attended the conference was to represent Blog With Integrity on a panel about blogging ethics, but I also got some great tips and ideas for my somewhat neglected travel blog, Snapshot Chronicles Roadtrip.

This year, I’ve spoken at a number of conferences about integrity, disclosure and the FTC endorsement guidelines. In most cases, the audience doesn’t know very much about the guidelines beyond whatever version of the urban myths are circulating within the community. This is of course why the conference organizers invite Blog With Integrity and usually someone from the FTC and/or a lawyer.

The travel community  was grappling with the ethical issue of sponsored trips  well before the guidelines were revised last year. Travel bloggers are very passionate about ethics and receptive to the approach of best practices — disclosure policies that go beyond what the FTC minimally requires. In fact, many travel blogs already have published policies.

During the Q&A on Sunday, it was clear that the attendees wanted to comply with the FTC requirements,  but they were struggling a bit with exactly what had to be disclosed and how.

And then I had an “Aha” moment. Hard to believe that after all I have written about this topic for more than a year, there would be something I hadn’t thought of, but lo and behold, there was.

I broke it down to a simple equation for disclosure, which seemed to clear things up for a lot of the bloggers at TBEX.

Endorsement + Compensation = Disclosure Required

How to disclose

The best way to disclose to meet the FTC guidelines is within the post that contains the endorsement: “I was privileged to be hosted by…” “I was thrilled at the opportunity to take a trip to (place) courtesy of (sponsor).” And so on. It is not sufficient to disclose in your disclosure policy or About page.

However, I recommend that you also have  a disclosure & editorial policy on your page:

  • to let your readers know what they can expect on your blog, especially casual readers or folks that find you through a search engine, and
  • to inform marketers and PR people about your interests so they contact you with relevant, appropriate offers.

Relationships and SWAG

Another key point Mary Engle from the FTC and I both stressed on Sunday was the relationship between the marketer and the blogger. If the marketer is reaching out to specific bloggers with sponsored trips and free products, there is a compensated relationship that must be disclosed. If 300 bloggers all get identical SWAG (stuff we all get) at a conference, the reason they received it was as a member of a group, not as an individual. There is no relationship between the marketer and a blogger who got the SWAG. This is still true if distribution of the SWAG is managed using a list of bloggers at the conference entitled to receive it. A list doesn’t create a relationship. Communication between people creates a relationship.

That said, of course, you know my mantra — disclose anyway. The company that provided an item relevant enough that you decide to write about it deserves the props for supporting the conference SWAG bag.

Bloggers, journalists

A touchy subject was the idea that travel bloggers are being held to a higher standard than travel writers for mainstream media who don’t have to disclose. I’ve written about why the FTC doesn’t require disclosure from mainstream journalists many times, and won’t rehash it all again. The brief version is that it’s about the consumer reading the item, not the person writing it. If the consumer would understand that the endorsement was compensated  — in the case of a journalist, by his salary and probably the subsidy of his paper for the trip,  no further disclosure is required.

The predominant sentiment at the conference was that mainstream journalists should be required to disclose as well. I agree. Disclosure is a best practice, full stop, regardless of your publishing channel.

However, I reject the opposite argument, which wasn’t offered by the TBEX audience, but I’ve read elsewhere — if mainstream journalists don’t have to do it, why should bloggers? That’s grabbing the stick from the very wrong end.

I also think it’s counter-productive to worry too much about others. Focus on what you need to do to connect with your readers, provide them good information and entertaining writing, and be honest about any business relationships you have. Compensation or free product may not change your opinion or writing one little bit, but you have to let the reader make that call for herself. You shouldn’t attempt to do it for her.

Twitter?

How to disclose on Twitter always comes up during ethics panels, and Sunday was no exception. It’s also a bit more complex for travel writers taking sponsored trips, as opposed to someone reviewing a single product. A trip occurs over a period of time, and there are only 140 characters. If part of every tweet has to have a disclosure, the tweetstream would get pretty dull.

Mary Engle made an important clarification for us. You have to disclose that the trip was compensated or the product was free in tweets containing the endorsement of the sponsor/advertiser. When you are tweeting about something unrelated to the sponsor — for example,  your experience at a local museum or farmers’ market, there’s no need to disclose because you are not endorsing the sponsor.

Here’s my advice.

