Bloggers, “buzz marketing” and the FTC

Book bloggers, including those who simply post reviews at Amazon, get blasted occasionally. Sometimes mainstream media reviewers assert that internet-only reviewers simply “enjoy shooting off their mouths” and their work amounts to “the degradation of literary taste.” Even some book bloggers themselves raise questions about whether there is an ethical obligation to disclose whether the book they reviewed was provided gratis by the publisher.

Now comes an online ad at Freelance Work Exchange posted by “kenwelsh.” The ad, posted Monday, seeks five reviewers for three new (but unnamed) books to “write a 1-3 Paragraph review with a 5 star rating (5 being best) of each of the 3 books.” The reviewers, who would get $5 to $10 per review, must “forward the reviews over to us so that we can look over them before you post them on and Barns and [sic].” Although “ken” says this has the potential for “[l]ong term work,” he also notes, “Unfortunately, Amazon has recently instituted a new procedure whereby you can only review books if you have an account that you have used to purchase books/products from them before, so in order to bid [for the jobs] you must have an account with Amazon that you have used to purchased [sic] books with them from [sic] before.” In addition, reviewers must “know how to write english [sic] well.”

Aside from asking someone to sell themselves out for a grand total of $15 to $30, the ad’s timing wasn’t the best either. It came a week after the Federal Trade Commission (“FTC”) released an opinion some in the internet community view as a potential threat of federal regulation of bloggers and non-commercial websites. In the staff opinion letter, the FTC said it would take a “case-by-case” approach to determining if it will recommend “law enforcement actions” for certain “word of mouth marketing” efforts. Specifically, the FTC staff was looking at whether failing to disclose that someone marketing a product is paying a consumer to promote the product to other consumers violates federal law.

The letter stemmed from an October 2005 request by Commercial Alert that the FTC investigate companies that engage in what Commercial Alert called “buzz marketing.” Specifically, Commercial Alert asserted it was a deceptive trade practice if those hired by buzz marketers failed to disclose they are being paid and by whom. It pointed to campaigns by such corporate giants as Sony Ericsson and Procter & Gamble.

The FTC staff avoided the “buzz marketing” term in its opinion. Instead, it looked at a specific type of what it called “amplified word of mouth marketing” – amplified in that marketing campaigns are used to encourage or accelerate the word of mouth. The FTC staff was concerned about “marketers paying a consumer (the ‘sponsored consumer’) to distribute a message to other consumers without disclosing the nature of the sponsored consumer’s relationship with the marketer.” It noted that FTC guidelines dealing with product endorsements look at whether the connection between the seller and endorser is one “not reasonably expected by the audience.” It then pointed to hypothetical situations in which a cell phone user or dishwasher owner who raves to friends about the product doesn’t disclose they are being paid by the marketer. The FTC staff said it appeared that failing to disclose that relationship would be deceptive under federal law “unless the relationship were otherwise clear from the context.”

Although the FTC staff did not recommend formal action, it said that was not a determination that the actions of which Commercial Alert complained complied with federal law. Instead, the FTC will “continue to evaluate these issues” and consider taking law enforcement action on complaints “when appropriate.” Some interpreted the opinion letter as an FTC edict that companies that engage in word of mouth marketing “must disclose those relationships.” Commercial Alert, in contrast, did not think the FTC went that far, calling the opinion letter “a giant Christmas present” to word of mouth marketers.

Still, the letter has generated fears in the internet community for a variety of reasons. For example, many blogs, including this one, are “affiliated” with various web sites, such as Amazon. Purchases resulting from links on the blog earn a commission from four to eight percent from Amazon. Does that make the blogger “a sponsored consumer”? Or does the blogger fall in that classification only if an item linked on the blog is actually sold and produces a commission to that blogger? Does the failure to disclose that certain links on a blog might result in a payment to the blogger constitute a deceptive trade practice? Or is it sufficient that the link takes the reader to a commercial website enough?

Or how about online reviewers? Regardless of whether they are affiliated with commercial sites, some or perhaps all of the books, CDs or DVDs reviewed are provided without charge by the publishers, labels or PR firms. Does the fact the reviewer gets a free copy make them “a sponsored consumer”? While the FTC staff letter noted that some marketers provide “product samples” or other “incentives to disseminate a mesage,” it does not specifically opine on what constitutes payment. And if a free copy of the work is payment, does praising the work mean there has been a deceptive trade practice if the reviewer doesn’t disclose it was free? If so, does panning the work in whole or significant part eliminate any obligation to disclose as it evidently didn’t disseminate the “right” message?

Much of the concern expressed on blogs and the internet may well be an overreaction. The FTC said only that it would look at future complaints case by case. Even if the FTC wants to pursue or investigate “amplified word of mouth” campaigns involving sponsored consumers, it would likely be more interested in the large firms pushing those campaigns that the solitary blogger. Of course, Amazon and other large websites with affiliate programs might make attractive targets. Yet one would hope that the FTC would make its position clear before any widespread enforcement efforts occur. Finally, if the need arises or the blogger is sufficiently concerned, blogs and web sites can easily add disclosure statements to avoid the failure to disclose element required for a deceptive practice.

Still, the timing of the ad by “kenwelsh” is somewhat akin to throwing gas on a fire that perhaps was about to smolder. If nothing else, it serves as another example for those who look to criticize online review sites. Given that the ad explicitly seeks to create a “word of mouth” campaign like the hypotheticals in the FTC opinion and the types of activites about which Commercial Alert was complaining, it and similar activities can only serve to bolster pushes for more government involvement in and regulation of the internet.

My suggestion? If the FTC wants to investigate abusive buzz marketing, I nominate “kenwelsh” to be the first one investigated. Not because of the timing of the ad but for the Faustian proposal it makes.

Buzz marketing also is known as “guerilla” or “stealth” marketing. The terms are significant because they suggest the subterguge that corporations are working on the buying public.

Commercial Alert request for FTC investigation

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