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A Note To Blog-Heads: The Ftc Begins Regulating The "Wild West" Of Internet Advertising

By Emeric J. Dwyer

The Holy Grail of any marketing campaign is a "viral" theme, where the internet-using public so adores the product that they take to the electronic streets to praise its virtues before it is even released. Everyone has seen a viral video or advertisement before. Whether it is "Star Wars Kid" pretending a broomstick is a light saber or a wedding party dancing down the aisle, a link enters everyone's e-mail inbox sooner or later. In marketing campaigns, success stories are most prevalent in the entertainment industry, with movies such as "Snakes on a Plane" and "Zombieland" peaking in popularity before they're released, or video games such as "Halo 3" or "Borderlands" which are sold out weeks before they're made public. Every marketer hopes that their clever advertisement will hit some collective funny-bone and be passed around the YouTube and CollegeHumor circles.

Bloggers are at the forefront of these marketing waves. Hailed as a new branch of journalism, these internet writers have been growing in popularity for the past decade. Many hear about bloggers in the arena of politics, but in reality it is much larger. Many bloggers dedicate themselves to a specific area and carve out a dedicated audience. From cooking to car maintenance, bloggers speak to a specific audience of dedicated enthusiasts. For marketers, this is a prime soapbox, capable of targeting the specific audience for a product or service.

Many companies have since undertaken to send bloggers products for their review, hoping for a positive comment on the blog that can build excitement among the audience. Some have gone a step further, paying bloggers for positive reviews of products as a form of undisclosed advertising. And in a move considered underhanded by many, some companies have even started blogs purported to be neutral as a means of providing positive' reviews.

The federal government, it seems, has finally taken notice of these practices. Beginning December 1, 2009, the Federal Trade Commission ("FTC") will require disclosure of any payment to a blogger from a company for an endorsement. This includes off-hand remarks about unsolicited products sent for testing. In short, if you're a blogger and you want to talk about your new toy, you better disclose where it came from.

The FTC rules are not federal laws. Instead, they serve as guidelines to the FTC about how to enforce federal laws, including truth in advertising statutes. Though not passed by Congress, these rules and regulations are binding in FTC investigations and determinations, and so bloggers should conform to them.

The FTC defines endorsement as "any advertising message (including verbal statements, demonstrations, or depictions of the name, signature, likeness or other identifying personal characteristics of an individual or the name or seal of an organization) that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser." This is a broad definition, and it should be noted is not only applicable to positive reviews even negative comments can be considered an endorsement.

More importantly, endorsements "must reflect the honest opinions, findings, beliefs, or experience of the endorser. Furthermore, an endorsement may not convey any express or implied representation that would be deceptive if made directly by the advertiser." A blogger cannot simply take money from a company, disclose the payment, and then endorse a product. They must form a genuine opinion about the product. Advertisers can then use that endorsement as part of a campaign, so long as they present it reasonably. Both advertisers and endorsers can be liable for their statements if they are untrue or misleading.

Consumer endorsements must be listed as such. Bloggers are encouraged to indicate whether they used the product and advertisers have to indicate whether results are typical if they use any endorsements in advertisements. Bloggers who hold themselves out as experts in a field should make sure they indicate what standards and practices they are relying on when judging a service or product, even if it is a matter of taste or price.

Finally, both advertisers and endorsers must disclose any connection "that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience)." The first example given is that of a blogger who receives a video game system free of charge, unsolicited, and then reviews it. The blogger is required to disclose he received the system free of charge.

This can obviously have an impact on those trying to create a viral marketing campaign. While friends may pass videos to each other without any disclosure requirements, now a company cannot ask a blogger to display a video of a product without disclosure. It does diminish the "grass roots" nature of viral marketing campaigns, as it reduces the impression that the general public is bristling with excitement over some new innovation. The regulations do, however, begin to tamp down on the practice of paid endorsements that are otherwise undisclosed. While television, print and radio advertisements have been constrained by these requirements for decades, this is the first effort to bring them into a digital realm.

These regulations leave a number of unanswered questions. It is uncertain, for example, how this may apply to comments made on message boards or comment sections do you need to disclose any connection to a product when responding to a blog review? The same is true for comments made about attending press junkets or organization events do you need to disclose your attendance at an event where your meal is paid for but you are otherwise uncompensated?

Running afoul of these rules can invite action by the FTC, including investigation or a law enforcement proceeding. These are lengthy and often costly ordeals that are better avoided than endured, so bloggers are encouraged to err on the side of disclosure.

Of course, nothing prevents a blogger from going out, purchasing a product or service, and then reviewing on their own. Indeed, this method of consumer testing' is likely preferred by the FTC and others, as it may lead to more accurate and more widespread dissemination of consumer information.

Many websites, from Twitter to Facebook, provide available options for a blogger to disclose these connections. It is hard to imagine that a 140 word post may be considered an endorsement, but the broad rules from the FTC do encompass even the simplest of online activities.

Blogging is a fantastic way to communicate with niche audiences and product enthusiasts. Marketing personnel are not likely to give up creating viral marketing. Bloggers are certainly not going to stop. So a measure of caution

Of course, any article about blogs would be incomplete without a few plugs for favorite bloggers:

"The Businessman's Lawyer" is written by Jeffrey O'Brien, of Mansfield, Tanick and Cohen, P.A. and addresses all manner of legal and professional issues for the modern business. It is a prime example of legal expertise being used outside the courtroom, often with a tongue-in-cheek attitude. http://blog.jeffreyobrienesq.com/.

"Boardley Consulting Group, LLC," written by Deborah Boardley, is a blog on executive communication, marketing, and presentation. Peppered with personal anecdotes, Ms. Boardley gives tips on not only communication, but also keeping up internal excitement and making sure the crucial little things do not get lost in the mix. http://deborahboardley.blogspot.com/.

"Ribbitz Creative Communication" is a mix of reviews, ideas, and experiences of a start-up advertising agency written by Kim Opitz. The blog focuses on unique and engaging marketing techniques and solutions to problems, and is coupled with the thoughts and ideas of a woman "taking a leap" with her company and career. http://rribbitz.wordpress.com/.

"Katie Kieffer," an eponymous title for the writings of Katie Kieffer, is a policy blog emphasizing the role of young professionals in the Twin Cities and across the country. It ranges from profiles of young entrepreneurs to political and economic discussions from the view of a young go-getter. http://www.katiekieffer.com.

All of the above bloggers have some connection with the author and the firm of Mansfield, Tanick and Cohen, P.A. The above endorsements are not neutral.

As always, if you have questions about disclosures, advertising, or web-law, you should consult an attorney for further advice.

Emeric J. Dwyer is an associate attorney with Mansfield Tanick & Cohen, P.A., practicing in the areas of commercial and employment litigation and internet law. He can be reached at 800-4016-194 or via email at edwyer@mansfieldtanick.com.