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A business primer on the new FTC transparency rules

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.

Stuff you put on the Internet is always fresh, never frozen.

One of my most popular posts this week is the one I wrote about Home Depot’s customer service problems.  Another blog referred to it in a post titled, The 10 Best (and 10 Worst) Companies for Customer Service.  It’s been drawing hits, links and comments all over the Internet.

The problem is that I wrote the post about Home Depot more than three years ago.  The post it got linked to is three years old, too.

How did a November 2006 post in a niche market blog outsourced overseas rise above the clutter in September 2009?  Hard to say. Somebody pasted the original article verbatim into another site and through the magic of search engines got it to show up. Readers began linking and posting comments to it.  And just like that old stuff is current again.

A good rule to remember about social media:  Criticism and bad news in particular have an indefinite shelf life.
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• Scatterbox |  The business of social media creates new headaches for business reputations

Scattered links of interest

Twitter’s ROI (Forbes.com)
There is a potential danger in that too many people will employ Twitter as a short-cut for customer service.”

Prepare now for “resume tsunami” (Ogilvy Impact)
“With a variety of signs pointing, if somewhat tentatively, toward an economic recovery, it’s not too soon for companies to begin thinking about how they’ll keep their top performers.”

We need a swine flu newsroom (Newsvetter)
“In matters concerning life and death I don't want to be forced to rely (solely) on a news media obsessed with body counts and hot zones.”

PRSA’s meaningless condemnation (O’Dwyer’s Blog)
“…How about revealing the source of your anger? Who in the world are you talking about?”
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Submit links to scatterbox@stevensilvers.com

Six standards for employee use of social media

PR lawyer Michael Lasky summarizes four key principals to include in company policies for how employees may use blogs, Facebook, YouTube, Twitter and other social media:

• Respect for intellectual property … Avoiding plagiarism and copyright infringement.
  
• Standards of truth … Attributing information, knowing the difference between fact and opinion.
  
• Confidentiality … Knowing what can be made public via the Internet, and what should be protected.
  
• Common sense … Using the same rules that apply to memos, emails, press releases, web sites and other company communication.

While these are broad enough to cover most concerns, I would also make sure that your social media standards address these two important areas:

• Transparency … That official communications will not be misleading, disguised or anonymous.
  
• Accountability … That the company will protect stakeholder interests by tracking social media use and content, and that employees will be held responsible for misrepresenting or maligning the company on the Internet, even if they do so on their own time.

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Why most companies should just ignore all those anonymous rate-your-employer sites

Internet Evolution blogger Chris Poley points to another aspect of employees using the Internet to ridicule the companies they work for. [Read Scatterbox: Managing the Unmanageable.]

One way they do this is through Internet sites that rate companies based on anonymous input from current and former employees, and even people who only tried getting jobs with a company. 

But the impact these user-generated sites have on a company’s reputation is debatable.  Glassdoor.com, for example, touts its “inside look” at more than 26,000 companies.  Large companies like Wal-Mart list hundreds of anonymous comments, which in reading lead you to the not-so-shocking revelation that some people like their employers and some people don’t.  Many other companies garner only one or two comments, most of them rants about stupid bosses and rotten culture.

Basically it’s like listening to strangers on the bus to work.

To be sure, some companies use search engine optimization – also hyped as “online reputation management” – to push negative comments deeper into the Internet clutter.  Other companies have their flacks post anonymous positive comments to counter the anonymous criticisms (the ethics of which are for another post).

Most employers, however, simply ignore the sites.  And in most cases that’s the best approach.

Why?  Because without attribution, scientific basis or mass context these opinion boards have as much information value as random graffiti.

It’s no surprise that a relatively few unhappy, unnamed employees are more likely to gripe online.  And that creates representations way out of sync with more credible reputation measurements.  Look up insurance giant Aflac on Glassdoor.com, for example, and you get a 5,000-employee company with a “neutral company rating” because half of the 26 comments that make up the score are from people like the agent who wrote that “they have no morals and they don't know what their [SIC] doing there.”

