Today, the Federal Trade Commission made good on its threat promise to change the way it regulates endorsements from bloggers by releasing its final revisions to the guidance it gives advertisers on how to keep their endorsement and testimonial ads in line with the FTC Act. Last May, we reviewed the proposed FTC guidelines that will now change the disclosure rules around paid endorsements and testimonials, and thus how brands use online endorsements in their marketing, advertising, and communications programs.
This amendment marks the first time in 29 years since The Guides were last updated in 1980.
In the 1980 version of the Guides, advertisers were allowed to get away with promoting unusually positive or outlier experiences in a testimonial as long as they included a disclaimer such as “results not typical.” Long overdue, the revised Guides no longer allow this form of safe harbor.
But for anybody contributing to the new media landscape, these new rules contain a dire warning that everyone from bloggers to “social media experts” (everyone raise your hands) must heed.
While The Guides mostly define the rules of engagement for advertising, it now contains clear language and consequences associated with the use of paid testimonials in blogs and celebrity endorsements.
As a result of the evolving level of influence inherent in the social Web, and web in general, the notice incorporates several amendments to the FTC’s Guides Concerning the Use of Endorsements and Testimonials in advertising and blogging, which address endorsements by consumers, experts, organizations, and celebrities, as well as the disclosure of important connections between advertisers and endorsers. Fines for violating the new rule will run up to $11,000 per incident.
Even though the FTC Guides refer to blogging, advertising, and celebrity endorsement specifically, Twitter and other social networks will not be overlooked. Pay-per-Tweet services such as Ad.ly, Izea, and Twittad are providing networks for brands to engage with the audiences of real celebrities as well as the communities of people who follow the Internet famous. Disclosure is also required in these new mediums. It should also be noted that these companies are working with the FTC and Twitter to help create a fair set of standards around disclosure, as well as the technology framework to effectively disclose sponsored Tweets.
However, in the eyes of the FTC, a paid endorsement is no longer limited to monetary compensation and this is why things will get interesting moving forward.
The revised Guides feature new examples that illustrate the long-standing principle that “material connections” between advertisers and endorsers—connections that consumers would not expect—must be disclosed. This is true whether it’s a payment or free products that change hands.
The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. To be clear, a blog post (or Tweet) in exchange for cash or in-kind payment to review a product is considered an endorsement.
The examples address what constitutes an endorsement when the message is conveyed by “bloggers or other word-of-mouth marketers.“
While I agree with the need for disclosure in sponsored posts and tweets, the FTC’s inability to see blogging as a bona fide publishing channel comprised of expert writers and pundits in addition to those consumers willing to exchange content for compensation, is incredibly hazardous.
For instance, traditional reporters and journalists have long received products and services to review. In the ethical world, brands entrusted the resulting experience with the reviewer and used corporate collateral and not monetary pressure to help sway positive exposure. In some cases those reviewers either kept products or received services, without paying for them, whether or not they ever published an unbiased review. Why are professional bloggers viewed differently?
Since the FTC is reviewing incidents on a case-by-case basis, perhaps they will eventually realize the clear division between editorial and advertorial regardless of platform. The difference between endorsement and individual experience should be discernible in the intent of the arrangement between brand and writer.
In the meantime, brands and bloggers can only benefit from disclosing the nature of endorsements. In the realm of new media, transparency and ethics speak louder than the value proposition of the product itself.
The FTC could not be reached for comment at this time in reference to the delineation between consumer bloggers and subject matter authorities who blog. We will update this post once we receive a response.
Update: The FTC responds
When asked if the FTC views bloggers equally and whether or not it recognizes levels of authority on par with traditional media, Mary Engle, associate director for advertising practices, clarified its position and perspective, “All bloggers aren’t the same and we are not saying that all bloggers are marketers. Most of them are ordinary folks musing or sounding off. The question as we put it in the notice we published today is whether, viewed objectively, the blogger is being sponsored by the advertiser. (We list a number of factors to consider.) Independent product reviewers, whether offline or online, would not be viewed as sponsored by the company whose products they are reviewing.”
