NEW YORK (AdAge.com) -- Thinking about letting a big-name blogger test-drive your new hybrid in the hope he'll post a glowing review about it, or maybe sending some beverage products to an influencer, hoping she'll spread the word?
You might have to think twice, if the Federal Trade Commission follows through with its proposed plan to start regulating viral marketing and blogs.
As part of its review of its advertising guidelines, the FTC is proposing that word-of-mouth marketers and bloggers, as well as people on social-media sites such as Facebook, be held liable for any false statements they make about a product they're promoting, along with the product's marketer. This could present a significant issue for marketers, including the likes of Microsoft, Ford and Pepsi, who spend billions on word-of-mouth and social media. PQ Media projects that marketers will spend $3.7 billion on word-of-mouth marketing in 2011.
Rich Cleland, assistant director of the FTC's advertising-practices division, said the commission is updating the guidelines to stay in step with evolving marketing practices. "The commission is attempting to update guidelines that are 30 years old so that they address current marketing techniques," he said, "and in particular to address the issue of whether or not the safe harbor that's currently allowed for 'result not typical'-type disclaimers is still warranted."
The FTC guidelines apply only to bloggers and others compensated to promote or review a product. Roberta Jacobs-Meadway, a partner at Eckert Seamans Cherin & Mellott, a Pittsburgh law firm, said: "The FTC is ... putting out guidelines to make it clear to people who are involved in social media and viral marketing that the same rules apply in this context as they do in the more formal context of paid advertising and infomercials." There are no legal implications for social-media sites such as Facebook or marketer sites such as Amazon, where consumers often post product reviews. However, Ms. Jacobs-Meadway said, paid endorsers who post on those sites can be held liable if they do not identify themselves as such.
Before FTC commissioners vote on the revisions this summer, they will review all the public comments, which so far include those from the American Association of Advertising Agencies and the Personal Care Products Council.
In its comment, the 4A's said while it and the American Advertising Federation want to ensure nondeceptive endorsements and testimonials, it "strongly urges the commission to reconsider the proposed, overly stringent amendments that will likely result in advertisers abandoning longstanding legitimate advertising techniques, such as consumer testimonials, and rejecting new media forms, such as blogs and viral marketing." In an e-mail to Ad Age, Adonis Hoffman, 4A's senior VP and legal counsel, said, "This does not have to put a chilling effect on the new methods of advertising, but it does put a responsibility on the advertisers and agencies to understand that the rules apply and to explain that to the bloggers, promoters and other viral supporters."
Paul Rand, president-elect of the Word of Mouth Marketing Association, said his group's members will be fine so long as they continue to adhere to WOMMA's guidelines. But he said the FTC's revisions should be clarified. "There are some pretty big perceived implications to this," Mr. Rand said. "And if the FTC goes a little bit further on some of these revisions, then everyone is going to have to look at retooling their approach."
Pepsi, a longtime practitioner of tapping online and offline influencers to promote its products, said it will continue with its "transparent" tack. Bart Casabona, spokesman for Pepsi-Cola North America, said in an e-mail: "Our relationships with digital influencers are completely transparent, and subsequent blog posts tend to be very straightforward."
Some fear that if the revisions are approved, marketers could be scared away from new-media marketing efforts. "It's possible there will be a hangover period, but it will self-correct," said Joe Chernov, VP-communications at BzzAgent. "People get nervous when the government gets involved, and it's possible the blogosphere will influence the trajectory of how brands respond."
But not everyone thinks the revised guidelines will hurt marketers. Jim Nail, chief marketing officer of TNS Media Intelligence and a WOMMA board member, said the revisions will bring more credibility to word-of-mouth and social-media marketing. "The thing that makes word-of-mouth marketing powerful is people believing they are getting truthful and honest opinions from real users," Mr. Nail said. "If people start disbelieving word-of-mouth marketing as much as they disbelieve advertising, we are in deep trouble."