Meanwhile, Aflac was named 2009’s most reputable and ethical insurance company by Reputation Institute's Global Reputation Pulse, an annual public survey of the nation's 153 largest corporations.  Second year in a row, too.

It doesn’t take a PR expert to know which image matters most.
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CEOs won't say Twitter and other contradictions about the hottest social media thing since the one before it

What a time.

Four years ago, a BusinessWeek cover story said blogs will change your business and influence the course of civilization just like the invention of the printing press did more than five hundred years ago.

Now a Time Magazine cover story announces that Twitter will change the way we live .

At this rate we should expect another planet-altering social media tool by Labor Day.

That is, unless you don't think a free online short-message service rastes with our generation’s revolutionary information technologies: voice mail, cell phones, the Web.

You’re the people who think Twitter is the Internet-era version of the CB radio fad. 

And you don’t believe that hot hype will take precedent over the cold realities of the marketplace.

In "Ten ways Twitter will change American business,"  Time’s writer predicts that the ability to send and selectively receive 140-character Tweets will give business, politicians, media, investors and other interests the ability to “engage” people like never before. For example:

“Twitter … will increasingly become a place where companies build brands, do research, send information to customers, conduct e-commerce, and create communities for their users. Some industries, like local retail, could be transformed by Twitter… having the opportunity to tell customers about attractive sales and new products can be done at remarkably low cost while providing for greater geographic accuracy.”

The problem with this vision is that it assumes consumers will do four things:

… One, that they'll stay fixed on reading and writing Tweets all day long, day after day.

… Two, that they’ll want to receive product announcements, promotions, surveys, celebrity restaurant orders, contests and other sponsored messages, at every turn of their day.

… Three, that they’ll overlook the intrusive advertising and spam that will increasingly pollute their legitimate news and conversation stream.

… And four, that they won’t mind how Twitter reserves all rights to sell any information it has on them so others can identify, locate or contact users.

Consumers don’t behave this way.  They won’t for Twitter.

Twitter’s problem is that the Internet has no walls.  There are no beachheads to dissipate the relentless waves of marketing and campaigning.  We hear anecdotes like how a suitcase company responded to a customer who Tweeted about his broken handle.  But take that scenario a few years from now – if that long – and that same customer will be inundated by followers, followees and interlopers Tweeting everything from luggage deals and discount travel to political fundraisers and pleas to help some secret princess transfer money. 

Nobody says Twitter doesn’t have huge potential for mass communication.  It does. The Iranian election aftermath shows how microblogging can facilitate real-time citizen-journalism.  But the same holds true for misinformation and propaganda.  The bad guys know how to use Twitter too. 

That's one reason corporate America isn’t exactly clamoring to get on board. And Twitter's goofy dot-commish name itself alienates the service from thousands of CEOs already averse to social media.

In fact, big brands see less value and more risk in associating with any Internet free-for-alls.

Consider YouTube. Time Magazine reports that despite drawing 99.7 million viewers watching 5.9 billion videos, YouTube's content is overall so bad that marketers have become reluctant to embed their messages within it. 

After paying $1.65 billion to own it, Google told investors that YouTube is "not material,” making the Web’s third-most popular destination also one of the ten biggest technology failures of the last decade.

It's a stretch to think Twitter will do better.  It doesn’t even own the micro-blogging concept, and several competitors already offer more features and open-sourcing.  RSS inventor Dave Winer, who PC World calls the father of modern-day content distribution, went so far as to predict that Twitter is the next Netscape.

As for the 29 million users, new research also suggests that Twittermania may have already peaked:

• 90 percent of all Tweets come from only 10 percent of all Twitter users. (Harvard University study of randomly selected sample of 300,000 Twitter users)
  
  
• Though 99 percent of Generation Y -- age 18 to 24 -- use social media, only 22 percent of them use Twitter.  (Pace University study for Participatory Marketing Network)
  
  
• 55 percent of Twitter account holders have never posted a Tweet and 56 percent aren’t following anyone.  53 percent have no followers. (HubSpot analysis of 4.5 million Twitter accounts over nine-month period)
  
  
• 60 percent of Twitter users quit after the first month.  (Tracking from Nielsen Online)
  
  
• Twitter’s growth came to a screeching stop in May, growing by only 1.5 percent.  (Tracking by Mashable)

Then there’s the Oprah factor.

