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WebFugitive says...

With all the recent conversations that are going on about the FTC Guidelines for Advertisers I would like to take a brief moment to discuss how ads have impacted the growth and creation of startups, [ as well as Fortune 500 companies ] and also provided a healthy strategy for many companies to stay in business. 

In the eighteenth century, American importers would bring in hefty shipments of British consumer-related goods. We're not really discussing your spices, and tea here, but more to the effect of clothes, furniture, musical instruments and other hand-crafted or manufactured products. In America, advertisements were originally used as a signal to consumers for items on-hand until good old Benjamin Franklin and his Pennsylvania Gazette [ one of the most promising blogs at the time ] began reaching out to local businesses and selling branded illustrations in his publication. 

In the late 1800's manufacturing technology grew exponentially and a majority of industries had unheard-of quantities of product available for sale. They needed methods of reaching their potential customers quickly. Without ads these companies would have failed on an overstock principle.

Early 1900's Sears Roebuck and Montgomery Ward began offering mail-order catalogs to their rural markets offering a wide-variety of product to "out of the way" people. By 1920 advertising was a nearly $3 billion dollar a year industry. However, what you don't hear much about is the companies that were supported by advertising. After the first world war, while the economy was building back up, our American past-time of baseball would have been unable to operate without the advertising industry. An America without baseball ... I need not say more about it.

Around 1910, during the decline of the motion picture industry, many companies like Warner Brothers would have went out of business if it wasn't for advertising efforts and even early situations of product placement. It has been quoted that Rin Tin Tin was the dog that saved Hollywood because of his appeal to audiences and advertisers alike. Rin-tin was called "The Mortgage Lifter". Heading out to see a movie this weekend ? Maybe a Warner Bros. film like The Blind-Side or Sherlock Holmes ? Thank advertisements [ and dogs ]. 

Of course the "Mad Men" series has popularized what took place in the 1950's after that. The advertising agencies that were formerly in the business of selling their own space now became "employees" of the national brands; doing writing, illustrations, and research. During this time the advertising efforts were still seeking public approval, similar to how the mediums are changing today. 

As of June 2009, the ad-supported internet contributes $300 billion to U.S. economy and has created 3.1 million U.S. Jobs according to one study commissioned by the IAB. [ source IAB.net ]. Without advertising we would not have companies like Google, Facebook, Hulu, MySpace [ and eventually Twitter ]. In a world without advertising, there would be many dream-concepts of the would-be entrepreneur that would be passed over due primarily to no profit model available.

While the ad-generating revenue model is beginning to be scoffed at by some investors [ due in part to the venture capital over spending of the mid-90's ] it is still entirely viable. Advertising may very well be a pain in the ass to look around sometimes, and some people who abuse the landscape may make it an eyesore .. but know this ; in this writers humble opinion advertising has created the realization of more dreams than any other form of business in modern America. And as someone who is severely passionate about startups, for that, I am thankful. 

So before you get your panties in a bunch about FTC guidelines, no matter which side of the fence you're on, you can certainly appreciate the things that you have because of the advertising industry. 

 

What other businesses can you think of that wouldn't be here ?

 

Filed under: FTC

The6thMyth says...

 

  1. Federal Trade Commission and other government bodies

  2. Forester Report -  Add Sponsored Conversations To Your Toolbox

  3. Google on PayPerPost

 

Federal Trade Commission and other government bodies

Last year in the UK the OFT/ British Institute of Practitioners in Advertising (IPA) highlighted a new U.K. law, which implicitly states that any commercial message should be immediately identified as such and that "falsely representing oneself as a consumer" is illegal.’ Full details can be found here.

WOMMA soon thereafter ‘announced its support of the principles of new U.K. legislation that makes nondisclosure in word of mouth marketing efforts a criminal offense, and urged U.S. word of mouth marketers to diligently maintain high ethical standards to continue to pre-empt the need for similar U.S. legislation.’

Throughout the rise of online advertising the Federal Trade Commission in America has until now pressed for self-governance. Most marketing companies require their bloggers/ brand evangelists to exercise full disclosure when reviewing or mentioning a product, however, the boundaries and financial rewards surrounding these conditions is murky and often questioned. It is primarily for this reason (and after a series of warnings) that the FTC is revised their dated policy and is now planning to regulate advertising in social media for the benefit of the consumer. New guidelines available from the FTC can be found here. Companies, bloggers and even celebrities could now be liable for untruthful statements. Reports state that the announcement will affect not only PayPerPost companies such as the popular IZEA and Magpie but also WOM companies.

