Bloggers Beware of Big Brother

Many marketers have been increasing their budgets when it comes to social media and word-of-mouth marketing. In fact, marketers like Ford, Microsoft, and Pepsi spend billions on social media and word-of-mouth marketing. Additionally, PQ Media projects that marketers will spend $3.7 billion on word-of-mouth marketing in 2011. However, using well-known bloggers to boast about a brand or sending products to influencers to spread the good word could be scrutinized by the Federal Trade Commission (FTC) in the near future.

According to an article in Ad Age, 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. 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.

It is evident that it has taken awhile for rules and regulations to speed up to the realities that exist in 2009. 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."

But will these rules and regulations be enforced in the near future? It turns out the FTC will review all public comments and concerns before the final vote. Organizations such as the American Association of Advertising Agencies, American Advertising Federation, and Personal Care Products Council have plenty of reservations. 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."

If the FTC passes the proposed plan, advertisers and agencies will be held responsible to understand the rules and inform their bloggers and promoters that they must comply. But could this actually be a catalyst in bringing a new array of problems that transpires when the government steps in, which may change the face of the advertising industry?

While many people fear the proposed plan because of Big Brother’s overarching presence, others feel that it will bring more credibility to word-of-mouth and social-media marketing. Jim Nail, chief marketing officer of TNS Media Intelligence and a WOMMA board member said "The thing that makes word-of-mouth marketing powerful is people believing they are getting truthful and honest opinions from real users. If people start disbelieving word-of-mouth marketing as much as they disbelieve advertising, we are in deep trouble."