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FTC Compliance Made Easy

By October 7, 2009 9 Comments

Earlier this week the FTC published their 2009 revisions to the FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising. Given that these revisions were the first significant update in the Internet era, we can understand why there is considerable fear, uncertainty and doubt floating around social media about these revisions. Some of the themes included:

  • Does the FTC really understand social media and the impact of these changes?
  • Is social media being held to a different standard than other media?
  • Who is at greater risk from these changes, advertisers, big bloggers, small bloggers or celebrities?
  • How will the FTC ever enforce such changes on the diverse population of publishers in social media?
  • Are their Free Speech implications to these revisions?

Although such questions are important and great link/comment-fodder, we at IZEA are focused on solving one simple question: How can we help you, as an advertiser, blogger or celebrity, meet the FTC’s clarified bar?

Before I get into the details I want to reiterate that this is actually a great thing for IZEA. It validates the size and growth space, creates a safe framework for creators and marketers, and inhibits unscrupulous marketers.

How can we help you?

As the pioneer of Sponsored Conversations, we’ve spent thousands of man-hours and millions of dollars building the marketplaces and tools to make social media marketing easy, effective and FTC compliant. Although some have tried to draw distinctions between cash and non-cash sponsored conversations, the FTC’s latest revisions make it crystal clear that material connections including free products and services, trigger the same transparency requirements as payment. That makes compliance easier and clearer…as easy as 1)Educate, 2)Disclose and 3)Monitor.

1)Educate

As an advertiser, you need an advertising service that empowers you to educate bloggers or celebrities about your engagement in a remotely deliverable and trackable fashion. The FTC made this clear on page 15, saying:

“The Commission, however, in the exercise of its prosecutorial discretion, would consider the advertiser’s efforts to advise these endorsers of their responsibilities … in determining what action, if any, would be warranted.” (emphasis added)

And, on page 39, saying:

[A]dvertisers who sponsor these endorsers (either by providing free products – directly or through a middleman – or otherwise) in order to generate positive word of mouth and spur sales should establish procedures to advise endorsers that they should make the necessary disclosures” (emphasis added)

And, in Section 255.1 Example 5, saying:

“In order to limit its potential liability, the advertiser should ensure that the advertising service provides guidance and training to its bloggers concerning the need to ensure that statements they make are truthful and substantiated.” (emphasis added)

Although blogger outreach is often done person-to-person with little education or “paper trail”, that may no longer be sufficient to demonstrate compliance after-the-fact. The FTC appears to understand that social media advertisers cannot control every message, but “safe harbor” depends upon educating bloggers in advance via a platform that documents compliance — particularly when certain claims are in or out of bounds for the product. IZEA is the only social media marketing platform that offers such trackable education to bloggers and celebrities prior to engagement.

As a blogger or celebrity, there is also good reason to align with an advertising service that provides such trackable education tools. You also benefit from having a “paper trail” of advertiser instructions, to avoid any after-the-fact finger pointing. An even bigger benefit of such an advertising service is to avoid the inevitable hudgepodge of education and tracking solutions that direct advertisers may start requiring. The FTC’s new guidelines just made direct engagement with a diverse set of advertisers a whole lot more complicated. Partnering with a service like IZEA allows for a single point of trackable education across multiple advertiser engagements.

2)Disclose

If there is one simplifying takeaway from the FTC clarifications, it’s that disclosure is required any time there is a material connection between advertiser and endorser that would materially effect the credibility of an endorsement. The FTC makes it very clear that soft-money like free products, passes and similar “freebies” are subject to the same disclosure requirements as direct payment. Section 255.5, example 7 is a straightforward example for such product-based blogger outreach practices:

“Example 7: A college student who has earned a reputation as a video game expert maintains a personal weblog or ‘blog’ where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review. Because his review is disseminated via a form of consumer-generated media in which his relationship to the advertiser is not inherently obvious, readers are unlikely to know that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact likely would materially affect the credibility they attach to his endorsement. Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge. The manufacturer should advise him at the time it provides the gaming system that this connection should be disclosed, and it should have procedures in place to try to monitor his postings for compliance.” (emphasis added)

Section 255.5, Example 3 also covers the case of celebrity disclosure, providing an example that sounds alot like celebrity tweets:

“Assume that instead of speaking about the clinic in a television interview, the tennis player touts the results of her surgery – mentioning the clinic by name – on a social networking site that allows her fans to read in real time what is happening in her life. Given the nature of the medium in which her endorsement is disseminated, consumers might not realize that she is a paid endorser. Because that information might affect the weight consumers give to her endorsement, her relationship with the clinic should be disclosed.” (emphasis added)

Therefore, if you’re a blogger or celebrity, disclose any material connections and never use marketplaces that forbid you from disclosing.  Likewise, if you’re an advertiser, make sure your endorsers disclose and never use marketplaces that forbid bloggers from disclosing.  If you’re currently with one of those companies, you might wanna consider switching to IZEA before December 1…the risk is too great to do otherwise.  IZEA is the only sponsored conversation company that requires and provides tools to make disclosure easy, consistent, and trackable for both sides of an engagement; across blogs, social networks and twitter.

3)Monitor

Although education and disclosure lay the foundation for FTC-compliant sponsored conversations, the need for post-campaign monitoring was also mentioned multiple times in the FTC revisions. This can be seen on page 15:

“The Commission, however, in the exercise of its prosecutorial discretion, would consider the advertiser’s efforts to … to monitor their online behavior in determining what action, if any, would be warranted.” (emphasis added)

And, on page 39:

“However, advertisers who sponsor these endorsers (either by providing free products – directly or through a middleman – or otherwise) in order to generate positive word of mouth and spur sales should establish procedures … to monitor the conduct of those endorsers” (emphasis added)

And, on page 64:

“The advertiser should also monitor bloggers who are being paid to promote its products and take steps necessary to halt the continued publication of deceptive representations when they are discovered.” (emphasis added)

Therefore, advertisers need a system that allows them to monitor compliance over time. Whether that monitoring gets done by brands, agencies or consultants, efficient and effective monitoring depends upon leveraging the right tools for the job. And guess what…IZEA is the only company offering such campaign monitoring tools, via:

  • A compliance dashboard to monitor claims and disclosure in all posts of a campaign; and
  • A post-campaign Disclosure Audit, including date and time stamps of disclosure.

The framework has been set

We hope this short summary of the FTC revisions was helpful. They’re not telling you what you can or can’t talk about. They’re not even dictating how to disclose. They’re just clarifying that transparency matters in social media as much or more than it does elsewhere. This is something IZEA has championed for years and we hope our investment in pioneering tools can make the transition easy for you.  If you’d like to discuss how IZEA can help your brand or agency implement FTC-compliant campaigns, signup today or give us a call at 1-866-514-1680×4…preferably BEFORE December 1.

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