  • Start your trip with a tweet acknowledging the sponsor (and linking to a post on your blog with more details if you have one)
  • Be sure to disclose in some fashion in any tweets endorsing the sponsor: “I love my room at the Aruba Marriott #sponsor” “The beach at host hotel Swanky Resort is pristine.”
  • If the trip spans multiple days, make sure you have at least one tweet per day that discloses that your trip is sponsored and by whom. The easiest way to do this is to spread out your endorsements of the sponsor 🙂
Related articles by Zemanta
Enhanced by Zemanta

Thoughts on the FTC investigation of Ann Taylor LOFT blogger event

by

So many things queued up to write about, including last week’s New Comm Forum, a slew of bad pitches that folks have forwarded over the past few months (Douches, Snakes and Brand Ambassadors) and a great visit to the Dana Farber Cancer Institute yesterday to learn more about the Jimmy Fund.

But the FTC went public this week with the results of its first investigation under the new endorsements and testimonials guidelines, and that news trumps the other (more evergreen) topics.

As reported in Ad Age, the FTC investigated an event held by Ann Taylor LOFT in January to launch its summer collection. The company invited bloggers to attend a special preview of the collection; those that posted about the event within 24 hours were entered into “mystery gift-card drawing” with a value between $50 and $500. (More about the event on Jezebel: February 3, April 28)

Reported Ad Age:

The event and the unusual request for posts to be submitted for a prize received media scrutiny and caught the eye of the FTC. “We were concerned that bloggers who attended a preview on January 26, 2010 failed to disclose that they received gifts for posting blog content about that event,” Mary Engle, the FTC’s associate director-advertising practices, wrote in a letter dated April 20 to Ann Taylor’s legal representation.

According to the article, the FTC decided not to take further action because it was a single event, only a small number of bloggers participated (and some disclosed) and Ann Taylor subsequently adopted a written policy for blogger outreach.

This is exactly what the FTC said it planned to do all along. Its focus would be on advertisers, not individual bloggers, and the initial investigations would likely result in warnings, not indictments.

Taking the step of pursuing an action in the courts is a long expensive process. The harm to the public has to be pretty significant to merit the cost, especially if satisfaction can be obtained more efficiently, as it was here.  I suspect an uncooperative Ann Taylor might have resulted in a different outcome.

What can we learn from this?

The guidelines are intended to prevent deceptive advertising practices. The media may love the (erroneous) idea that the FTC is “cracking down on bloggers,” as Ad Age repeated again in this week’s article, but reality is, the larger burden is on the companies, not the individuals.  The FTC expects the company — the advertiser — to provide guidance to its WOM agents about the requirements. In the Ann Taylor case, there wasn’t much guidance.

While it isn’t covered in the Ad Age article, there was also an element of confusion in the event that probably concerned the FTC. This is entirely speculation on my part, but it’s a fairly informed one.

Basically, if you write about a company or product and subsequently get a gift, you aren’t required to disclose the gift. Unless of course you write about the company again. Further, if you win a sweepstakes or get a product in a swag bag, you don’t really have a material relationship with the advertiser. Your receipt of the product is random. Best practices may dictate disclosure but the endorsement guidelines do not.

Here we have a gift contigent upon a post. That’s compensation, albeit a little ugly. Not a gift. Disclosure required. But confusing.

This is compounded by the contest-like element of the mystery gift card drawing, which makes it look a bit like a sweepstakes. Except not really. Everyone who wrote a post got a gift card, and you had to get the initial invitiation to participate.  Relationship and compensation. Disclosure definitely required.

Bottom line, just a messy confusing campaign all around. Confusion for bloggers about whether they need to disclose, and little guidance from the company on the requirement. Confusion for consumers, because they don’t have the information they need to evaluate the blog posts.

The lesson for companies: Keep blogger outreach programs simple and easy to understand. Provide guidance and training to your word-of-mouth agents. And your employees, especially the ones charged with developing and executing social media programs.

The lesson for bloggers: Think twice about working with companies that don’t inform you that you need to disclose. Push back if you aren’t getting the information or support you need. Also, unrelated to this case specifically, but general advice: read agreements carefully. While I do not think companies can push their liability onto you, I wouldn’t be at all surprised if some tried. That’s just a mess you don’t want to get into.

What I highly advise you to NOT take away from the Ad Age article

A lawyer interviewed in the Ad Age article speculated:

“They’re [the FTC] probably throwing a little fire-starter into it, sending some messages out. The message this time is somewhere between $50 and $500 requires a disclosure.”

My head about to explode. I can just see this quote spawning a new urban legend that there is a minimum and maximum value that the FTC will look at, vis disclosure and enforcement. No no no no no. Compensation is compensation. $5 or $5000. Products or cash.

When in doubt, disclose. There’s never too much information when it comes to informing the consumer. You know. Us.

Eleven Urban Myths about the FTC Guidelines for Endorsements & Testimonials

by

There’s still a great deal of misinformation about the Federal Trade Commission (FTC) Guidelines for Endorsements and Testimonials (FTC Guides or Guidelines) wafting around on the Internet, and from time to time, it makes its way into mainstream media stories.