Unsurprisingly, the announcement has caused quite a stir and has been met with both ongoing praise and criticism all over the web.

As a proponent of FTC’s announcement, Danny Brown in Why Social Media Needs the FTC does a nice job linking some of the fundamental arguments against FTC’s decision. He presents his article around the simple premise that it’s not opinion that’s being questioned - it’s false advertising and as long as the blogger discloses that he or she was paid to write about a certain product there should be nothing to worry about.

Danny does not attempt to differentiate a paid post with that of a sponsored post. This is not a simple issue about terminology; there is an awful lot of grey area in determining what each actually constitutes. In the light of the FT’s recent announcement, Danny and many others categorize them as one and the same thing for the sake of argument.

How the FTC will determine the truthfulness of a paid/sponsored article will be interesting and will perhaps only be brought to life with a few key cases.

In a letter to the FTC, 4A’s vice-president Richard O’Brien argues that “bloggers and other viral marketers will be discouraged from publishing content for fear of being held liable for any potentially misleading claim.” Even if a blogger presents truthful opinions about a certain product there is no telling whether or not these opinions could be misinterpreted or mislead in some way. In a recent article, The Metz illustrate this potential liability with an excellent example:

Here’s a fairly realistic example. You’re a tea company that sends out $50 boxes of tea for bloggers to review, citing that some of the enclosed products are organic. It turns out that one of the twenty bloggers screws up, and cites the entire product as organic. An organic competitor responds, and files an FTC complaint. Brand gets slapped with a $20k fine, and then sues blogger for damages. Under this proposed legislation, the blogger is indeed secondarily liable.’

In 3 "Watch-outs" About The FTC Guidelines and Blogger Outreach John Bell expresses his personal opinion on the matter ‘Is there a difference between bloggers who fully disclose a non-cash relationship with a brand in terms of their liability here? Well these guidelines remain in review and we will have to see what finally gets enacted…It may also come to pass that bloggers paid cash have a higher liability for themselves and brands with or without disclosure.’

 

 

Forester Report - Add Sponsored Conversations To Your Toolbox

 

March 02 2009 - http://blogs.forrester.com/marketing/2009/03/sponsored-conve.html

In the outline to the hotly debated Forester Report entitled Add Sponsored Conversations To Your Toolbox Sean Corcoran presents the benefits of Sponsored Conversation. Citing IZEA’s recent success with their K-Mart campaign, he argues Sponsored Conversation is a powerful marketing tool alongside the more traditional mediums of Public Relations and Advertising. It is defined here as Paying bloggers to create transparent and genuine content about the brand. Effectively, Sponsored Conversation has been defined in this Forester Report to include WOM campaigns and spokesbloggers. The FTC’s recent announcement has suddenly made this debate more apparent than ever. The first Comment to this article quickly points out:

I think you miss a really important distinction between the different results you get as a result of a creative and well planned and executed blogger outreach campaign versus a pay-per-post campaign. Although you might choose to classify both as "buzz", the first can generate genuine and emotive Word of Mouth, while the second just generates advertorials.’

 

Additional Responses/ Concerns surrounding the report:

 

  • If you're going to employ ghost bloggers, then utilize them in a capacity to tell the CUSTOMER's story - testimonials and successes! Have the ghost blogger interview and write up how your company has impacted the customer. This way, it's not the voice of the ghost blogger, it's the voice of the company.’ Douglas Karr (in comments to post)

  • ‘… even if the august analysts at Forrester have convinced themselves that as long as the bloggers disclose the payment and are permitted to say whatever they feel, that pay-per-post sounds better redubbed as a “sponsored conversation.” http://www.churbuck.com/wordpress/?p=2633

  • Congrats are also in order for Ted and the whole IZEA crew, because IZEA was a core piece of Sean's report.  In fact, IZEA's Kmart campaign success appears to have been the driver for the research effort’ Dan Rua http://www.floridaventureblog.com/2009/03/sponsored-conversations.html

  • The Forrester report discusses a recent “sponsored conversation” from Kmart, but I doubt whether mentions that even in that small test, Google found multiple bloggers that violated our quality guidelines and we took corresponding action. Those blogs are not trusted in Google’s algorithms any more.’ Matt Cutts http://www.mattcutts.com/blog/sponsored-conversations/ (more on this below)

 

 

Google on PayPerPost

Google was in full support of FTC’s decision to promote self-governance in social media advertising. Exactly how they have responded to the FTC’s recent announcement is uncertain. Google currently penalize blogs that use PayPerPost schemes and violate the no-follow attribute by resetting their page-rank to zero, a history of this development can be found here.

