Viral Video Marketing Under Scrutiny By Watchdog Groups

Should Viral Ads Be Labeled as Commercials?

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NEW YORK ( -- As YouTube moves to monetize its traffic through paid advertising and consumer advocacy groups start to circle the wagons, the days of the viral video universe as marketers' playground could soon be over.
Watch the Smirnoff 'Tea Partay' video from YouTube that one agency exec watched four times before realizing it was actually an ad for the alcoholic beverage maker.
Watch the Smirnoff 'Tea Partay' video from YouTube that one agency exec watched four times before realizing it was actually an ad for the alcoholic beverage maker.

FTC hearings
Jeff Chester, executive director of the Washington-based Center for Digital Democracy, said he is investigating the ways in which marketer-generated viral video violates consumer privacy. He plans to raise the issue with the Federal Trade Commission and Congress, but feared he might need his own viral video to get their attention.

The FTC on Nov. 6 will host hearings, titled "Protecting Consumers in the Next Tech-ade," which will bring together business, government and technology sectors to look at what has been happening online. Mr. Chester, author of "Digital Destiny," a book that explores these issues, said: "That's one of my goals, to push [the FTC] to look at the entire infrastructure in terms of [ad] targeting and the stealth nature of broadband marketing which includes the delivery of viral videos."

Video labeling sought
Gary Ruskin, executive director of Portland, Ore.-based Commercial Alert, views viral videos as another form of buzz marketing, an ad practice he's been trying to reform. He argues that such broadband productions should be labeled as commercials so consumers understand that they are being marketed to. Viral videos are akin to social networks, which can be deceptive because users don't know who they're interacting with, he said. Mr. Ruskin's group prompted the FTC to force search engines to delineate results identifying sponsored links as distinct from search results back in 2002.

Consumer advocates argue that videos served up on sites such as YouTube, Collegehumor and are not identified as commercial speech and that it is often difficult to establish who is behind the videos.

'The right policy'
"It will be interesting to watch," said Jamie Tedford, senior VP-marketing and media innovation at Arnold, of potential regulation. "You could say the same for the Wild West of product placement ... both disciplines are predicated on the seamless immersion of [advertising] and content. We believe disclosure is the right policy."

Mr. Tedford received Smirnoff's Tea Partay, currently circulating on video sites and via e-mail, and watched it four times before it dawned on him it was actually an ad for the alcoholic beverage maker. The video was produced by Bartle Bogle Hegarty.

Cal McAllister, co-founder of an ad shop that creates viral videos for clients such as Microsoft and Nike, said, "I don't feel that, unless we're making a health benefit claim, that you need to say it's a commercial" -- a common view among agency executives.

One creative executive said marketers were well aware of that cloak of anonymity. "Yes, we've had that assignment where clients don't want to be right out front as the sponsor or have their name associated with it, and have told us to make it look like something that 'got out.' ... Our clients are wholly embracing it because they don't necessarily have to go through 'brand watch' people, [and] its trackable -- you know when half a million people have seen it."

Avoiding internal screening
By going viral, marketers are not only circumventing the public's animosity toward watching ads, but also their own executives whose job is to make sure all corporate marketing adheres to certain corporate policies. Also, marketers can post international or archived commercials and largely avoid the headache of rights fees. YouTube founder Chad Hurley told Fortune, "We're seeing situations where we have the marketing side of the company posting clips to our site and then we're getting notifications from the legal side asking us to take it down."

Right now, consumers may be the only ones policing the content of viral videos -- they regularly use the comments page on websites to slam videos they believe are really ads. The Internet Advertising Bureau has broadband ad creative guidelines at its site, but those largely discuss traditional broadband commercials served up alongside regular programming, rather than stealth viral products. The American Association of Advertising Agencies also has a program named Ad-ID aimed at creating a unified system of tagging marketing materials in an electronic form wherever they might appear. Executives close to the program said agency members are not all on board with the standardized tagging initiative for a variety of reasons, one of which might be that those viral videos need to remain anonymous to be effective.

Blurring ethical lines
The biggest worry for others is that viral videos, much like video news releases, are blurring ethical lines. In August, a video produced by TaxBrain aired on local news broadcasts in a stunning 125 U.S. markets across the country. The video showed a man trying to make off with a race car before being stopped and shoved to the ground by security at the racetrack. The company had placed the video on various websites that mistakenly got picked up by news media as being actual footage from the event.

Tracey Watkowski, assistant news director at San Francisco ABC affiliate KGO, one of the stations that reported on the incident, called the incident -- and the use of that type of marketing -- "despicable."

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Alice Z. Cuneo contributed to this report.
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