FTC Plans to Monitor ‘Blogger Payola’

Posted by Helen Pitlick on
Tuesday, September 1st, 2009 at 8:48 am

Flip the Media is the best blog ever! Flip the Media will teach you everything you ever wanted to know about social media… and more! In fact, experts say that reading Flip the Media will make you more popular with the opposite sex, reverse male pattern baldness, and even cure some types of cancer!*
*results not typical.

Sponsored posts — endorsements by bloggers in exchange for compensation from marketers, dubbed “blog-ola” for “blogger payola” – have become a reality. Flip the Media is great, but can it really do everything described above? Probably not. To combat deceptive sponsored posts, the Federal Trade Commission (FTC) announced last year that it plans to revise its Guides Concerning the Use of Endorsements and Testimonials in Advertising (“the Guides”) to regulate how bloggers and other social media users endorse products. This could strike a blow to both the companies who crowdsource using social media and the bloggers who supplement their income with freebies.

The changes mandate full disclosure of any monetary relationship between the blogger and the sponsor, and will make bloggers responsible for any unsubstantiated statements they make (ie, that FTM cures cancer). The amendments do not completely ban bloggers from accepting gifts or cash; they simply ensure that bloggers are upfront about the transaction and make accurate claims. The updates also apply to infomercials, celebrity endorsements and “results not typical” advertising.

While the FTC admits that this is a controversial proposal, it views the changes as a way to update its mission of consumer protection for the 21st century. From the FTC’s angle, the regulation appears logical: A review that does not accurately reflect the blogger’s experience is dishonest, as is a review that presents the blogger as an actual customer when in fact he or she a paid spokesperson. Still, many bloggers, readers and the companies that depend on sponsored posts are heavily divided over the proposed amendment.

Some people fear that the FTC will turn into Big Brother, scrutinizing every product mention regardless of intent. Eric Robinson of the Media Law Resource Center writes, “It’s dangerous for the FTC to be regulating editorial content and ethics, rather than straight ad content. FTC regulations on advertisers, barring them from giving freebies, for example, may be legitimate; regulating bloggers for what is essentially an ethical issue is a dangerous precedent of government encroaching on First Amendment speech.”

Many bloggers, particularly those who run product review sites, depend on free products and rely on sponsored posts to supplement their income. Newspapers have codes of ethics preventing their journalists from receiving freebies and bribes, and the FTC defers to this independent regulation. However, newspapers traditionally have had deep enough pockets to pay for products to review. Plus, many social media groups, such as the Word of Mouth Marketing Association, have their own guidelines that state how to ethically accept and review products. Some bloggers feel that the FTC is demeaning their legitimacy by not deferring to the judgment of professional industry groups as the FTC has done with newspapers.

Regardless of the law, transparency is generally the best option. Google downgrades paid blogs because it feels that they do not provide accurate search results. In a world where SEO is king, you don’t want to upset the largest search engine. Plus, if bloggers write sponsored posts and do not freely reveal the connection, they risk a backlash from their constituents. Wal-Mart experienced such a fallout after muckrakers uncovered that their “Wal-Marting Across America” campaign was a fraud. As the saying goes, honesty is the best policy — in real life and on the net.

The FTC will decide whether to adopt the revisions regulating bloggers shorty; their original deadline was the end of the summer. If you’re interested in learning more, read my final project for this summer’s U.S. Digital Media Law class. It won’t cure cancer, but it has a bit more information on the FTC’s proposal.

Helen Pitlick has been a student in the MCDM program since spring 2009. She works with social media as an intern at Foodista.com, and in her spare time, she reviews craft beer.