Interestingly Google Japan, in an effort to promote the search engine there, launched a PayPerPost campaign and soon thereafter apologized for the controversy and reset its page rank to zero accordingly.

Responding to Forester Report - Add Sponsored Conversations To Your Toolbox, Matt Cutts reiterates Google’s stance on paid posts and explains exactly why the search engine giant dislikes them:

The paid post at the top happens to be about brain tumors, which is a really serious subject. If you are searching for information about brain cancer or radiosurgery, you probably don’t want a company buying links in an attempt to show up higher in search engines. Other paid posts might not be as starkly life-or-death, but they can still pollute the ecology of the web.’

In his blog, Ted Murphy of IZEA apologizes for the six posts from the K-Mart campaign that violated the no-follow attributes and caught Google’s attention but firmly believes: the concept of no-follow is absolutely ridiculous. There is NO WAY Google can possibly determine paid links from unpaid links, even if you could where does it stop?’ Ted also points out that the no-follow policy is distributed unevenly, suggesting Google has a preference or uses some sort of a hierarchy system: ‘Not only is no-follow a lost cause, it is also enforced sporadically and unevenly. When I mentioned TechCrunch using PR passing links to you (on several occasions) you reached out them personally, you didn’t penalize them.’

Responding to Matt Cutts’ article in more detail Loren Baker criticizes Google’s over-simplified and ambiguous stance on pay posts. He raises many fair points about the complexity of transparency and the complexity of paid post versus sponsored posts:

Question, what if the blogger did use a NoFollow in their post, then wrote a follow up post one day about how after doing the KMart $500 shopping experience, they shop there all of the time now. What if they linked to KMart from another post with a story about KMart? An organic link would be expected.’

The debate about genuine sponsored posts versus spammy-looking PayPerPost posts is raised again here Loren:

Comparing misleading Brain Tumors blog spam posts and A List bloggers videoing and writing about THEIR experiences in KMart using a giftcard is not fair. We’re talking big brand relationship building vs. “Buy Viagra” style spamming, and I believe these bloggers have earned their trust…I really don’t see the difference in the KMart cards and a large company flying a blogger out to Mountain View and taking care of the hotel and dinner to make sure they attend a press conference on a new product launch or some new behind the scenes technology.

Filed under: FTC

desdemona says...

A guest post by Krizia from Eat Smart Age Smart

I’ve been blogging since June 2007 when I launched my beauty site . In April 2009, I launched a healthy eating site with the encouragement of my Internet coach Yaro Starak and in the last few months I’ve noticed a shift in the way I deal with publicists.

When I first started blogging, I actually went out and bought beauty products to review them on the site.

During a conference, an exhibitor told me that in my position (promoting skincare and make-up brands on the Internet at no cost to the manufacturer), I should never have to pay for products and I should be getting them for free by contacting the companies.

I didn’t need to hear that twice. On the following Monday morning, I started calling and emailing skincare and make-up companies to get review samples.

I crafted an introduction letter with the most important points about my blog and the reason why I was asking for samples.

In very little time, I started received samples and before I knew it, I became inundated with products from the U.S., Canada and as far away as the U.K.

It got so bad, that the guys at my pick-up area (I rent a UPS address) started complaining about the number of parcels (I’ve received several thousand dollars worth of samples) I was receiving and they were threatening to seriously increase my yearly fee. Luckily I received a few samples I could share with them and they quickly forgot about the idea of increasing my fees.

The samples were taking over my home and I couldn’t give them to friends and reviewers fast enough. In order to keep up with the flood of samples, I started running contests on the blog in order to give away products to 1) clear my home 2) put my readers to work so they could write reviews that I could post on the blog 3) secure some sponsorship dollars from beauty companies to keep up with these contests.

In 2007 and 2008, publicists (who I dealt with to get these samples) would email me to let me know they would gladly send me the samples I requested and asked that I email them once the post was up on the blog.

