Blogging as Marketing Strategy Under Scruniny

New FTC Rules Impact Small Business Marketing Strategies

Oct 29, 2009

On December 1, 2009, the Federal Trade Commission's new rules for marketers take effect and impact many small business marketing strategies.

Sweeping changes to FTC rules are sure to have a signficant impact on many company's marketing strategies, particularly small business marketing strategies. Many small businesses rely upon word of mouth and so-called "viral" marketing for business, and a way to drum up such coverage if often through popular bloggers. As of December 1, 2009, bloggers, advertisers and marketers take note; on December 1, 2009, the most sweeping changes to advertising disclosure laws in 29 years will take effect. The Federal Trade Commission (FTC) voted in October to change the disclosure laws so that bloggers and advertisers who publish material using testimonials must fully and transparently disclose paid promotion from unpaid opinion. While most bloggers nod in agreement at the new rule, others are up in arms.

Many consumers are unaware that bloggers often review products not from a genuine interest in providing unbiased testimony, but because they're paid to do so. This marketing strategy is often used in guerilla marketing campaigns. Popular bloggers can reach thousands for far less money than traditional marketing methods such as direct mail marketing or print advertisements. Receiving payment for writing a favorite review goes by the nickname "blogola", a take off of the word "payola" with its seedy connotations. Most large companies do not use this practice.

David Berkowitz, senior director of emerging media and innovation at 360i, a marketing firm, stated in the October 12, 2009 issue of DM News, "Most marketers and bloggers get that disclosure is a must...We're happy to see this formalizes what we've been doing for a long time." (page 13, DM News, October 12, 2009)

According to PC World magazine, the number of bloggers receiving pay to endorse or review products is rare. In addition, most bloggers are honest and say upfront whether or not they've been paid to review a product, whether the company gave them a copy or sample of the product, and if they used the product before the company contacted them. In short, they've disclosed to the public where they stand in relation to the product and the company so that the reader can judge for him or herself the neutrality of the review.

Print Adveritsers, Direct Mail Marketing Companies, and Others Must Also Provide Full Disclosure

More affected than bloggers will be advertisers for products ranging from diets to supplements. For the past 29 years, companies merely had to put the words "Results Not Typical" on print ads, in commercials or on websites to note when paid models, spokespersons or even customers appeared to tout their products. After December 1, that will no longer be sufficient. Companies will be required to provide lengthier disclosure if they pay the spokesperson for a testimonial or even if they give the customer a gift to thank him for appearing in the commercial.

Social Networking Marketing Must Also Disclose Payments

All facets of advertising are included in this new regulation, including social media. People who post to Facebook, Twitter, You Tube, MySpace and all the other social networking websites about products will now be forced to disclose relationships with advertisers and whether or not they were paid to review the product.

The penalties for violating the new rules are steep. Companies will fork over up to $11,000 per violation if convicted. Many marketing agencies are scrambling to put into place the proper legal language to fulfill the new FTC laws, and those relying upon bloggers as part of their marketing strategy must find alternate marketing methods.

Whether bloggers agree with the new rule or not, many find the ruling unfairly penalizes bloggers and forces them to adhere to a lengthy and cumbersome policy and disclosure statement that goes against the grain of the short, simple messages endemic of the blogosphere and of social media in general.

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