Not that long ago, blogs were a mysterious animal that most reputable companies shied away from, an untrustworthy medium populated by cranks in their pyjamas. But at some point over the past year or two, blogs became mainstream, and companies like Microsoft and Hewlett-Packard and even Wal-Mart started turning to them for some good, old-fashioned “word of mouth” advertising. Reaching out to bloggers with offers of gifts seemed like an easy way to do this, and many bloggers were eager to accept — but not all of them disclosed their relationships with the company whose products they had received.
Doing this is now mandatory, the Federal Trade Commission said in newly released rules governing advertising and promotional material on the Internet. The new amendments are the first updates to the FTC’s guide for advertisers since 1980. According to the new rules, a post by a blogger who is paid cash or receives a gift is considered an endorsement and the relationship must be disclosed. According to the FTC, messages posted on Twitter are covered as well.
Richard Cleland, a staff attorney at the FTC’s Bureau of Consumer Protection, told a Fortune blog: “We’re required to update our rules periodically to ensure that they address relevant issues in the marketplace. Social media has become a relevant marketing force, so we started looking at it.” The FTC official said that the commission was concerned about so-called “pay-per-post” websites, where bloggers receive cash or in-kind gifts in return for positive blog reviews.
“The issue here,” he says, “is whether, if the consumer knew of the relationship between the advertisers and the blogger, would it affect the credibility of the blogger’s statements?” Cleland told the Wall Street Journal that the FTC looks at it “from the perspective of the consumer and the principle being that a consumer has the right to know when they’re being pitched a product. It doesn’t matter whether it’s an email or Twitter or someone standing on a street corner.”
One of the companies that likely gave rise to the FTC’s concerns is Izea — formerly known as PayPerPost. The startup’s business involves helping companies with products or services they want to market find bloggers who are willing to write about them in return for payment. Although Izea didn’t initially require bloggers to disclose these payments anywhere, it changed its rules after much criticism from other bloggers such as TechCrunch. Izea founder Ted Murphy says that his company is working with the FTC on standards for disclosure regarding both paid blog posts and Twitter messages.
Not everyone is enamored of the FTC’s new moves, however. Jeff Jarvis, who is both a blogger and a journalism professor at the City University of New York, says that while he despises companies like Izea that pay bloggers for their opinions, he sees the guides as “dreadful overreach that will drag a lot of innocent people into a bureaucratic dragnet.” Among other things, Jarvis says that he is concerned that the rules only apply to bloggers and Twitter, but other forms of publishing are considered able to regulate themselves. Dan Gillmor, director of the Knight Centre for Digital Media Entrepreneurship, said on Twitter that the new rules “are big-brotherish in extreme, unworkable and downright dangerous.”
As a number of observers have noted, however – and as Robert Cleland himself admitted in several interviews about the new rules – the FTC doesn’t have a huge staff available for enforcement, and certainly doesn’t have the kind of staffing it would need to police the entire blogosphere or Twittersphere. As a result, it will likely rely on customer complaints to bring cases forward for investigation.