The Federal Trade Commission announced this week that it is changing its regulations regarding sponsored testimonials online, and not surprisingly, the web has been a buzz ever since. The original FTC ruling about sponsored endorsements from 1980 is designed to protect consumers against fraudulent advertising and applies to television, radio, print and later, email. Beginning December 1, 2009, the scope of this regulation will be expanded to also include blogs and social media platforms. Why is this such big news? Well, the proposed changes will affect four important and vocal parties involved in the marketing process; consumers, bloggers, celebrities and companies, by making sure that any paid endorsements online are made known to the public. While that’s a significant change, the ruling spotlights an issue that will have a widespread impact on our industry.The fact that the U.S. government is imposing regulations on blogs and social media means that it now considers both to be legitimate channels of mass communications. If you’re reading this blog post, you certainly get the importance of the social web, but this is a wakeup call for marketers still unsure of the validity of this channel.
What this means for brands & bloggers
In a phrase, no more under the table pay for play, everything will be out in the open. It is not an uncommon practice for companies to send influential bloggers free product (or cash, trips, etc.) in return for a positive review on their blog. However, the blogger is currently under no obligation to tell the readers about the transaction, although some do. Under the expanded FTC guidelines, bloggers and social media users must disclose any paid relationship with a company (this includes freebies, not just money) so that consumers are aware. The same situation applies when brands reach out to social media users to post sponsored content on sites like Facebook and Twitter. It should be noted that sponsored blogging/posting is still allowed, so long as it is indicated as such, just like the accepted practices of marketing through traditional media channels
Another new issue addressed by the FTC is the practice of creating entirely fabricated blogs and personalities so that a brand can falsely feed advertising content through the voice of a supposed customer. Now, companies will not be allowed to mimic user-created sites to mask advertising messages from their audience.
What this means for consumers
In keeping with the FTC’s mission, the reason for all of these new rules is to protect the consumer. Consumers have to most to gain from these new changes, the more transparency there is in product related blogging and posting, the more educated they will be. Similar to the “paid actor” disclosures seen on television commercials, it will be much easier to distinguish a paid blog post, wall post or tweet from an actual opinion.
What this means for marketers
This is not bad news. The same regulations already apply to television, radio, print and email and marketers have been abiding for almost 30 years. Marketers now will have to be smarter and more creative with their social media marketing campaigns as well. As good marketers, we should always want our consumers to be well-informed about our products and services. The proposed FTC regulation is intended to level the ethical playing field and weed out those who are abusing these channels. Many brands will continue to thrive in our online social space, the point is to be here and do it right. Those marketers still skeptical about Web 2.0 applications need to recognize, as the government has, that social media and blogging are maturing into viable and impactful communications channels.