Representing its most sweeping action in 30 years, the Federal Trade Commission’s new rules governing endorsements and testimonials will change how marketing is done.
Here’s what the Guides Concerning the Use of Endorsements and Testimonials in Advertising say:
ACCOUNTABLE FOR BLOGS AND SOCIAL MEDIA.
The FTC already directs online reviewers to disclose if they’re being paid by advertisers. Under the new rules, however, every blogger, Twitter user or social network member must disclose any “material connection” with a company, product or service.
Taken literally, this connection could result in fines for bloggers who fail to disclose anything from getting a sample can of chili in the mail to having a spouse who owns company stock. While consumer advocates support the guidelines, some prominent bloggers argue that the rules in effect force them to disclose every business relationship they’ve ever had.
Enforcement is another matter. The FTC says it will primarily go after the advertisers rather than individual bloggers, though it will take into account how companies encourage transparency in their paid reviews and freebies. Beyond that, the agency will decide matters on a case-by-case basis – which basically means they’ll know deceptive advertising when they see it. What makes things even more convoluted is that the agency doesn’t say by what means it will handle these situations.
Given that the new transparency standards for bloggers are higher than what’s required of commercial news media and politicians, the FTC rules are generating considerable debate among marketers and social media proponents alike. Stay tuned.
ACCOUNTABLE FOR TYPICAL RESULTS.
Ads that feature individual consumer experiences with a product will have to state clearly what kind of results everybody else can expect. Soon to be history are those ubiquitous ads that whisper “results not typical” while showing some guy who lost 300 pounds drinking vitamin shakes.
ACCOUNTABLE FOR EMPLOYEES.
Employees that promote their company or its products online must “clearly and conspicuously” disclose who they work for.
The FTC urges that companies have social media policies as one way to avoid fines or other actions when employees pretend to be someone else – say, a happy customer or invigorated shareholder.
Keep in mind, however, that a recent Deloitte study found that a third of all employees don’t even consider what their boss might think before posting something online.
ACCOUNTABLE FOR CELEBRITIES AND RESEARCH.
A warning to every company that uses movie stars, retired quarterbacks and 70’s sitcom actors for promotional tours. Under the new FTC guidelines, both advertisers and their celebrity spokespeople can be held liable for making false claims as part of a commercial endorsement.
The ramifications are huge. Celebrities making the rounds of late-night talk shows, state fairs and Twitter feeds must disclose their business relationship with any company or agency that’s paying them to pump movies, books, products or even charities.
Companies that quote research must also disclose if they paid for the studies, or if they have any business relationship with the organization that did the research.
These standards go way beyond front groups and hidden clients. From now on, any failure to disclose corporate affiliations could be considered deceptive advertising. That’s going to hit a lot of marketing PR campaigns.
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Download a PDF of the revised FTC rules here.
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