FTC eyes social media endorsements

BarbaraBloggers, Consumer markets, Influencer engagement, social media

FTCBloggers who are compensated for endorsing products and services could be held liable for any false statements they make, if newly proposed FTC guidelines are adopted. I’m pleased to see some movement beyond voluntary blogger transparency.

I’m a fan of voluntary transparency. It puts peer pressure on bloggers to tell you about sponsorships and other compensation. It has uncovered several unethical promotional campaigns. However, I see shortcomings as well. Voluntary transparency does not hold bloggers’ feet to the fire with regards to the honesty of their statements.

Consumers and brands suffering unfairly due to false statements have little recourse. This situation favors the powerful and wealthy — who can afford to pay for endorsements and posts — and undermines the value of word of mouth (WOM) influence.

Excerpting from coverage at AdAge:

As part of its review of its advertising guidelines, the FTC is proposing that word-of-mouth marketers and bloggers, as well as people on social-media sites such as Facebook, be held liable for any false statements they make about a product they’re promoting, along with the product’s marketer. This could present a significant issue for marketers, including the likes of Microsoft, Ford and Pepsi, who spend billions on word-of-mouth and social media. PQ Media projects that marketers will spend $3.7 billion on word-of-mouth marketing in 2011.

The current FTC guideline on endorsements and testimonials in advertising was issued in 1980.

Hat tip to Andy Beal, Markeing Pilgrim, for raising the topic.