In many cases, publicists liked the concept of the product review so much that they would recommend my site to their marketing departments for paid reviews or other paid advertisement opportunities that were incredibly lucrative to me.

I still remember that in 2008, I got a really incredible contract via my ad service company (I have a company that takes care of selling ads on my blog) with a large pharmaceutical company to write six posts for them to try educating readers on the benefits of their product. The deal was to net me $8,000 for those six articles and the only thing I had to do was to get the copy reviewed by the pharmaceutical company to ensure that I wasn’t using any medical words in the wrong way.

This was an exciting point in my blogging career since that type of contract is far more lucrative than running site ads or Google AdSense ads.

Everything came to a stop in October 2008. As the stock markets were tumbling, panic was setting in, real estate prices were falling, companies were laying off workers and hard copy magazines were folding, I received an email from my media company informing me that the pharmaceutical company was ceasing the campaign I had started and that they had to cut back on the fees I was supposed to get (I only got $1,600 in the end for three features).

It was a devastating moment for me, but I thought things would get back to normal soon. I don’t think at that time that I understood how things were going to change.

Life as a blogger since the recession and my relationship with publicists

It took me some time to realize that things where changing; but because I was so busy working, I had not noticed the signs of change.

It’s only spending 90 minutes in one day answering emails from publicists that it hit me.

>>> Here’s what I was observing:

1) I was getting at least two to three times the number of pitches to review products. I was spending a lot of time emailing back publicists asking them to send basic essentials like photos, a press releases and price information. Some of these emails from publicists contained only a few short lines “we love your blog, will you feature our product, here’s a link.”… that’s not much to work with.

2) I was getting more requests from non-bloggers looking for link exchanges. These requests were coming from companies that had sites which sold beauty and hair care products on the Internet. They wanted me to add them to the front page of my blog, while they would give me a link on their blog on a page that was almost impossible to find and not visible from the homepage. This happened a lot and it floored me that these companies didn’t get that I didn’t want to give them free publicity while my site was buried somewhere on their site.

3) I was no longer receiving ANY offers for sponsorship opportunities on my site.

4) The few requests for free samples that I had sent were returned to me with a long string of questions:

  • “How long have you been blogging?”
  • “What’s your PR rank?”
  • “Are you on Twitter?”
  • “Are you on Facebook?”
  • “How many unique users?”
  • “How many page views?”
  • “How fast can you get our review on your site?”
  • “Have you won any awards in the past?”
  • “Send us links to past reviews you’ve written.”
  • “What angle will you take with this feature?”
  • “I need all your company details before we release any samples to you.”
  • “Will you promote this on social media networks?”
  • “Are you going to shot a YouTube video like you did for other brands?”
  • “You said the review would be up last week, WHERE IS IT?” … etc.

As you can see, I’ve started dealing with really demanding publicists and in some cases rude and impatient publicists. I was never asked so many questions in the past when I requested samples.

>>> Samples are being denied or scaled back:

I’ve contacted companies that in the past had sent me boxes and boxes of samples (and I do mean full-size products) and when I contacted them recently, they would say “sorry, we’re not sending any samples right now, but if you want we can provide you with information for you to write a review on your site”. Well, it’s hard to be excited about a product you’ve not tried.

In some cases, companies were sending those ridiculously small samples you get at your department store and it’s still unclear to me how they expect me to write a review when I can only test the product for two days (we usually test products for two-to-three weeks before writing a review.

Here’s a photo of products I received the same week for review:

Samples

As you can see one company sent me the smallest possible size while the other company sent me full size products.

Maybe it had to do with the niche?

The interesting thing is that I launched a new blog on healthy eating and healthy lifestyles in April 2009 (www.EatSmartAgeSmart.com) and my relationship with publicists is vastly different from one niche to another. The blog tackles healthy eating, but I also focus on fitness. The fitness publicists have not been really easy to deal with during this recession.

One company (which manufactures supplements) that contacted me to send products for review also wanted to know how much it would cost to sponsor spots on my site. They actually wanted to pay to have banners on my site and not only receive a free review!

I remember that when I sent them the finished post I wrote for them, the publicist sent an email thanking me for getting their company circulating in the social media networks. They were thrilled and I was thrilled.

