New Rule for Marketers: Mandatory Disclosure When Working with Online Bloggers

The Federal Trade Commission yesterday released updated guidelines on testimonials and endorsements used in marketing. Current guidelines were last updated long before the Internet became an irreplaceable communication channel and before marketers understood the irrefutable power of word-of-mouth marketing.

The FTC protects consumers from being influenced by unethical, untruthful, and unscrupulous business practices. Updated guidelines will ensure that marketers and bloggers are 100% transparent and always disclose when a blog post is a “sponsored conversation.”

“Sponsored conversation” is the term being used to describe a marketing program where a business gives bloggers material compensation (loaner product, in-kind gifts, and special access privileges) in exchange for writing a post about a product or service a business provides.

For example, Sony works with a collection of daddy bloggers known as DigiDads. Sony gives these digital dads new gadgets in exchange for posting online reviews about the product. Walmart works with mommy bloggers in a program called Elevenmoms. In exchange for receiving unique products as well as insider company knowledge, these influential online moms blog about their experiences in saving money for their family.

Both of these programs are designed by businesses to foster relationships with key online personalities in hopes of receiving brand-related mentions in blog posts and tweets, all leading to online word of mouth.

However, since the FTC is in the business of protecting consumers from unscrupulous business practices, the commission believes consumers must be protected from being influenced by bloggers who fail to be transparent and disclose they have been compensated by an advertiser. The worry, of course, is compensated bloggers may not give their honest opinion about the products or services they’ve been compensated to write about.

The Word of Mouth Marketing Association recently hosted a webinar with industry experts discussing ethics and disclosure in light of the anticipated release of the updated FTC guidelines. The resounding sentiment was marketers and bloggers need to design word-of-mouth marketing programs to state early (and often) when material compensation changes hands.

Paul Rand, CEO and president of the word-of-mouth marketing company Zocalo Group, said it’s a matter of integrity and credibility.

“We’ve seen time and time again that word of mouth works best when it is 100-precent credible,” he said. “Credibility cuts both ways as bloggers, endorsers, and companies must disclose relationships with one another. Full disclosure assures consumers that testimonials are truthful and trustworthy, and it offers marketers and advertisers a proven way to reach audiences with credible information.”

To ensure transparency and credibility, the DigiDads blog from Sony and the Walmart Elevenmoms program offers disclosure statements on the bloggers respective Web sites explaining the programs and the expectations of the bloggers involved.

The Walmart Elevensmoms disclosure is explicit and part of the statement reads: “We request participants in the program to clearly disclose their relationship with the company as well as any compensation received, including travel opportunities, expenses or products. In the event that products are received for review, participants may keep or dispose of product at their discretion.”

According to John Bell, managing director at 360° Digital Influence, for disclosure to be effective three components are needed: (1) being complete, (2) being in context, and (3) being yourself.

Being complete is clearly explaining what was provided by a brand to a blogger. This can be accomplished by having the bloggers involved in the program always mention in their posts whenever they have received products or special services from a brand.

Being in context is fully outlining the relationship between a blogger and a brand. Bell recommends brands create and publish a “terms of engagement,” a Web page that explains the design of their influencer program. Furthermore, Bell recommend brands “Be transparent and mention what people are receiving as gifts, loaners, and sample product. People will appreciate this level of disclosure and trust the brand more for sharing more. Brands should also ask the bloggers/influentials who have received material compensation to link back to the ‘terms of engagement’ page whenever they blog about the brand in relation to the freebies they received.”

The third component to effective disclosure is being yourself, an assurance that any statement a blogger makes about a product or service provided to them is their honest opinion, positive or negative.

The bottom line is when there is a material connection between a blogger and a brand that might affect the credibility of the endorsement, such a connection must be fully disclosed. This protects both consumers and advertisers because it assures consumers that product testimonials are truthful and trustworthy, and it offers marketers and advertisers a proven way to reach consumers with credible information.

John Moore was formerly in marketing at Starbucks Coffee and Whole Foods Market. He now works as marketing strategist and chief evangelist for the Word of Mouth Marketing Association. He can be reached at
[email protected].