Engle further observed the distinction between expert and consumer bloggers, “But if bloggers regularly receive free products from a company, the blog audience might view their reviews differently than if they went out and bought the products on their own. Under those circumstances, bloggers should disclose they got the products from the company. This is consistent with the WOMMA code of ethics. And, companies who use bloggers to generate buzz about their products by sending free merchandise should have a policy that their bloggers should disclose.”
Photo credit: Shutterstock
I’ve always wondered if any of those endorsements on the get rich quick late night TV infomercials were real. It always appeared as if these enthusiastic endorsers were there because they truly believed in whatever programs Dean Graziosi or Robert Allen were peddling
The obvious first question is wouldn’t this apply to every affiliate link?
And that leads me to suggest that now would be a very good time for every person who ever posts anything online to get VERY clear on their ethics. There are basically two choices:
1) Those who care about their reputations and making the world a better place who will ONLY endorse what they truly believe in.
2) Those who will recommend anything for a buck.
If you are involved in affiliate marketing or have a blog where you write reviews it is important that you are VERY clear on who you are in this regard and make it publicly obvious where you stand.
Those who choose the first option are doing a public service. The second is the reason we all hate spam and advertising. Choose carefully.
Obama what’s up with this? Just when I thought the Bush years were over.
How is the FTC going to manage this? They’re going to be inundated with cases. What are the actual rules?
BTW, the guidelines have been taken down! http://www.ftc....desfnnotice.pdf
rww posted a link to guidelines on Scribd – http://www.scri...tguidesfnnotice
Link to Izea is broken
That’s odd…still broken. It’s unusual for Brian to make such an obvious typo and not fix.
Given the reference to tweets in that paragraph, I’m guessing the Izea marketplace being referenced is http://SponsoredTweets.com/
Scene 1: Some PR person sends me a gadget to review. I didn’t want it. I don’t review it. I don’t return it but throw it in an e-waste recycling bin, or kick it to a good cause. Or else, I keep it in a storage closet, unopened, with a pile of junk I’m planning to donate at some point. Scene 2: I’m a hip hop celebrity. I genuinely like a drink, and am spotted all over town with it in my hands. Later, the brand asks me if I want to be their spokesperson. I agree because I love their prodcut. Will I be fined? COME ON!
For scene 2, no. You buy the product, so it is not an endorsement. If they gave it to you for free or paid you to review it, then it would be an endorsement
so now we can look forward to a header or footer in every blog saying, blah blah blah, product to review, blah blah blah?
sounds brilliant!!!!!!!!!!! woohooo!!!! etc
Hmmm…
It’s 2009.
Last updated in 1980.
You said it’s the first update in 27 years.
1980 was 29 years ago.
Hmmm…
Methinks you’ve done your math wrong.
Or at the very least it should be 28 years.
“Since the FTC is reviewing incidents on a case-by-case basis, perhaps they will eventually realize the clear division between editorial and advertorial regardless of platform.”
Yeah, that’ll happen, because unelected, barely-accountable government bureaucracies are renowned for making fucking awesome decisions all the time so there’s not even the smallest problem with them basically making law like this.
Jesus.
As I understand it, though, these are guidelines and not actually the law. Good luck in tracking down some bloggers, though.
Arguing that there’s a double-standard with print journalists doesn’t help your case, TechCrunch. If David Pogue is paid for his reviews, I want to know, regardless of whether or not he’s keeping a $1000 camera or is paid $1000 cash. I also want to know if Twitter is paying you for posts, whether it’s in followers (positioning on their site) or cold, hard cash.
These relationships need to be disclosed, not hidden behind a vague label of “expert writers”. Honestly, I don’t even see how such an exclusion wouldn’t make the entire rule moot. Bloggers are, almost by definition, expert in their subject matter. I certainly am an expert in the area I work in, and if I wrote a blog I don’t see any different between posts I would make in my area of expertise and posts on TechCrunch.
The SEC would have something to say about it if I were a stock analyst recommending companies that I hold a position in, and I don’t really see the substantive difference between profiting from that kind of relationship and profiting because I’m simply shilling for the latest technology fad.
Whether it’s a double-standard or not is irrelevant. the 1st Amendment does not allow the government to regulate the press.
Deciding that there is a distinction is de facto regulation.