In contrast, I’ve contacted a number of fitness companies who have said “NO, we don’t send samples to bloggers. We only deal with major media. If you want to test the product, you’ll have to buy it”.

In the cases where a fitness company was willing to send me samples, I’d be subject to daily or weekly emails asking: “When will our review be up?” to “The client is getting nervous and impatient, WHERE IS THE REVIEW?” to “I saw the review and there are things that you wrote that are wrong.” to “We don’t like ‘this word’ you need to change it in the review NOW”.

Most fitness reviews have been received with a string of negativity, while my healthy eating reviews are usually quite well received and the publicists or owners of companies jump for joy at the idea that I’m helping get the word out.

So how am I dealing with publicists since the recession?

  • In the case of negative backlash, I’ve decided to ignore those publicists and not let them affect me or affect my work. I usually won’t work with that publicist anymore.
  • When I get praised for a review, I quickly email the publicist and company back and thank them and I’ll usually get my traffic assistant to take that link to more social media networks.
  • I’ve created an auto-reply that delivers an email with a link that takes publicist straight away to a PDF they can download that gives them all the requirements we need to write a post. If we don’t get all those elements, I will pass on the review and will not chase after publicists. This also has helped cut back on the number of follow-up emails I send publicists.
  • I’ve set clear expectations in that PDF and do make it clear that a review will take eight weeks before it’s featured on the site. And that once the review is up, I will send them a link.
  • I’ve said ‘no’ many times to publicists who had a burning deadline to meet if I couldn’t make it fit in my publishing calendar and if that would be adding to my stress level.
  • When I contact a company for samples, if I feel that getting samples is hard work and I’m being asked loads of questions and am given tons of excuses why they don’t release samples to smaller media outlets, I’ll usually walk away and find another product to review or another topic for my blog post.

I’m not the only one finding it hard dealing with publicists these days

I’ve spoken to other beauty bloggers and editors of magazines (who were not bloggers) and they’ve also found that more and more publicists are being quite pushy, demanding and sometimes rude.

They also feel things are quite different since the recession and they’ve found themselves having to put their foot down and ask the publicist to no longer contact them on a daily or weekly basis and tell them that once the review is ready, they will be contacted.

My theory is simple: Publicists and companies now know that bloggers have a lot of weight on the Web and with the recession hitting advertising budgets really hard, publicists are turning to bloggers to get the word out about their products and also as quick way to getting into social media networks without having to spend any money.

Manufacturers realize that buying a full page ad in a magazine that would costs several hundreds of thousands of dollars will affect their profits if they aren’t able to calculate the rate of return on investment, while hiring a PR firm to get a few samples (that costs very little to the company) out to thousands of bloggers and demanding quick turn around on the features is much cheaper.

They get their new launches to circulate all over the Internet and thousands of bloggers telling their readers to go out and buy the product, and they don’t even have to write a cheque to the bloggers.

This situation could be quite specific to lifestyle bloggers, but I’d love to know if other bloggers also feel more pressured when dealing with publicists since the beginning of the recession.

Filed under: FTC

macala says...

I woke up to an interesting email in my box from my dear friend Elizabeth Wahler this morning introducing me to Cmp.ly.

cm·ply (kem-pli) To act in accordance with another's command, request, rule, or wish.

CMP.ly  is a service that proposes that it's series of simple disclosures become the standard for adhering to the FTC's revised guildelines. CMP.ly disclosures follow a standard naming convention that is easy for readers to understand and can be used in print, online, SMS, tweets or any online communication.

What do yo think? Are you willing to add the following disclosure to your digital communications?

Note: The Federal Trade Commission (FTC) recently issued revised guides concerning the use of endorsements and testimonials in advertising to include blog posts, word of mouth campaigns and even twitter messages that take effect on December 1, 2009.

Filed under: FTC

The New York Times responds to amended Federal Trade Commission guidelines about truth in advertising. Bloggers and social media platforms must use care issuing endorsements and testimonials.

(BTW ... Marcie Roggow and I cover this in our http:RealEstateSocialMediaPolicyManual.com ... it's a nice piece of work. DISCLOSURE: We sell the manual.)

Filed under: ftc

Mike says...

If you're a business owner or marketer, you've already heard about the recent FTC ruling regarding affiliates, endorsements, testimonials, and reviews effective December 1st. While on one side they're trying to significantly reduce spammy and deceptive practices, those who do and have always done business legitimately, are a little upset to say the least.