We’re trying to chip away at it. Blog With Integrity did the two free Disclosure webinars last year. My colleagues and I leave comments with accurate information when we find posts and articles with errors. Just about every blogging conference since the beginning of the year has had a session about the Guides, and we’re doing the Bridging Brands and Bloggers webinar for PR, marketing and advertising professionals next Tuesday.

But the misinformation persists. So, it seems like the time is now for a little debunking of the urban myths about the FTC Guidelines.

MYTH: There’s an $11,000 fine for violations of the Guidelines.

FACT: The Guidelines explain how the FTC would apply Section 5* of the FTC Act to endorsements and testimonials. They are not rules or regulations, and there are no fines. Any penalties would be assessed by the courts as the result of a legal enforcement process during which the FTC would have to make its case for deceptive advertising.

* Section 5 broadly prohibits “unfair or deceptive acts or practices in commerce.”

MYTH: The FTC dictates how you should disclose.

FACT: There’s no checklist of  “approved” ways to disclose. The Guidelines simply require  “clear and conspicuous” disclosure of material relationships between sellers and endorsers when those relationships would not otherwise be clear to the consumer. The FTC  Guidelines do include examples to illustrate the conditions under which disclosure would be required. However, there are no specific prescriptions as to how the disclosure should be done.

If you are interested in best practices for disclosure, take a look at the slides from the general session I did at BlissDom in February.

MYTH: The Guidelines were revised because bloggers are unethical.

FACT: They were revised because it had been 30 years since they were first published. It was time for an update.  Initially because it had become clear that the way disclosure was being handled in traditional media for certain types of products  (like weight loss) wasn’t working as it should. In the process, it became clear that changes in the the media landscape, and specifically, the rise of social media, needed to be addressed.

MYTH: Mom blogs have been singled out for special scrutiny.

FACT: Absolutely not. This was confirmed by Mary Engle, the FTC’s Associate Director for Advertising Practices, during the Blog With Integrity webinar on November 10, 2009.

The FTC Guidelines apply to endorsements and testimonials in all types of marketing including viral,  WOM, blogs, TV, radio and print.

MYTH: Bloggers are being held to a higher standard than journalists.

FACT: The issue at hand isn’t standards or even ethics. The Guidelines are all about making sure that the consumer has enough information to evaluate the endorsement or testimonial. If she would not reasonably expect a material relationship to exist or would not understand it without the disclosure, the endorser should disclose. If the context is clear, disclosure is not required.

In the case of the mainstream media, consumers generally understand that the reporter didn’t buy the item or choose his own topic, and can evaluate the report accordingly. We make different assumptions about people “just like us,” thus disclosure is necessary. A blog or website that operates just like a magazine would be treated like a mainstream magazine because the consumer, or reader, would have the proper expectation. More on this topic in this post.

MYTH: Celebrities are not subject to the guides.

FACT: There are specific examples about celebrity endorsements. The litmus test is the consumer’s expectation. If we would understand the relationship — for example a celebrity athlete wearing logo gear — no disclosure is necessary. We assume a compensated relationship. If the consumer wouldn’t understand the paid relationship, disclosure is required. More on this topic in this post.

MYTH: The FTC said that X was (or was not) a violation.

FACT: The FTC does not speak about specific cases. This could compromise ongoing investigations. More importantly, if it were you, or your company, would you want the FTC passing comment before a full investigation had been completed? I wouldn’t.

MYTH: The FTC is gunning for bloggers.

FACT: The FTC has stated on more than one occasion that its enforcement attention is focused on advertisers and companies, not on individual bloggers.

MYTH: The FTC guidelines violate the 1st amendment.

FACT: The FTC guidelines apply to commercial speech. Compensated, material relationships. They do not apply to opinions where there is no material relationship. If you are paid for your opinion — even if you can say whatever you want — it’s commercial speech. Commercial speech is paid speech. Not free speech.

Free speech is still free. And protected.

MYTH: All you need is a disclosure policy.

FACT: A disclosure (or editorial) policy is a best practice. You still must disclose within the post or tweet if you have a material relationship with a seller.

MYTH: The FTC guidelines will destroy the blogosphere.

FACT: So far, not so much.

Disclaimer:  I am not a lawyer and do not play one on the Internet. This post is my opinion based upon analysis of public records, including the FTC Guidelines.

This post also appears on BlogHer.

Facebook’s new contest rules and FTC guidelines – has social media marketing adapted?

by

Warning – long post

Are social media marketers implementing the new Facebook contest rules and meeting their obligations under FTC guidelines? Survey sez: maybe not, or at least, not yet.