It’s up to each blogger, each citizen journalist, each stock analyst to establish their own ethics and credentials and up to the consumer of that content to judge those credentials.
Our Constitution does not allow for a middle man in that process.
While I do agree that if you receive something for free in order to review it that you should say so, I also resent that being called an endorsement. The dictionary definition of endorsement is “approval or sanction”. If your review is truly a review, then there’s the possibility of NOT liking or recommending the item or service. it’s only an endorsement if you intend to approve of the item or service regardless of the outcome, which is biased and misleading. A review is a review, not an approval.
Awesome Google ads sense showing me “Sponsored tweets from Holly Madison”
+1
Do these rules apply for people who are paid to review items on Youtube?
Knowing who says what and why, generally makes what they say more valuable, and that makes the web more valuable. Enforcement will be problematic, and initially there will be a disconcerting uncertainty until enforcement precedents are set, but those who err on the side of common sense, disclosure, and good faith transactions will have nothing to worry about.
Australia keeps looking better and better. Then again, Australia has always looked good.
I wish the government would friggin’ chill out for awhile.
Well, as it so happens, I did what Techcrunch couldn’t — namely, get through to the FTC’s Richard Cleland. I spoke to Mr. Cleland for a good half hour. The results of my interview reveal precisely how the FTC maintains a double standard between newspapers and bloggers:
http://www.edra...ichard-cleland/
It looks like Brian posted an update from FTC discussions in his full, unmodified post here: http://www.bria...t-11000-apiece/
Ed, thank you. Great post too. I spoke with Mary Engle, associate director for advertising practices shortly after this post was published. I also spoke with her when the notice that the FTC Guides would be revised was originally announced. As you can see, her answers are very clear based on a very direct conversation. It’s important to note that these are guidelines, but they extend across platforms – blogs, twitter, facebook, and anywhere influence is pervasive.
Dan, thanks for sharing the update.
I Love Your Style!
“Mary Engle, associate director for advertising practices, clarified its position and perspective…” ugh I don’t think so. Perhaps Mary and the rest of FTC should think about learning about social media and marketing before they start changing things and talking in terms that mean nothing to anyone who actually does this stuff.
More typical crap coming from the Obama administration — they are experts on everything, you know!
Hope and Change.
I hope that these new rules apply to all of the trash promotions that posters put in the comments pages of news stories.
They repeatedly post ads for cheap knockoff products, dating sites, porn sites, and others.
Although you can “report” these ads, the Web sites (AOL the worst) do not delete or block them.
The Web sites should be required to pass the “reports” on to the Feds to stop this shit. Maybe the $11,000 fine will get their attention.
The reach of the FTC doesn’t extend into countries that have many successful bloggers or what some are touting as “A-List” bloggers. Proactive disclosure should be high on the radar for anyone who wants success in this industry.
The FTC does not make “laws” – The FTC makes “guidelines” and then shakes down companies that they feel do not follow the guidelines. The shaking down works well, particularly because its very expensive and time consuming to fight the FTC in court.
Notice this section of their endorsement press release:
“The Guides are administrative interpretations of the law intended to help advertisers comply with the Federal Trade Commission Act; they are not binding law themselves. In any law enforcement action challenging the allegedly deceptive use of testimonials or endorsements, the Commission would have the burden of proving that the challenged conduct violates the FTC Act.”
To summarize, they can shake you down and threaten to take you to court and you can settle then or you can fight them in court and get the court to actually interpret the law and thus see if the FTC “guidelines” fall within the law.
From my research most of the time when the FTC actually goes to an actual court (as opposed to badgering companies to settle), they rarely win. Usually their “guidelines” stand unopposed and they use the might of their bureaucracy to shake money out of companies who don’t have time/resources/energy to fight them.
Are you a professional journalist? You write very well.
Brian – I have heard it say that the quality of your answers depends on the quality of the questions you ask. I have read a lot of interested blog comments and commentary in forums over the past couple of weeks. I appreciate your shining the light on the penalty question.
I think as marketers we should certainly take the time to understand and play by the rules (just as with Google) allowing you to communicate to your market without landing in the sand box or taking a hit to your bank account.
Great post and comments that follow!
James
http://Twitter..../AskJamesHolmes