New FTC Rules Won't Deter Celebrity Social-Media Endorsements

But Marketers May Not Have a Grasp on Guidelines' Implications

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NEW YORK ( -- Don't expect the FTC's new guidelines on product endorsements to put a damper on social-media efforts.

Since the guidelines became official two months ago, marketers and agencies alike have been educating themselves on the guidelines, modifying spokesperson agreements and implementing new social-media policies. The marketers and agencies that spoke with Ad Age all said the new rules would not deter them from any social-media or celebrity-endorsement efforts.

The new rules, which go into effect tomorrow, call for bloggers to openly disclose any "material connection" they have to an advertiser, such as receiving payment or a free product for an endorsement. The FTC's first updates to its rules on endorsements and testimonials since 1980 will also hold celebrity endorsers liable for false statements about a product. And all endorsement must also include results consumers can "generally expect," abolishing the old proviso advertisers would so often cover their tracks with -- "results not typical." Each infringement of these rules will cost the guilty party $11,000.

Some experts, such as Pete Blackshaw, exec VP of digital strategic services for Nielsen, think most marketers and their agency partners still don't have a clear idea of what the implications of the new rules are for their word-of-mouth campaigns, social-media efforts and celebrity-endorsement deals.

"Most marketers are still swimming in uncertainty about what it means," Mr. Blackshaw said. "The critical thing is just being educated about what it means, what's happening and what are the potential scenarios of impact."

Question of substantiation
Elisa Camahort Page, founder of BlogHer, a female-oriented publishing network of over 2,500 blog affiliates, said the question she most often gets from marketers she works with, which include Proctor & Gamble, Sprint, Chevrolet and Campbell Soups, is about substantiation.

"They want to know what our process is for making sure the substantiation of claims is actually possible when it's an everyday person writing about a product," Ms. Page said. "Their other big concern is being sure that they are working with reputable sources. A lot of companies are new to the social media space and are asking that if these rules are necessary what does that say about the blogosphere."

Mr. Blackshaw said getting clarity on what's right and wrong isn't rocket science but brands need to continue studying all scenarios and work closely with their agency partners.

Frosty Welch, lead social-media strategist at HP's Personal Systems Group, is taking that course. Mr. Welch said his division is currently running seven word-of-mouth campaigns for products such as the Touchsmart desktop unit and the Envy laptop. "Right now my emphasis is education and monitoring," he said. "It's establishing an awareness of what these guidelines are and what they potentially mean. We are making sure that any bloggers involved in any programs we're running acknowledge they are working with us."

Mr. Welch said he's being proactive with any agencies he's working with, such as Edelman, on these campaigns and "adding that clarification to any of our programs that are under consideration." He said he also has people monitoring any bloggers HP works with to ensure they are in compliance.

Gretchen Paules, VP-marketing for Boston Market Corporation, said the company is rolling out a new social-media policy in December that will set some guidelines for employees requiring them to identify themselves as Boston Market employees on social sites.

Putting a policy in place
"We felt it was smart to have a social-media policy in place for our employees so that it protects us against rogue activities," Ms. Paules said. The company is also using a new product that its agency partner BzzAgent is debuting today called Social Compliance. Agency CEO Dave Balter said the platform allows marketers to address each of the three FTC requirements -- education, monitoring and enforcement -- without sacrificing marketing impact.

The agency's 100-member Compliance Assurance Team will drive the Social Compliance offering by analyzing "social media and word-of-mouth activity" both on- and offline then educating, sanctioning and even removing violators who do not comply with the FTC guidelines.

Dave Balter, CEO of BzzAgent, said the platform will be available to other vendors and non-clients "who want to run their social-media program through our systems to make sure they are in compliance for their brands."

But marketers aren't the only ones concerned. While the FTC's real target here may be advertisers falsely promoting the benefits of their products, it has been the new element of the equation -- bloggers -- that have been getting the lion's share of the coverage. And the community is taking just as many steps as marketers and agencies are to educate itself on the guidelines.

Susan Getgood, a marketing consultant and co-founder of Blog With Integrity, said the site held two webinars on the FTC guidelines. The first was on disclosure, and the second, which took place after the guidelines were approved, featured a member of the FTC who fielded questions from bloggers about the guidelines. Ms. Getgood said the two biggest questions/topics the blogging community asks about center around disclosure and affiliate marketing.

"Bloggers want to know if they have to put the disclosure in the post; and if they need to put one in every post or if they can have a blanket disclosure that covers their whole blog," Ms. Getgood said. "And they also want to know the proper way to disclose any affiliate marketing relationships."

Bloggers are 'cautiously optimistic'
Ms. Getgood said when the guidelines were announced earlier this year, bloggers were extremely nervous and unsure about their implications. And as it's educated itself on the new rules, the blogging community has grown more "cautiously optimistic," she said, because the FTC has made it clear that "its real enforcement intent" is on the advertisers working with bloggers.

"The media attention has been on the bloggers because that was new part of all this," Ms. Getgood said. "Bloggers are interested in doing the right thing and they want to understand what they need to do so they can do it right."

One of those bloggers is New York City-based Kimberly Coleman, whose Mom in the City blog contains "a lot" of product reviews. Ms. Coleman said she is fine with the guidelines and that most other bloggers are as well.

"They just want to be sure they are not being singled out and that the guidelines are being applied equally across the board in all types of media," she said. "For me, it really isn't a big deal because I always preface everything with 'I was sent this to review' before I review something. But now you just have to be more specific about which company sent you what."

To educate herself, Ms. Coleman said she has read the guidelines and taken part in some webinars "that have been helpful on the practicals and how they apply to blogs."

On the agency side, Andy Marks, general manager at Matter, Edelman's sports and entertainment marketing arm, said the agency modified the standard spokesperson template agreement they use for their clients. "We're asking celebrity spokespersons to confirm through representations and warranties that they are familiar with the products and services," he said. "And that they have a positive view of our clients and their products and services." The agency is also initiating a series of Edelman University classes on the issue. "We have to educate the entire populace so everyone is grounded in the rulings so they know how it impacts any of their clients," Mr. Marks said.

For now, Nielsen's Mr. Blackshaw said brands should be exercising some level of conservatism as these practices and their cost and consequences become clearer. "We have been in a bit of a period of exuberance in social media," he said. "We have been pushing the needle in the name of experimentation, and I'm a big fan of that in areas such as blogger outreach or giving incentive to bloggers. But it may be smart for brands to think through that very carefully and overcompensate on disclosure even if it looks exaggerated on the surface."

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