Background

Social media marketing. A bit like the wild west of our imaginations — a little bit glamorous, a little bit dangerous, and as practiced by some, perhaps just a little bit dirty.

At the end of 2009,  however, the Sheriff came to town. Or at least a few parts of it. Facebook’s new rules for contests and sweepstakes were announced in November and updated in December. The revised FTC guidelines for endorsements and testimonials went into effect on December 1.

The landscape is bound to change. In fact, strictly speaking, it should have already. Marketers had plenty of warning about the proposed changes to the FTC guidelines, and their responsibilities under them.

The Facebook changes were more of a surprise but they seem fairly straightforward (and a revenue boon to third-party app developers) although there was a great deal of confusion about whether you could require someone to be a fan to enter a contest. The answer BTW is yes, although you cannot have the action of becoming a fan equal an automatic entry in the contest or sweepstakes. There must be an explicit entry form, and there are very specific rules governing how you can administer the contest on Facebook.

I wondered.

Were marketers informing bloggers of the obligation to disclose when they offered free stuff? The evidence, including that in my own inbox, indicated: not so much. Every so often, I would hear of efforts like Procter & Gamble’s for its Vocalpoint program. They sent an email informing community members of the FTC requirements and telling them how P&G would support them. Not surprising perhaps, given that P&G’s programs and products were cited in more than one news story about the guidelines, but still smart and commendable.

By and large though, it seemed the offers were still coming without any information about the FTC requirements.

On the Facebook front, on Christmas, an email from Lands’ End promoted a contest that one could enter simply by becoming a fan on Facebook. Oops.

Now, I adore Lands’ End, and think their marketing is top notch. If a big brand could make such an error, what about the smaller ones on Facebook? Not to mention all the bloggers who had been running contests to build their fan bases.

It seemed to me that perhaps marketers hadn’t got the message yet. So I decided to do a survey.

Disclaimer: In no way does this survey purport to be scientific or definitive. I just wanted to get a better idea of what was going on in these two areas, and figured a survey would give me access to far more data points that conversations and Twitter chat. It was promoted to my Twitter and Facebook friends and here on the blog, and to Blog with Integrity’s fans, followers and email subscribers. Friends and colleagues kindly retweeted and emailed the link as well. The survey was published on December 27th and closed this morning, January 4th.

Survey Says

Here are the raw results with a little bit of analysis.  Later, I am going to do some cross-tabs and other fancy stuff that SurveyMonkey lets you do when you have to buy a paid account because your responses exceed the 100 you can get with the free account. But not today.

  • Started the survey: 243
  • Completed the survey: 198 (81.5%)

One to 10 pitches per week was reported by more than half the respondents. The answers to the next two questions were equally compelling. Seventy-percent (70.2%) reported that the number of pitches they receive on average every week had stayed the same since December 1 when the FTC guidelines went into effect, and 63.7% reported that pitches since December 1 contained offers for free products, review products or other compensation.

Seems like business as usual. Time for the money question: Thinking about the pitches you’ve received since December 1 2009 that offered free products or other compensation, *generally speaking* how many have contained guidance or information about a blogger’s obligation to disclose his/her relationship with the company?

It’s cut off in the chart but that orange bar in position one represents nearly 50% reporting that NONE of the pitches contained any information about the obligation to disclose. One of the comments in “other” states that this information did come after the blogger had accepted the offer. Fair enough, but in my opinion, that isn’t soon enough. If we are offering free products or other compensation, we need to state the terms of the deal clearly and up front.

Moving on to Facebook. I asked how often the respondent used Facebook and if they had recently entered any contests.

There are a few interesting things here:

  • Most respondents would be classed as fairly or very active users of Facebook.
  • The majority of respondents hadn’t recently entered any contests. Is this because fewer contests are now held “on the wall,” they are being held somewhere else (Twitter?), the holidays or some other reason? Questions for a future survey.
  • 37.1 % entered by becoming a fan of the page, which is a violation of the new rules.
  • Clearly some companies are beginning to implement the new rules, or at least holding their contests appropriately by accident,  with 40 respondents indicating that they entered a contest in a way sanctioned by the new rules.

Demographics



Does this survey prove anything? Yes and no.

No, because it didn’t use a rigorous model. I’d like a more even representation of the blogosphere than “folks who know Susan, Blog with Integrity or Susan’s colleagues,” and I wish I had done a better job on the list of primary topics for the primary blog. If I do another survey, I’ll dig into what people replied for ‘Other’ to make sure I cover more categories.

On the other hand, nearly 200 responses isn’t too shabby. Bottom line, I think these results are a good place to start our exploration of how well — or not — companies are implementing these new rules.

Because like it or not, once the law shows up in town, you gotta live by the rules.