FTC: WOMM Links & Affiliate Links Need Disclosure

33 comments

The FTC recently reported an opinion on word of mouth marketing stating that if you are paid for an endorsement you need to disclose that:

"The petition to us did raise a question about compliance with the FTC act," said Mary K. Engle, FTC associate director for advertising practices. "We wanted to make clear . . . if you're being paid, you should disclose that."

The FTC said it would investigate cases where there is a relationship between the endorser of a product and the seller that is not disclosed and could affect the endorsement. The FTC staff said it would go after violators on a case-by-case basis. Consequences could include a cease-and-desist order, fines and civil penalties ranging from thousands of dollars to millions of dollars. Engle said the agency had not brought any cases against word-of-mouth marketers.

Tony Hung wondered if and how that may affect thin review sites and other affiliate sites.

Comments

Is it realistic?

I can't think of a single social bookmarking or social networking site that has a feature enabled which allows for people to disclose their commercial relationships. Other than placing a comment that says "I'm getting paid for this" into a link summary - which is a surefire way for people to not follow a link.

I don't think it's a bad idea, necessarily - but if relationship disclosures are law, then people have been violating the law en masse since the beginning of the web. Not to mention publishing companies like Ziff Davis that enjoy some sort of relationship with just about every vendor who's product gets a positive review.

And come to think of it... shadiness in marketing strategy seems to be an American tradition dating back to the beginning. Astroturf campaigns are just one of the more recent developments.

If enforcement is non-existant and barely even possible, then the legal issues are questionable - since any one particular defendant can throw up his hands and say "selective prosecution". This isn't an issue for a judge to decide, it's an issue for the marketplace to deal with. Isn't every affiliate marketer out there a paid word-of-mouth marketeer?

If they REALLY try this, the

If they REALLY try this, the only loser would be the US, I suspect. It's a case of the law (and the FTC) being behind the times. Anyone who felt they may be at risk of prosecution would simply move somewhere the FTC can't reach. Perhaps there will be a wave of "new" companies setting up in Russia to market to the US?

US agencies are going to have to get over the fact that the US does not "own" the internet one day. Any really serious attempt to impose US legislative powers can only harm US interests, I believe

Where are all the Web 2.0

oxygen thieves that have been clamoring for transparency? Or does that transparency sentiment only extend to businesses? Where are all the anti-splog activists?

And who said anything about the U.S. owning the Internet? It's the U.S. Federal Trade Commission, so I would assume that any laws passed would apply to U.S. citizens and businesses.

The end of affiliate marketing?

I guess Intellitxt and CJ could shut down in a minute if this would be enforced.
A small note:
Europe is pretty much on the same level. E.g. in Germany the paragraph 13 of the MDStV ("Media State law") requires a clear separation of advertisement and content. They already busted the largest daily newspaper (Bild.de) b/c they inserted a link to a commercial within one of their articles.

Luckily the government does not really enforce this law on blogs and private websites.

>> any laws passed would

>> any laws passed would apply to U.S. citizens and businesses.

Absolutely. The point I was trying to make is that if certain US agencies persist in thinking they can legislate for the whole WWW, they will have a rude shock in store.

Ant serious attempt to regulate WOMM could have fairly serious implications for any company that derives the bulk of it's revenues from online advertising, be that aff links, paid posts, even AdSense etc

If you were such a company, currently based in the US, and it became clear that you were a potential target for an FTC investigation, I think that moving overseas to a jurisdiction where the FTC can't reach you would suddenly look like an attractive option.

That can only be bad for the US, I think. Of course, it could be little more than stupid posturing by the FTC, always a possibilty worth considering

>> so I would assume that any laws passed would apply to U.S. citizens and businesses.

You might well assume that DG. Some US government agencies seem not to suffer any such shortcomings of the imagination - I don't know whether the FTC is one of them or not for definite. A lot would depend on how wide an interpretaion the FTC try to get to stand up, both geographically and in terms of the definition of WOMM.

