Influencer marketing is on a collision course with the US Federal Trade Commission and its new guidelines for endorsements and testimonials in advertising. The revised guides span consumer endorsements, expert endorsements, endorsement by organizations, and disclosure of material connections between advertisers and endorsers. The FTC has already said it expects the revised guidelines to affect most businesses that advertise in the US.
Don’t hit the snooze button on this because you think expert influencers such as industry analysts are beyond the scope of the revised guidelines. Recall the case of Microsoft, META Group and the UK Advertising Standards Authority. The ASA upheld complaints that a Microsoft print ad comparing Linux and Windows(R) costs was misleading. The heart of the ad was a META Group benchmark study. (The Inquirer, 25 Aug 2004)
Duncan and I have written about these guides a few times (here and here). We know the revised guidelines are coming, we just don’t know when. Many, including Ogilvy’s John Bell, expect the new guides to go into effect as early as next month. An FTC spokesman told me this morning that the effective date has not been set; the revisions are still in staff discussion. However, I tend to give John his due. Seems likely that an advertising powerhouse like Ogilvy has an ear or two placed close to the FTC staff discussions.
The revised FTC guides deserve close scrutiny. In short, transparency is no longer an option. You need to provide information about where you’ve seeded free products, services or other considerations in exchange for an endorsement. You may also need to provide evidence of the grounds for an endorsement, including repeatable results that back up claims.
What can you do?
- Team up with lawyers to understand the implications for endorsements and testimonials and to agree on how you will accommodate these guides in your best practices, approval processes and influencer relations.
- Agree on a simple rating system for determining the risks associated with endorsements and testimonials already in use. Come up with one or two criteria that determine each level of risk — high risk, moderate risk or low risk. Keep it simple.
- Review the endorsements and testimonials you’ve already released and rate the risk associated with each. Remember, the new guides will apply evenly to endorsements you initiate and to unprompted endorsements you pick up and use. You are accountable for claims made in both types of endorsements. If you use an endorsement, you’re accountable for it. Come up with an action plan as needed.
- Use your risk ratings to update your approval process for future endorsements and testimonials.
Useful information links:
Old FTC Guides Concerning Use of Endorsements and Testimonials in Advertising
Proposed revisions to the FTC Guides Concerning Use of Endorsements and Testimonials in Advertising, published for public comment in November 2008 (this link opens a pdf)
Extension for submitting comments to the proposed revisions (this link opens a pdf)
FTC press release announcing the revisions, Nov 2008
Related posts at John Bell’s blog, Digital Influence Mapping Project
Bloggers 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.