FTC Getting Closer to Weighing in on Social Media Marketing

Proposed changes on the horizon to Federal Trade Commission (FTC) guidelines could further impact social media marketing while radically altering some marketers practices of using third-party spokespeople for online brand marketing. Michael Lasky, a senior partner at Davis & Gilbert LLP, a New York law firm that specializes in advertising and communications law says “Agencies and clients, especially those working in the social media space, must understand that the FTC’s efforts to address deceptive practices can create liability and exposure.”

Additions and modifications now under consideration by the FTC are, “Guides Concerning the Use of Endorsements and Testimonials.” It is expected that a final ruling on the Guides will occur sometime later this summer or early fall. Behind the proposed changes is what Lasky terms, “The 10 Commandments of commercial marketing as found in Section 5 of the FTC Act — summed up as — thou shall not commit a false or deceptive practice.” The FTC is working to address this: A blogger or spokesperson’s failure to disclose a fact or event that could alter the consumer’s decision regarding a product or service.

Now, I know some agencies and marketers may have tried this approach of non-disclosure but most cases have been very unsuccessful and actually created more bad that good for the brand in question. The practice of full disclosure for social marketing is really the only way to really operate otherwise it just rooted out as not genuine and in many cases deceptive. I think part of the great value of the social graph is that it self-polices on much of this. Also, organizations like WOMMA publish guidelines and best practices for agencies and marketers in addition to have formal process for grievance filing when tactics are in question.

Brands and agencies should examine the FTC’s efforts understand their meanings and interpretations and to avoid problems down the road. A clear liability can and will arise when and if marketers pay bloggers or provide other “consideration” such as free products and services in return for a favorable post. Disclosure is necessary.

Agencies and clients, if they haven’t already, should adopt written guidelines that come into play when any “consideration” is involved. The guidelines must work explicitly to “make it clear the company wants the blogger to disclose whether any compensation or any other item of tangible value, such as free product, has been received in return for a favorable post or review,” said Allison Fitzpatrick, associate counsel at Davis & Gilbert LLP.

I would encourage agencies and marketer to go the WOMMA site to familiarize themselves with the organization and much of the guidelines and best practices they have organized around this topic.

Blake Cahill

Visible Technologies