Last week, the FTC issued its first update in 30 years guiding the relationship between advertisers and the people who endorse their products.
It is no fun to side with the regulators, but I’m with the FTC on this one*. As stated in their “Guides” issued last Monday:
“To 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.”
Credibility is critical for any industry, and particularly important for social media. Take the famously unregulated nutritional supplement industry. Quick–what words come to mind? Trustworthy is probably not near the top of the list.
I took a spin through the FTC report, and it reads overall as a reasoned, conservative guidance. It was developed over several years, and in consultation with 17 trade organizations ranging from the U.S. Chamber of Commerce to Interactive Advertising Bureau. This is not the work of overzealous regulators.
To me, the FTC’s move is a statement of the obvious: social media has arrived. Collectively, blogs, social networks, and online communities exert an enormous influence on commerce. That the FTC is wading in is an acknowlegement of the power of social media, and it is only right to formalize the responsibility that comes along with that power.
If you want further proof that social media is a big industry with major commercial interests, check out the trade industry commentary, summarized in the report. The industry objections fall into the following categories: we’ll regulate ourselves, blogger/corporate relations are too complex to regulate, the issue needs more study, and the regulation will have a chilling effect. Isn’t this ripped from the playbook of any industry lobbying to stave off new regulation?
To be sure, many influential bloggers are way ahead of the FTC here. Check out the disclosure statements from Chris Brogan or Kara Swisher. They have set a high standard and great example for the rest of us. But a quick search of “bloggers” and “conflicts of interest” reveals plenty of instances where self-regulation isn’t good enough. I found mommy bloggers, tech bloggers, and wine bloggers who downplay the influence of gifted products or travel, saying, in essence, “you can trust me, I have no obligation to say nice things about the products.” This may be true as far as it goes, but isn’t it human nature to look kindly on the companies that send a stream of FedExes to the door? Isn’t it possible that these gifts influence opinions?
This perception–that gifts, travel, and other freebies cloud objectivity–is precisely the issue. All industries depend on trust and transparency as a context for business. But in social media, trust and transparency are the business. Social media is increasingly a primary influence on how we perceive products and brands. As marketers, we’re figuring out the best way to participate in social conversations and networks–turns out that paying to influence bloggers is not the way to go.
So, to paraphrase that great de-regulator Ronald Reagan, it is high time that the FTC said trust, but verify. Not to mention enforce. I’d love to hear thoughts and comments, either hear or on Twitter at @motoole1.
*The FTC ruling was discussed at length on last Thursday’s This Week in Social Media. Here’s the link.
In some ways this FTC ruling misses the point. Disclosure is great but influence comes in many shapes and sizes.
Where does the disclaimer fit in a world of 140 characters. There are many cases on Twitter where people are flogging things for personal interest and the discloser it hard to find…
Frank,
I agree disclosure is a complex issue when it comes to social media. But the quick answer is that disclosure comes in the link…the link to all the places where you can give a broad accounting for relationships and commitments that may influence opinion.
I think that you are correct in claiming that the FTC’s ruling announces the “arrival” of social media and that the guidelines they have established are sensible.
I also think that this is only the beginning of what will be a long, iterative process because the social media are inherently different from traditional, broadcast media. Regulations on the latter made sense because they constituted a monopoly upon which everyone was dependent for information and entertainment. For this reason, consumers needed to know who was behind a particular message, program, or advertisement and, frankly, they could.
In the decentralized, “sharing with commentary” world of social media, the sponsor of a particular viewpoint – “Coke adds life” – can be easily obscured or quickly lost. Similarly, as more and more networks, such as the network of one’s Facebook friends, become essentially private, the ability for the FTC or anyone to regulate their behavior, along with the desire to have such behavior regulated declines drastically.
Full disclosure: I was recently introduced by someone as “a friend of Mike’s” and, moreover, I was a guest on the podcast in which this topic was discussed and am, in fact, writing this comment from within PJA’s office space. Nevertheless, the views expressed here are entirely my own and in no way reflect the influence of my current benefactor and patron, Mike O’Toole.
I’m not as thrilled by this as you are, Mike.
Of course I believe in transparency, but to my knowledge, but the public has always seemed to sniff out lack of authenticity in this space. What problem, exactly, is the FTC trying to solve that the people haven’t already solved for themselves?
The public appreciates disclosure, and they didn’t need the FTC to build in robotic regulations about how disclosure should be handled to tell them that. They’ve come down hard on corporate giants Wal-Mart and Sony, among others — without the help of the FTC.
And you know what they did next? They moved on with their lives, and Wal-Mart and Sony moved onto the next idea.
If I had to guess, this has more to do with justifying their existence and collecting fines from corporations than it does about uncovering deceit.
The “damage” done by the soft disclosure you mentioned from mommy bloggers and such does not justify the regulatory authority or expense required to find and snuff it out. If people sense a hack or a liar, they’ll call them out on it.
“You can’t stop the signal, Mal.” – Mr. Universe
I believe that the FTC regulations regarding social media are extremely important and came at a very appropriate time. Social media calls for all kinds of transparency and honesty and, frankly, if you choose to disobey that the world will know.
