How the New FTC Guidelines Affects Your Business

By Perks |

Think that the revised FTC guidelines are just about blogging and don’t apply to your business? Think again!

Back in October of 2009, the Federal Trade Commission (FTC) revised a set of guidelines that had been unchanged for 30 years. Beginning December 1. 2009, these revisions took effect and they made some significant changes in the ways that brands market themselves on the web and in social media channels. ftc-logo-social-media1Brands have been slow to adapt to the changes and the FTC recently made it clear that investigations have begun and that they are monitoring marketing campaigns for compliance.

Whenever someone is endorsing or making a testimonial of a product it must be made clear if the writer of that content has a “material connection” to the product or company that they are writing about. That “material connection” could be that the writer received a sample, gift, affiliate payment or any form of compensation. Advertisers are responsible for ensuring that disclosures are included in their campaigns, and they are liable for any false claims made by their endorsers.

Note that this also applies to employees and agencies posting on behalf of a brand and is meant to address “astroturfing” – which is a term used for positive reviews that are generated by a brand and their PR machine to create reviews and/or counteract negative reviews in the marketplace. The most common areas where disclosures are an issue include: product reviews (samples and gifts), paid posts, employee/agency posts and affiliate marketing programs.

Although bloggers were the most vocal group when the guideline updates were announced, it is marketers and advertisers who are most affected by these changes. The FTC expects advertisers to 1) lead the conversation about disclosures in their marketing campaigns, 2) create a disclosure policy for their campaigns, 3) document that they have followed their policy and 4) monitor campaigns for proper disclosures.

The FTC recently announced that they closed their first investigation around the practices of Ann Taylor LOFT in a blogger outreach program they ran in January 2010. While the FTC decided not to take further action against Ann Taylor for this program, they made it clear that compliance is not optional, and that advertisers are responsible for disclosures in their campaigns.


There has been a lot of confusion over what the guidelines are who is affected by these changes. Here are a few quick pointers:


-    Disclosures are now required for marketing campaigns that include product reviews, sampling campaigns, affiliate/referral programs, influencer outreach and word of mouth marketing.


-    The FTC is expecting advertisers (and their agencies) to lead the conversation about disclosures in their marketing programs and is holding them responsible for creating disclosure policies and best practices, documenting their process, and monitoring their campaigns to ensure compliance with those policies.


-    Disclosures must be included when a material connection exists between the writer and the product that is being endorsed and they must be clear and conspicuous.


-    Disclosures are required in all forms of digital media including blog posts, web sites, forums and even in Tweets and Facebook status updates.


-    While there are many ways for bloggers to disclose their “material connections” it is advertisers (and their agencies) who are liable for disclosure policies and proper documentation.


Sponsored conversations and word of mouth marketing are increasingly popular as brands leverage social media technologies and embrace user generated content and reviews in their marketing efforts. Openness and transparency of these efforts is standard best practice in the space, and disclosure is no longer optional for brands engaging influencers to market their goods and services.


CMP.ly has developed a simple solution specifically for advertisers to manage and document an audit trail for disclosures in their campaigns. In addition, CMP.ly offers a standard framework for disclosures that are offered to the blogging community for free. For more information about these solutions, please visit http://cmp.ly. (Disclosure http://cmp.ly/4/t2ziwc – I am a co-founder of CMP.ly)

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