Today the FTC published new guidelines requiring advertisers and marketers to be transparent when using endorsements as a marketing tactic. In a new twist the revised guidelines also apply to the people who act as the endorser.
Who Is Affected
The revised FTC guidelines apply to:
- celebrities who endorse products or brands;
- bloggers or word-of-mouth brand ambassadors who receive a material benefit from the company (cash or payment-in-kind, such as free products);
- customer testimonials (especially when the customer’s experience is atypical);
- research organizations – when sponsored reports are used to help promote the sponsor’s products and services.
The disclosure requirements apply both to the sponsoring brand or company as well as the recipient of the sponsorship: bloggers, celebrities, analysts or research organizations. The recipient must disclose the nature of their relationship with the sponsor.
When endorsing or reviewing a product, bloggers must disclose “material connections” with the sponsoring brand – or face potential fines up to $11,000. When a blogger is paid or given a free copy of a product in exchange for a product review, the blogger is obligated to disclose that fact. The new FTC guidelines define that relationship as an endorsement; they define “material connections” as cash or payments-in-kind, such as gifts of free products or services.
Celebrities tweeting or touting a brand on talk shows must reveal that their designer apparel, jewelry, or fancy sports car were free gifts from the company.
Although intended as a means of protecting American consumers, these guidelines will also apply to B2B marketers who rely on endorsements and testimonial tactics. For example, there’s a long-standing tradition of webinars, white papers and analyst reports that are used as endorsements, and paid for the sponsoring company. B2B marketers do not always reveal that the endorser’s services have been paid for… Those practices will now need to undergo new scrutiny.
There’s no doubt that these new guidelines will be difficult to enforce; however, they will demand a new set of professional standards – a code of ethics – for bloggers whose postings are sponsored by third parties. That will help all of us apply the right context to our interpretations of the product and service reviews we read online.
Personal Disclosure – And a Promise
I’m happy to report that my posts are not sponsored by any third parties. In the future if a company pays me to review a product, or gives me a free copy in exchange for this service, I promise to reveal that fact.
Unlike bloggers who blog for a living (such as people on salaries who write for their employer), I’m not paid when I blog. My consulting firm does not pay me to write this blog. Having said that, I hope the blog reflects favorably on the firm.