Well over a million people signed up for Twitter in the first 72 hours after Oprah featured the service on her show.  But as Silicon Valley Insider reported, Oprah is already bored with it.  Despite having 1.56 million followers, Oprah herself follows only 14 people and Tweeted just four times in June. 

So what are we to make of all this?  I agree with InternetNews columnist Mike Elgan, who thinks Twitter is simply leveling out to what it really is minus the hype. 

“It’s no longer a new frontier, an elite club or a culture-transforming medium,” he writes. “It's just a service for sending messages.”

And you can get mine at Twitter.com/StevenSilvers.  Or at least until I move on to the next big thing.
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Also read:  No, social media doesn't actually sell anything. And no, you can't afford to ignore it.

Get on President Obama's email update list

Drop a note to WhiteHouse.Gov and you'll be added to President Obama's email blast list.

The White House is using official letter-looking emails -- like this one about health care reform -- "as a way to directly communicate about important issues and opportunities." 

The email letters include links to other White House web sites designed to educate and build support for various administration initiatives.

You can get on the official Obama email updates list by clicking here.
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Fear and Loathing in Lost Media

Bulldog Reporter notes how news companies hate that Google doesn't share the money it makes by selling ads tied to news blurbs it "scrapes" to create Google News.  Experts say it would take only a few lines of code to prevent Google from indexing content from the Wall Street Journal, New York Times and hundreds of the other sources it gleans from.

So why don't they?
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KFC free chicken promotion runs around like a PR stunt with its head cut off

It will go down as one of the least thought-out marketing publicity stunts since Sony used a decapitated goat to promote a video game.

The idea seemed simple enough.  Strike a deal to have Oprah to "give away" two pieces of KFC's new grilled chicken to everybody in America.   Tell people to download an Internet coupon and show up at a store.  Publicize madly.   Post a Tweet from Oprah reading, "You're Getting a Chicken! You're Getting a Chicken!" 

But like many good intentions gone bad, this campaign didn't plan for the most obvious potential PR problems:

Contingency:  Not enough Internet.   The servers crashed from so many people trying to get coupons at the same time.  Maybe we understand how the Colorado Rockies weren't ready to sell World Series tickets, but how can one America's largest consumer companies not have the plumbing worked out?

Contingency:  Unprepared stores.   Consumers didn't read the fine print and assumed every KFC was a participating store.  Many stores were overwhelmed. Some locked the doors.  Other taped hand-written "no Internet coupons!" signs to the door.  Police were called.  Managers freaked out, politicians called for action.

Contingency:  Consumers gone wild.   People who didn't get their free chicken behaved like they were being denied the right to vote.  In New York, angry citizens staged a sit-in while the world's news media looked on.  The Internet exploded with smarmy bloggers, angry customers, finger-wagging criticisms and conspiracy theories.  Talk shows had a field day.

Contingency:  Caught in a lie.   Animal rights activists loathe KFC.  But just last year, PETA gave Oprah its "Person of the Year Award" for helping to expose factory farm abuses, including a show titled "How we treat the animals we eat."   A Huffington Post column called it Oprah's "most hypocritical move yet."

Both KFC's and Oprah's PR machines are in full swing.  They'll survive.

But companies with fewer resources for damage control should be paying close attention.
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Internet scammers run like pigs to the Swine Flu trough

Washington Post blogger Brian Krebs reports that spammers and scammers are working overtime to profit from public fears of a Swine Flu epidemic.

Just days after the first headlines, more than two percent of all Internet spam tried to get people to click on hundreds of new Swine Flu-labeled sites selling everything from "survival guides" to fake prescription drugs.
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