For me, it's kinda flip-sided. On one side I'm like "Ok, this is interesting" and on the other side I'm just scratching my head but willing to make the changes in compliance. Like a cool dude to check out, Andy Jenkins was saying yesterday, "I’m ALL UP in that COMPLIANCE. Like a BOSS." Me too.

However, there's one thing I particularly don't get and that's infomercials.

Now, I can see how this new ruling may help weed out spammers and deceptors. I'm all for that. At the same time though, one way the FTC is making it difficult is the use of testimonials. Results aren't typical doesn't cut it anymore. Starting December 1st, you must list the "average results" your customers get from your product or service.

 

So in some ways, it can help and in other ways it's just a frustration that we all have to take into consideration but also follow the rules of the FTC honchos. I'm looking at it in a way that will just help me provide better and better products and/or services.

Back to infomercials...

I don't know how many times I see these infomercials with Sally AKA poorly acting paid actor, talking about how she lost 35 pounds in 2 weeks or Jason AKA paid actor who is now making $150,000/month from the comfort of his own home, and get this, with only 4 hours of work per day!

AMAZING!

Most of us business owners and marketers realize that the majority of these infomercials are complete and utter bullsh*t. Most of the testimonials are fake, pictures are photoshopped, and income claims are blown WAAAY out of proportion.

Does the FTC have a loving interest for infomercials? Do they think, "Oh well, that's not as bad since it only reaches THOUSANDS & potentially MILLIONS of people"? Or are they just getting to them later after a nice steak and caviar dinner?

I'd say if you're going for one and not the other, that's kind of one-sided. Hell, make every business comply. When Brian goes to put up a banner in his storefront window talking about a 25% off holiday sale, make him post the relationship he has with the banner maker because their 6 inch by 6 inch logo is on it.

Ok, of course I'm blowing that last part out of proportion but you understand what I'm getting at. I'm sure there are plenty of people out there who've bought something from an infomercial and then found out it sucked and WAS actually blown out of proportion. That's fair grounds for some sort of deception, right? That's what I thought...

I'm not saying all infomercials are bad in fact, there's quite a few that are really good and honest. Just maybe, Dear FTC, pay attention to others that are giving business a bad name in more than just one medium.

*DISCLAIMER: I was not paid by the FTC to post this or by any means paid to endorse their brand. This is strictly my opinion. The average result from digesting this information is making you think about their new ruling. And maybe a gazzillion dollars. And a new car.*

Filed under: FTC

therealpecan says...

Much has been written this past week about the Federal Trade Commission's "Guides Concerning the Use of Endorsements and Testimonials in Advertising" which goes into effect December 1st, 2009. These guidelines effect all persons providing commentary (reviews) on products for which they have received any form of material compensation in exchange for their commentary. The FTC seems to be giving a pass to traditional media outlets such as newspaper, television, radio and magazine news outlets and concentrates on "real" individuals who give testimonials in exchange for money or products. Going forward these individuals have to disclose when they are receiving material compensation or face fines for not doing so.

Personally I think people should have been doing this all along and some have. Better bloggers will not risk ruining their credibility by endorsing a product which is substandard. Most consumers are smarter than the FTC seems to think. Consumers who are naive enough to grant credibility to a sponsored review on a blog or an infomercial are as likely to believe the same sort of fluff from a "valid" news organization or a magazine which has to print "advertisement" over a rave review for the next big thing.

Since they don't appear to be doing much with these guidelines to protect consumers from themselves, what is the FTC really doing? Are they now in the business of regulating what qualifies as news? Several articles I've read have expressed this concern and I think it is valid. It deserves close scrutiny to examine how that all plays out. When Government gets involved in judging what is legitimate news and insinuating citizen journalism is illegitimate they are walking dangerously close to censorship similar to the Chinese model. I'm not sure that is what they are attempting to do nor do I think, if this were the FTCs motive, they could get away with it long term. There are too many individuals and lawyers to challenge them.

What I have seen curiously absent is any mention of material compensation being monitored as income. At least I find it curious and I am not much of a conspiracy theorist. The United States is in the midst of an economic recession and the United States budget is running a previously incomprehensible deficit. Anyone would be foolish to think the United States Federal Government doesn't need as many tax dollars as it can get its hands on. You're likely thinking bloggers who collect Adsense revenue and the occasional freebie in exchange for a review are making peanuts for their efforts and in many cases you may be right but there is no doubt some freelancers are making a living from web content.

