Related Links

If it ain’t broke, don’t fix it.

That’s the central message various marketing organizations have for the Federal Trade Commission, which on Monday closed the window for public comment on its proposed changes to its Guides Concerning the Use of Endorsements and Testimonials in Advertising. One change would require disclosure of any paid relationship between companies and online commenters who praise their products.

The proposed changes span a wide range of issues and "impact just about every marketer out there," declared Paul Rand, vice president of the Chicago-based Word of Mouth Marketing Association, and president and CEO of Chicago-based Zocalo Group, a unit of Omicom Group Inc.

The two proposals that have drawn the most pointed responses call for disclosure of typical consumer experiences expected from a product or service if a consumer endorsement does not reflect such typical experience, and transparency and liability for marketers and favorably-commenting consumers who have a commercial relationship.

While the FTC is on the right track, Rand said, he doesn't think more stringent governmental regulation is necessary.

"Companies are going to be rewarded and punished based on their abilities to be transparent and open to consumers," he stated. 

Rand added that marketers should be aware by now that for companies caught lying, "the backlash against them is overwhelming," and that these market forces are self-correcting.

"We commend the FTC’s efforts to take additional steps to protect consumers from deceptive and misleading testimonials," said Linda Goldstein, chairman of the government affairs committee for the New York-based Promotion Marketing Association. "But the way they’ve gone about this is neither the best nor the appropriate way to do so."

Current guidelines, which have been in place since 1972, "provided the FTC with the ammunition they need" and should stay in place, she said.

Goldstein added that the typicality measure "doesn’t make sense for products and services that are highly individualized and may actually make more confusion because consumers will make comparisons when it’s not appropriate."

She used a weight-loss scenario to make her point, saying that starting weights and the length of a dietary regimen are two factors that would render average or typical results meaningless.

Jerry Cerasale, senior vice president of government affairs at the Direct Marketing Association, which is based in Washington, D.C., agrees with Goldstein’s criticism, noting that "for new products, you don’t have average results when you’re trying to advertise," which eliminates "the ability of a new product to have a testimonial endorsement."

However, Cerasale said the DMA’s "biggest concern is blogs."

According to the FTC’s proposed change, "advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose material connections between themselves and their endorsers." In addition, "endorsers may also be subject to liability for their statements."

The FTC offered three examples that would "apply the general principle that material connections between the endorser and the advertiser should be disclosed to several new forms of marketing—blogs, discussion boards, and 'street teams.'"

A joint public comment submitted by nine organizations, including the DMA and the PMA, criticized a specific scenario of blog-based endorsements that the FTC made in its notice.

They stated: "If the blogger who has become a video game expert must disclose that he received the video game system for free, then is every critic required to disclose that a reviewed item was provided for free? Reviewers in traditional media do not have to disclose this information; reviewers in nontraditional media platforms such as blogs, online discussion boards, and street teams should not be treated any differently."

"How does an advertiser control what’s happening on a blog?" Cerasale asked. "You need more guidance as to the liability of an advertiser in this area where they don’t have real control over the channel of marketing."

Goldstein complained about the FTC, "Sort of at the 11th hour, it introduced issues that involve blogging and new media that are really premature."

Still, Rand said, the FTC’s concern with transparency and honesty in relation to online social media is important.

"What it really kind of folds into is that it becomes increasingly critical for complete transparency and disclosure," he said. 

The Word of Mouth Marketing Association announced changes to its own ethics code on Thursday afternoon, "consistent with the Federal Trade Commission’s recent revisions to its guideline for the use of testimonials and endorsements in advertising," according to a press release. Among the changes, the association took a stand "against marketing practices whereby the consumer is paid cash" by a marketer to make recommendations, reviews or endorsements.

"The industry is proactively drawing the lines about what is and isn’t acceptable in this evolving space," Rand said in the press release.

Andy Abramson, CEO of Del Mar, Calif.-based marketing communications firm Comunicano Inc. and an avid blogger himself, took this concern to heart when he first heard about paid blog postings, making sure to use the word "client" when writing about clients, "to depict that this is someone I have a relationship with."

This awareness also shaped his company’s Blogger Relations Program for Nokia Corp.’s Nseries smartphones, which sent the product to bloggers with an already-paid-for return shipping box, evading the issue of freely giving products to consumers for review.

Bloggers immediately made it clear that Nokia was not paying or giving them anything for these reviews.

"We anticipated that there would be some shots across the bow, and we didn’t want to put a company like Nokia in those crosshairs," Abramson said.

Abramson used an example of giving a reporter the opportunity to drive a new car for a weekend. "You’re not paying a reporter – you’re just giving them access to information," he said. "You don’t have to bribe people."

Betsy Lordan, a spokesperson for the FTC, said the commission’s attorneys are reviewing the 15 public comments it has received since its notice of proposed changes in November, and will see if further revision is needed. The process will likely "take a few months," she said.

She said the typicality issue was "definitely something that will be a major issue."

Lordan pointed out that "Sometimes people confuse guidelines and regulations. Regulations come along with civil penalties. Guides are just guides."