Ξ October 5th, 2009 | → 14 Comments | ∇ A Day at a Time, Technology, Wine News |
The FTC has issued new guidelines concerning endorsements and testimonials for the blogosphere, and the internet generally. Last updated in 1980, the new guidelines take a much needed step forward to include emergent social media on the internet. Though multifaceted, with respect to bloggers, the October 5th news release writes,
“The revised Guides [...] add new examples to illustrate the long standing principle that “material connections” (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. Likewise, if a company refers in an advertisement to the findings of a research organization that conducted research sponsored by the company, the advertisement must disclose the connection between the advertiser and the research organization.”
For a fuller analysis of what this specifically means for bloggers we may turn to the FTC’s Endorsement Guides Notice itself.
“The Commission does not believe that all uses of new consumer-generated media to discuss product attributes or consumer experiences should be deemed “endorsements” within the meaning of the Guides. Rather, in analyzing statements made via these new media, the fundamental question is whether, viewed objectively, the relationship between the advertiser and the speaker is such that the speaker’s statement can be considered “sponsored” by the advertiser and therefore an “advertising message.” In other words, in disseminating positive statements about a product or service, is the speaker: (1) acting solely independently, in which case there is no endorsement, or (2) acting on behalf of the advertiser or its agent, such that the speaker’s statement is an “endorsement” that is part of an overall marketing campaign?
So how does one to distinguish between point 1 and point 2? Relevant facts would include:
” whether the speaker is compensated by the advertiser or its agent; whether the product or service in question was provided for free by the advertiser; the terms of any agreement; the length of the relationship; the previous receipt of products or services from the same or similar advertisers, or the likelihood of future receipt of such products or services; and the value of the items or services received. An advertiser’s lack of control over the specific statement made via these new forms of consumer-generated media would not automatically disqualify that statement from being deemed an “endorsement” within the meaning of the Guides.”
“Thus, a consumer who purchases a product with his or her own money and praises it on a personal blog or on an electronic message board will not be deemed to be providing an endorsement. 21″
Note 21 reads, in part,
“Even if that consumer receives a single, unsolicited item from one manufacturer and writes positively about it on a personal blog or on a public message board, the review is not likely to be deemed an endorsement, given the absence of a course of dealing with that advertiser (or others) that would suggest that the consumer is disseminating a “sponsored” advertising message.” (emphasis added)
However, page 10 is where it gets tricky.
“A blogger could receive merchandise from a marketer with a request to review it, but with no compensation paid other than the value of the product itself. In this situation, whether or not any positive statement the blogger posts would be deemed an “endorsement” within the meaning of the Guides would depend on, among other things, the value of that product, and on whether the blogger routinely receives such requests. If that blogger frequently receives products from manufacturers because he or she is known to have wide readership within a particular demographic group that is the manufacturers’ target market, the blogger’s statements are likely to be deemed to be “endorsements,” as are postings by participants in network marketing programs. Similarly, consumers who join word of mouth marketing programs that periodically provide them products to review publicly (as opposed to simply giving feedback to the advertiser) will also likely be viewed as giving sponsored messages. 22″
Note 22 reads,
“The fact that the participants technically might be free not to say anything about any particular product they receive through the program does not change the Commission’s view that positive statements would be deemed to be endorsements. The underlying purpose of these word of mouth marketing programs is to generate positive discussion about the advertiser’s products.”
The bottom line for the FTC (from pg. 11):
“[T]o the extent that consumers’ willingness to trust social media depends on the ability of those media to retain their credibility as reliable sources of information, application of the general principles embodied in the Guides presumably would have a beneficial, not detrimental, effect. And although industry self-regulation certainly can play an important role in protecting consumers as these new forms of marketing continue to evolve and new ones are developed, self-regulation works best when it is backed up by a strong law enforcement presence.”
Further, from pg. 39,
“The recent creation of consumer-generated media means that in many instances, endorsements are now disseminated by the endorser, rather than by the sponsoring advertiser. In these contexts, the Commission believes that the endorser is the party primarily responsible for disclosing material connections with the advertiser. However, advertisers who sponsor these endorsers (either by providing free products – directly or through a middleman – or otherwise) in order to generate positive word of mouth and spur sales should establish procedures to advise endorsers that they should make the necessary disclosures and to monitor the conduct of those endorsers. 79″
Note 79 reads,
“The Commission’s view that these endorsers have an obligation to disclose material connections with their sponsoring advertisers should not be seen as reflecting a desire on the part of the Commission either to deter consumers from sharing their views about products they like with others or as an indication the Commission intends to target consumer endorsers who use these new forms of consumer-generated media. As with traditional media, the Commission’s law enforcement activities will continue to focus on advertisers.”
This is a developing story. The precise implications for our community of wine bloggers is as yet unclear. But we can say:
1) Bloggers who routinely write about wines should disclose whether the wines have been purchased or given as samples by a distributor, agent, or winery.
2) The advertiser’s lack of control over the review is not sufficient to disqualify a blogger as an endorser of a product.
3) The blogger is primarily responsible for disclosing a material relation with distributors, agents and wineries when they have previously received similar products or services from a specific commercial entity or from multiple commercial entities, and when they are in the future likely to receive such products.
4) The vote was unanimous, 4-0. The Guidelines will take effect December 1st of this year.