New FTC Guidelines are Here: Is Your Marketing Transparent Enough to Stand the Test?
by Ed Keller, October 8, 2009Tags: advertising, Brands, Keller Fay Group, Marketing, Social media, WOM, word of mouth
This week, the FTC released its revised Guidelines for Endorsements and Testimonials in Advertising, the first time its Guidelines have been updated since 1980.
The Guidelines have significant implications for both brands and individuals (especially bloggers) engaged in social media:
- Advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose a material connection between themselves and their endorsers. This includes their relationship with bloggers and others who are compensated to promote or review a product.
- Endorsers (again, including bloggers) may also be subject to liability for their statements.
- The communicator of the message must be transparent and honest.
- The FTC will require substantiation, or an appropriate basis for claims being made.
When the Guidelines are implemented, social media, bloggers, and others who facilitate consumer-generated content will be subject to government regulation and law enforcement. Brands and individuals engaged in social media need to be fully transparent in terms of their relationships and are responsible for the accuracy of what they say.
The good news is that marketers who have been practicing sound ethical practices in social media and word of mouth are on the right path. Fine tuning of practices may be in order, and the need for close communications about ethical practices between brands and the agencies that serve them is critical.
But for brands and social media practitioners who haven’t really tuned in to this pending change, it’s time to tune in and determine whether you need to make any changes.
For both groups, a recent webinar from the Word of Mouth Marketing Association (WOMMA) is well worth watching. Included in the webinar were John Bell, WOMMA President, and an excellent 11 minute audio and slide summary has been prepared by John Moore, WOM Enthusiast for WOMMA. (Disclosure: I am on the Board of WOMMA, and a former President. I write here as an individual, not in an official board capacity.)
Panelists included:
- John Bell, President of WOMMA and Managing Director of Ogilvy’s 360 Digital influence
- Tom Collinger, IMC Chair, Northwestern University
- Sean Corcoran, Marketing Analyst, Forrester Research
- Jory Des Jardins, President, BlogHer
- Tony DiResta, Partner, Manatt, Phelps and Phillips, and WOMMA General Counsel
- Paul Rand, CEO, Zocalo Group and President elect, WOMMA
Here are some highlights as noted in John Moore’s blog, All Things WOM:
“Marketers and bloggers need to design word-of-mouth marketing programs to state early (and often) when material compensation changes hands.
It is non-negotiable and businesses must solve for being obvious and upfront when a brand offers in-kind gifts, special access privileges, and cash as part of a marketing program designed to spark word-of-mouth.
Solutions discussed by the panelists centered on being clear and conspicuous when disclosing material relationships between a brand and a consumer. Practical implications talked about on the webinar included: “Disclosure badges” on Web sites, prominently placed “terms of engagement” practices, specially designed “product review” blogs, and unique tagging of tweets (such as [#ad]).”
In addition, you can keep up with the FTC Guidelines and the legal implications at WOMMA General Counsel Tony DiResta’s blog, Diresta-The-Law.
To keep on the right side of these ethical issues, follow the spirit of WOMMA’s ethics code, which can be summarized (in part) by “the honesty ROI”:
- Honesty of Relationship: “We require marketers to disclose their relationships with consumers in relation to word of mouth initiatives.”
- Honesty of Opinion: “We never tell consumers what to say.”
- Honesty of Identity: “Clear disclosure of identity is vital to establishing trust and credibility.”
The bottom line is this. Social media is coming of age, and a bright light is being shined on ethical best practices. At stake is credibility with consumers, as well as compliance with the law. Transparency and disclosure are paramount. There can be no faking, no hiding, and no half truths.
This post previously appeared in Jack Myers’ Mediabizbloggers.com on October 7, 2009.
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