FTC Revises Endorsements and Testimonials in Advertising
On Monday of this week, the FTC announced they approved final revisions to the guidelines they give advertisers on how to keep their endorsement and testimonial ads in line with the FTC Act. While the announcement didn’t come anywhere close to making the Twitter trend, it certainly had no shortage of old school retweets as everyone from Ad Age to the Wall Street Journal had some coverage of the announcement. The reason this seemingly routine announcement received such high coverage had to due with the nature of the revisions. The revisions dealt specifically with the FTC’s views on blogging and social media, revisions meant to cover everything from individual blogs, Facebook Fan Pages, Tweets, and just about any other means that an individual could discuss a preference for a particular good or service. In this case, the discussion only becomes germane to the revisions if the individual has received some form of compensation for expressing their favorable opinion. The FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, part of making sure individuals and companies comply with the FTC Act, took several years to create, and no doubt underwent major changes given how much communication changed from the time they even began looking into the revisions.
Blogging (Real)
The easiest example of how the changes to the FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising impact the online world deals with blogging. Self-publishing has created an amazing microcosm of individuals whose passions have translated into not just a following but incremental income if not more. The "mommy blogger" as a large subset of the genre is called will often time receive gifts in hopes of a favorable review on the site. The power of this group shouldn’t be underestimated as even a small blog can lead to thousands of sales. And, that has power for everyone from the small company to the large brand. In the past, though, such reviews didn’t require any disclosure. It was up to the blogger to disclose or not to disclose the affiliation. That now changes, sort of. The rules have always focused on what the FTC calls "material connections" between advertisers and endorsers. Material connections can take the form of payments or free products, but the important point is that they are connections that consumers would not expect just by reading or watching. Those must be disclosed. For bloggers this means no more endorsement like posts without some clear disclaimer.
Social Media (Facebook, Twitter, et al.)
Things get much trickier when trying to make sense of the various aspects of social media. Cnet writer Caroline McCarthy provides a plausible if not slightly confusing example regarding a celebrity, a hotel, and a Facebook Fan Page. The man getting quoted through much of the coverage is staff attorney Rich Cleland, assistant director of the FTC’s division of advertising practices. He says, "Social media has become a relevant marketing force, so we started looking at it in 2004." Speaking from the point of view of FTC, he adds, "We were looking and seeing the significance of social media marketing in the 21st century and we thought it was time to explain the principles of transparency and truth in advertising and apply them to social media marketing. Which isn’t to say that we saw a huge problem out there that was imperative to address." It’s not just celebrities anymore. In the new model for communication, everyday people can become and have become influential marketers, and there is a belief that they aren’t instilled with the same sense of obligation for transparency as more traditionally employed journalists are, or are supposed to be.
Taking A Step Back
The phrase that comes to mind is "principles of transparency and truth in advertising." That is what we are really talking about. "As a practical matter, we don’t have the resources to look at 500,000 blogs," Cleland said. "We don’t even have the resources to monitor a thousand blogs. And if somebody reports violations then we might look at individual cases, but in the bigger picture, we think that we have a reason to believe that if bloggers understand the circumstances under which a disclosure should be made, that they’ll be able to make the disclosure. Right now we’re trying to focus on education." A friend said it best. He compared this period surrounding the revision to the game show controversy just over 50 years ago where it became known that the most popular TV game show, 21, was rigged. It was a scandal that ended in a House hearing and the government getting involved. This, if not directly, is in spirit with what the FTC wants to avoid happening. Now, instead of it taking one television show to dupe a nation, it takes place in the myriad of conversations occurring daily in the blogosphere, tweetosphere, etc. Individuals have a new found power and trust. The FTC wants to instill the Spiderman creed of “With great power, comes great responsibility.”
These new rules are meant to make the web more trustworthy. For a great counterargument exposing the potential unintended consequences to the revisions, read the post and comments from Jeff Jarvis. In this piece he writes,
First, Pay Per Post et al, as I realized late to the game, are not aimed at fooling consumers. Who would read the boring, sycophantic drivel its people write? No, they are aimed at fooling Google and its algorithms. It’s human spam. And it’s Google’s job to regulate that.
Second, the FTC assumes – as media people do – that the internet is a medium. It’s not. It’s a place where people talk. Most people who blog, as Pew found in a survey a few years ago, don’t think they are doing anything remotely connected to journalism. I imagine that virtually no one on Facebook thinks they’re making media. They’re connecting. They’re talking. So for the FTC to go after bloggers and social media – as they explicitly do – is the same as sending a government goon into Denny’s to listen to the conversations in the corner booth and demand that you disclose that your Uncle Vinnie owns the pizzeria whose product you just endorsed.
Fake Blogs – Impact on Performance Marketing
One of Mr. Cleland’s earlier quotes mentions how the FTC didn’t see a huge problem that they wanted to address. The updates almost feels like a proactive approach to cover a wide range of channels. When reading most news article titles that focus on FTC and blogging, it felt as though we would see some direct mention of the impact of fake blogs. And, the problem is you could easily drive yourself nuts trying to get into the nuances of what the new guidelines cover. There is one thing though that caught our eye in the updates, and it was mentioned in the FTC press release. It says, "Advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect. In contrast to the 1980 version of the Guides – which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as “results not typical” – the revised Guides no longer contain this safe harbor." We haven’t jumped into the actual guidelines to find the elaboration, but clearly they made an effort to focus on not just endorsement in the standard sense but endorsement in the manner used heavily by flogs. And, if we had to guess, it’s not the mommy blogger or celebrity that will be the first recipient of action for not following the FTC Act, it’s the once "results not typical" users.