One the one hand, stuff like the recent Edelmann / WalMart screwup, or the fake PSP fan site probably should get FTC attention. Some British, German or Chinese webmaster running aff links probably should not - but where will the FTC ACTUALLY try and draw the line? Past experience suugest that they will get it wrong, probably badly wrong

The PSP

'fan site' is a perfect example of a promotional technique that needs more scrutiny.

>Some British, German or

>Some British, German or Chinese webmaster running aff links probably should not - but where will the FTC ACTUALLY try and draw the line?

I don't think they'll go that far. The main point is just so that they have a law in place to chase after those who go too far. Instead of not being able to do much because there isn't a law. Which will most likely involve the big boys. Then its probably like X amount of people complain, or by discovery, and then the FTC looks into it.

They aren't going to care about some blogger in another country with affiliate links.

Is this really enforceable?

Is this really enforceable?

Is this really

Quote:
Is this really enforceable?

Of course not, but neither is the other crap the government tries to do with the net. Like everything else, it's vague, has no concrete examples, and will be next to impossible to enforce with the sheer number of websites that do it. This is a government who put a guy in charge of Internet regulations that believes the net is a series of tubes that can get clogged.

But it brings up the issues of disclosure on everything. Should TV ads that include celebrities state that the celebrities get paid to endorse the product? When a radio station broadcasts live from a bar, should they not state that they are being paid to do so?

"If you are getting paid,

"If you are getting paid, you should disclose that." I'm with Mary Engle on that.

Oh the irony. Someone from

"If you are getting paid, you should disclose that." I'm with Mary Engle on that.

Oh the irony. Someone from google is for disclosure? Does that mean the end of things like "quality algorithms"?

If I provide rankings of dentists in Mountain View, CA

This is in reply to Matt:

If I publish rankings of dentists in San Francisco, CA and in most prominent positions I display dentists who pay me the most, as long as I disclose that fact my rankings of dentists are somehow ok?

How do you think those dentists with "organic" or "natural" rankings feel about such a ranking system?

C'mon let's not be silly

>"If you are getting paid, you should disclose that."

How about a quicktime movie of me saying I was paid for this post. People would understand that but not a crawler, and we are supposed to be building for people not search engines right ....

When they start enforcing

When they start enforcing transparency of contributions to lawmakers, I'll be sure to throw (linkbait client) next to all my shizzle.

"If you are getting paid,

"If you are getting paid, you should disclose that." I'm with Matt Cutts on that.

Let's start with big money - disclose Publisher/Agency relationship (AdSense program) within Google's "organic" SERPs (Google's so called "opinion").

Is this really

Quote:
Is this really enforceable?

I have the same question.

Neil Gaiman told me he'd

Neil Gaiman once told me he'd once walked into a store for a major book chain and saw his most recent title in a Top 10 list of bestsellers.

He was chuffed - until the publisher told him they'd bought that slot.

Are we going to take notification of paid listings offline as well?

MYOB

My pay is none of your business, regardless of whether you happen to read my rants.

(Disclosure: Aaron pays me a little bit to post here, but not really enough that I'd say it's worth disclosing).

US Supermarkets

In US supermarkets, many companies pay the retailer to display their products or pay to have special placement. It helps the big boys move product and keeps the little guy little. I'd love to see a sign up on the shelves for each and every instance of payola but it ain't going to happen.

these pixels are sponsored

these pixels are sponsored by the alphabet

the english alphabet is

the english alphabet is sponsored by the countries that helped to create the english language

Google

Here at Google we'd like to disclose that we are getting paid for copying all of your content onto our computers and surrounding it with advertising.

When a radio station

When a radio station broadcasts live from a bar, should they not state that they are being paid to do so?

Next time I see a branded MP3 player, a laptop or certain can of soda in a movie I want to see a "text box" saying it was paid placement.

Next time I listen to a radio talk show that puts in plugs for local bars, car dealers and cell phone companies I expect them to start with an advertising disclosure.

