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FTC: No faux social messaging

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The social media universe lit up last week, reacting to the Federal Trade Commission's 4-to-0 vote to update its rules governing endorsements. The rules on the use of endorsements and testimonials in advertising, which were last updated in 1980, now include guidelines requiring bloggers to clearly disclose any “material connection” to an advertiser, including payments or free products. The rule, which goes into effect Dec. 1, calls for fines of up to $11,000 per violation. Predictably, the dizzyingly diverse social media community had a number of reactions, from angry rants about federal overreaching to thoughtful posts about the FTC's inadequate past record of enforcing the old rules on old media (and legitimate questions about the enforceability of the new rules in the vast digital realm). Andy Sernovitz, CEO of the Social Media Council and author of “Word of Mouth Marketing: How Smart Companies Get People Talking, Revised Edition” (Kaplan Publishing, 2009) was busy posting his own analysis last week. “Marketers are dumping cash and gifts on bloggers. Bloggers have been hoovering up freebies. And everyone has complained about the idea of FTC regulation,” Sernovitz wrote on huffingtonpost.com. “The truth: False advertising and fake endorsements have always been illegal. Just because it's social media doesn't mean you get a free pass.” I called Sernovitz, a fellow Chicagoan, for additional reaction. What, I asked, did he think was the single most important part of the new FTC guidelines? “Everyone knows the rules now, how to play and how to play fair,” he said, adding this is good for marketers and bloggers alike. Allowing that there might be First Amendment legal challenges, Sernovitz said, “This is not a free speech issue. It is a consumer deception issue. If you would deceive the average reader, it is against the law; [and that's] always been against the law.” That may be true, but as many, many bloggers noted last week, the traditional media have played fast and loose with existing “disclosure” rules for decades. For instance, the travel review in the glossy magazine that glosses over (i.e., does not disclose) the fact that the reviewer sailed on the luxury cruise as part of a press junket arranged by the cruise line. The FTC addresses the objection this way: Disclosure is required if the average consumer would be deceived—that is, if an average consumer would not expect the relationship between advertiser and endorser. In Sernovitz's world, average consumers already know that traditional media get free stuff to review, and so disclosure isn't required. In my opinion, that's a very questionable assumption and supports the claim of bloggers who say the FTC is holding them, unfairly, to a higher disclosure standard than traditional media. At the end of the day, will the updated FTC rule end marketer-blogger relationships? No, wrote Sean Corcoran on Forrester Research's Interactive Marketing Professionals blog last week: “In fact, over the long term, we believe this will help strengthen those relationships by providing incentives to both companies and bloggers to do this the right way—with open disclosure, with authenticity, within the right context and through a long-term conversation, versus short-term PR spin or ad campaigns.” Ellis Booker is editor of BtoB and BtoB's Media Business. He can be reached at ebooker@crain.com.
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