Social media is not a place where people can hide. Theses regulations add accountability to everyone’s business activities, especially marketers. Sure, it’s scary. Some people aren’t going to like your product. But the best part of social media is that you have millions of people who can offer feedback that might help you create a better one.
As a marketer, wouldn’t you prefer that kind of honest, open conversation?
Tessa Carroll
VBP OutSourcing
http://www.blogs.vbpoutsourcing.com
The ancient and honorable journalistic separation between church and state has survived for a reason. It would otherwise be a constant temptation for even scrupulous marketers (on the one hand) and sales people (on the other) to ‘influence’ the editorial content of any reputable medium.
Perhaps what we need, beyond any legislative or punitive enticements from the FTC et al., is a Code of Practice for Bloggers AND Marketers to which we can all subscribe. Readers could then judge for themselves based on the presence or absence of Code credentials on a given site.
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Cam, Michael, and Tessa,
Thanks for the comments. I might suggest some common ground. We probably can all agree that the FTC regulations are only a small part of what will ensure an open, honest, and trustworthy exchange through social media. The natural, built-in incentives (transparency, commenting) are critical, and I like the idea of more formal codes of conduct. To me, the FTC guidance is an important part of that mix.
Mike -
I think the clear common ground is that we all value transparency, which is fantastic.
Where we disagree is whether we need FTC guidelines (and the power that goes with it) to enforce them. I fundamentally disagree that “FTC guidance is an important part of that mix,” as recent history clearly shows that the market handles these sorts of issues just fine without the FTC.
This is a solution without a problem, which, due to the power it grants to a regulatory authority, actually creates a problem, where none previously existed.
By happenstance, I came across this article by John Stossel:
http://www.wnd.com/index.php?fa=PAGE.view&pageId=113563
Key quote: “Not only is government help often not needed, Ostrom says it usually screws things up because bureaucrats operate in an ivory tower ignorant of the local customs and the specific resource.”
It’s a good read. Check it out.
I think it’s time for some reigns to be put on social media, at least for those using it who are abusing its awesome power and influence.
My friend Cam says the hacks and liars will be found out, without government regulation. Not necessarily; some may be very persuasive by the power of their personality and ability to write well. Disclosure can help unsuspecting consumers from getting taken.
I’m not looking for more government, but this seems to be an area where it’s warranted before it gets totally out of hand.
Most of us, who are open and transparent, will not be impacted one bit by these new regulations.
Hey, David! Good to see you.
I’ve not seen any evidence that lack of disclosure is something that can cause the sort of damage some people apparently fear. On the other hand, history is filled with examples of the high costs and inefficiencies of government bureaucracy and the abuse of government power. And government does not surrender power often.
If people get “taken,” because of lack of disclosure that a relationship exists between an advertiser and someone using social media to promote them, what is the real damage done? Is it because they didn’t disclose a relationship existed or because they misled or misrepresented a product?
If it’s the second, that’s already covered by laws against fraud. And if those laws against fraud don’t have enough teeth, let’s deal with THAT problem, not create new layers of bureaucracy to solve a problem that we have no reason to believe is causing any real damage (unless you have evidence to the contrary; I haven’t seen it up until now).
I know you, personally, are open and transparent — perhaps one of the most open, kind, and transparent people I know. Because you have a long track record for honesty and transparency, I’m confident that I can trust what you say. And if you have something to disclose, I’m confident that it will be done in a way that reasonable people can understand and make a judgment about.
However, with regulations come rigid interpretations. They not only force people to disclose these things, but they determine when and how the regulations apply.
Take this example: The other day I was in the drive through at quick-serve restaurant, who is a client. I took a picture of the menu (no particular reason other than I wanted an excuse to use my iPhone) and posted it on Facebook, a “social media” platform.
At some point, I also joined the their fan page. I happen to enjoy their food food, but I did that to keep abreast of how our client was using the media, since I’m not on that account.
I didn’t do it to advertise for them, but regardless, these activities were captured and published on my news feed. I did not give any sort of disclosure that this restaurant chain was a client. I was just using the platform in the way it was intended.
Regardless of any other consideration, these actions were not misleading or coercive in the least.
I would just urge extreme caution … to consider whether we have any reason to cede power to a bureaucrat to decide whether that activity I just described is punishable by law. Not only does it tie up the bureaucrat’s time, but also the court’s (and all of their employees). Since this is not something that has shown to cause any significant damages, it’s an important consideration.
As I said, transparency is a good practice. I highly recommend it. However, we should avoid creating bureaucracies that cost more than the problems they seek to correct.
I’m probably more in line with Cam’s thinking on this issue.
I believe this new reg is as useless as all the existing ones. There is absolutely no substantial enforcement capability. Has anyone ever tried to obtain any enforcement action from the FTC, or any regulatory branch? It is an absurd process that actually puts the burden on the harmed party with no hope for remedy. Govt. keeps the fine all to themselves. Remember the do-not-call list anyone? Useless to the general public, but a great revenue generator for the FTC and the vendors in charge of that DNC list. These regs are setup as supplemental revenue opportunities for govt. agencies, to go after deep pockets. That is how it has always worked. I’m concerned when sharp marketing folks can’t see through this old scam. We’re the ones that are supposed to see it coming!
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