TIN FOIL HAT TIME: Perhaps Google's lobbyist in Washington are finally learning how to work the system to their advantage.

"If I publish rankings of

"If I publish rankings of dentists in San Francisco, CA and in most prominent positions I display dentists who pay me the most, as long as I disclose that fact my rankings of dentists are somehow ok?"

sascha, I'm not saying it's okay, but surely it's better for users if you disclose that your dentist site has paid positions than for them not to know?

Amit Patel, are you saying that there is some AdSense boost within Google's search results? Cuz there isn't one. I've said that so umpteen million times that it's not worth a debunk post.

wheel, Aaron pays you to post here? Aaron, how many people do you pay to post here? :)

Can we do the same with laws?

In today's news, 'The We Love the USA and Prevention of Molestation Act' (mostly dealing with tax code and the suspension of habeus corpus) passed by a wide margin.

Section 1: Blah blah

Section 2: Blah Blah (Disclosure-- this little easter egg was paid for by the pharma lobby)

Section 3: Blah Blah (Disclosure-- this sponsored section was brought to you by Boeing)

Section 4: 100M bridge in Alaska

Aaron, how many people do

Quote:
Aaron, how many people do you pay to post here? :)

We're all paid, Matt. Didn't you know? I thought for sure you knew about the SPIF on Friday Matt baiting, and the monthly quota for anti-Google posts. I was willing to swear you were getting a cut of Graywolf's SPIF bonuses, because of the way you so reliably post to his bait threads.

Just goes to show you how little I know about what goes on ;-)

Matt - did I say "boost"? Me not think so.

I said:

disclose Publisher/Agency relationship (AdSense program)

As a native of Kentucky you may be interested in the following "non-commercial" Google search as an example:

population of kentucky

1 Q&A + 10 results
10 domains (1 .gov, 1 .org, 3 .edu, 5 .com)

You are paying ALL 5 .com domain owners via the AdSense program. That is 100% sponsorship of commercial domains.

If you are for disclosure - disclose this - in the SERPs.

P.S - maybe not worth a debunk post - but sure worth a lot of money....

You know...even many non

You know...even many non profits that are allegedly out for good causes take money from scumbag corporations which makes it virtually impossible for those non profits to actually do what they are supposed to.

And then there is research and reports which are thinly diguised advertisements.

I sorta just view everything as an ad, and if I like the placement I try to reverse engineer how it came to be.

When the government doesn't even control the printing of their own currency why do they care so much to regulate how others exchange it?

I'll Take Mine Now, Thanks Aaron

Just don't even think about trying to pay me again in those useless little Dollar things, or I'll let the ringtone posts through.

Still, it'd be nice if the kids could look forward to having some bones to to gnaw on, after the gruel. So pony up. I'll be looking for the UPS man.

are you saying that there is

are you saying that there is some AdSense boost within Google's search results? Cuz there isn't one.

If there was one then everyone here would probably be screaming for the Feds to crack down on Google for not disclosing it ;)

On the Payroll

Matt you didn't get yours, Adam said to combine both your and his payment and send it to his paypal address ... ;-)

I must say that I am aghast and completely insulted at the mere insinuation that my journalistic integrity can be compromised for a cash payout. Speaking purely hypothetically of course how much were you going to offer ...

maybe the next conspiracy...

working on the headline right now. what shall it be ;)

Google does not disclose.
Google engineer denies payment.
Just when you thought you could trust Matt Cutts...

and this one from a friend

Cutt's Pays Calacanis to Out Paid Links.

How about "Calacanis New

How about "Calacanis New Business: The Threadwatch Clone".

On the heels of his Nutscrape success, Calacanis is now paying the top Threadwatch competitors to post. The only catch? No more Jason Calacanis Is A Gobbler type content.

Don't worry, Aaron. Based on Jason's history, all this will do is raise the valuation of Threadwatch.

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