Letters, Oct. 26, 2009

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FTC takes issue with editorial

Ad Age's Oct. 12 editorial criticizing revised Federal Trade Commission guidelines on endorsements in advertising attacked a straw man bearing little resemblance to our actual announcement.

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Question the experts live at our 'Hot Topic: The Skinny on the FTC's Endorsements and Testimonials Guidelines' webcast on November 3.

The editorial says penalties include $11,000 in fines per violation. Wrong. FTC regulations such as the do-not-call rule carry monetary civil penalties for violations, but guidance documents like these guides do not.

The editorial criticizes the guides' case-by-case approach. The guides put meat on the bones of Section 5 of the FTC Act -- the truth-in-advertising statute we enforce -- which simply prohibits deceptive commercial practices. Since 1980, the guides have called for disclosure of connections between advertisers and endorsers that consumers wouldn't reasonably expect, and law enforcement under Section 5 has always been case by case. The alternative to giving this guidance would be leaving advertisers in the dark about how Section 5 applies when they use endorsements. Rather than do that, we added new examples involving social-media marketing.

Of course we can't monitor all blogs. That doesn't mean truth-in-advertising principles don't apply. When marketers started using the internet, the FTC applied Section 5 there just as we did to traditional media. That there were more website sellers than we could monitor and many were foreign didn't mean we threw up our hands and left it solely to industry self-regulation. Instead, we focused our enforcement resources on marketers perpetrating the worst schemes, which is what we will do if marketers use blogola to buy biased reviews.

Ad Age should support truthful marketing practices, not disparage efforts to promote them.

Mary K. Engle
Associate director for advertising practices
Federal Trade Commission

Social media brought FTC rules on itself

The new FTC guidelines requiring bloggers to disclose payments or gifts received in exchange for posting endorsements or favorable coverage are an unfortunate result of ongoing ethical lapses by many SEO specialists, buzz-marketing agencies and PR firms over the years. Through ongoing, deliberate attempts to breach the church/state wall between advertising and editorial through obfuscation the industry has brought regulation upon itself.

Ethical media relations require always providing bloggers (and all other media and various publics) with full disclosure. The practice of offering gifts or payment should have been discouraged by clients, who should have insisted that that agencies secure positive editorial coverage based solely on the merits of a brand.

These new FTC rules will not present any challenge for those who execute their campaigns in a fully transparent manner. After all, time and the internet show that the truth comes out eventually.

Lloyd P. Trufelman
Trylon SMR
New York

Auto industry using same tired playbook

Benjamin Franklin defined insanity as "doing the same thing over and over and expecting a different result." That's a fair characterization of the U.S. automotive industry -- at least Cadillac's approach to its new agency search.

At a time when super-accountable media and engagement solutions abound, Cadillac is going through yet another traditional brand agency search that is likely to get it the same old players, offering the same inefficient solutions.

But this time Cadillac, along with the rest of GM's brands, is playing with taxpayer money. More brand building is not what the automotive industry needs right now. What it needs is more sales, and they can only be achieved through a pay-for-performance advertising model, both online and off.

Pay-for-performance TV in particular, is a proven sales driver that has worked for major brands including Proctor & Gamble and PepsiCo. There is a plethora of data proving the effectiveness of this model and its ability to affect consumer spending.

In the age of government bailouts and global recession, the auto industry should be paying for customers, not media. The data, analytics, experience and expertise are available to create media strategies guaranteed to generate sales at an agreed upon cost-per-lead or cost-per-sale.

It's time to stop the insanity, Detroit. Pay your agencies to sell your cars, and hold them accountable!

Ken Dec
Senior VP-business development
Mercury Media

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