Freelancers are self employed and it is generally easier for the self employed to juggle their books to appear as though they are making less income than they actually are. I can attest to this since part of my profession is to indemnify people for loss of income. The cost of these policies are partially based on the amount of income a person makes which is determined by how much the individual claims on their income taxes. When it comes time to collect on these indemnity policies it is not at all unusual for the policy holder to miraculously present alternate proof their actual income is greater than previously stated.

As the public turns away from traditional media in favour of the internet and advertisers turn from conventional print advertising to viral and guerrilla internet marketing techniques there are increasingly more opportunities for individual freelancers to profit from new media. If PR firms are seeing this, I am seeing this, and freelancers are seeing this wouldn't it be naive to think the United States Federal Government isn't? Rather than wondering whether the FTC is crawling in bed with the FCC why isn't anyone wondering whether they are crawling into bed with the IRS?


(image from www.acf-fr.org)
(The author received no compensation material, monetary or otherwise for writing this post.)

Filed under: FTC

Ray says...

On the cover of today's Wall Street Journal: "U.S. Seeks To Restrict Gifts Made To Bloggers"

This is a tell tale sign of how social media is edging its way up beside traditional media. I hate to say it, but bloggers are becoming today's journalists. From everyday movie reviewers to mommy bloggers commenting on diapers, these new-age "journalists" have been receiving quite the kickbacks. And the government is looking to stop this. The FTC even wants blogs to disclose relationships with endorsers.

But isn't it freedom of speech? Aren't we free to post whatever we like onto the Internet? What right does the FTC have to stick it's nose in bloggers' affairs?

Whether or not the FTC succeeds in establishing these new restrictions, it's important to realize just how much influence some John Doe can have on the world with just a little Internet access. It's scary, but people and their companies are going straight to the blogger. Straight to the source. Right to the people.

It's my hope that bloggers never replace the role of the journalist, but if they get anywhere close (like they are now) they should play by the rules too. Whether or not the restrictions become law, bloggers should still observe ethics.

If you're going to play journalist, please play responsibly.

Filed under: FTC

therealpecan says...

I have never been paid to review a product. If I take time out of my day to write about a product it is because I either really like it or, rarely, because I feel I've been ripped off. Also. I save receipts for everything I purchase whether I pay by cash, credit card or check. If you'd like to challenge me about any product I've written about, I'll happily show you my receipt of purchase. Finally, I've never been paid or otherwise received recompense to write anything I have posted on line. So have at me. You are welcome to review my records. At least while you are busy with me, you'll leave my online acquaintances time to cover their tracks.

Filed under: FTC

desdemona says...

ftc_logo_oct09.jpgAccording to new guidelines from the Federal Trade Commission (FTC), bloggers who fail to disclose that they have received freebies when they write about a product can now be fined up to $11,000 per post. The new FTC Guide Concerning the Use of Endorsements and Testimonials in Advertising argues that any post of a blogger who receives "cash or in-kind payment to review a product" should be considered an endorsement. Because these posts are now officially considered endorsements, bloggers who receive freebies must now disclose this fact on their site.

Freebies and the Independent Blogger

While the FTC will obviously have a hard time enforcing these regulations, there can be no doubt that marketers regularly approach independent bloggers (and especially mommy bloggers) with freebies. When bloggers accept these exchanges, they may not always disclose them in the posts that result. So, while bloggers who are involved in these schemes often tend to say that they would have reviewed the product anyway or that their reviews are often critical, there can be little doubt that payments and freebies influence these stories.

These new rules and rather large fines should bring some bloggers and marketers into line, though others will surely continue to push the ethical boundaries. And blogging Payola is unlikely to go away completely because of these new rules.

This marks the first time the FTC has updated endorsement and testimonial rules since 1980. The new rules also take on celebrity endorsements. If celebrities endorse a product and make false or unsubstantiated claims, or don't disclose 'material connections' between themselves and the advertisers in ads and outside the context of the ads (talk shows, social media, etc.), these celebrities can be held liable under the FTC Act. Judging from this, it would seem that celebrities who tweet about a product they endorse are now risking large fines.

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Filed under: FTC