What Percent of Affiliate or Buzz Marketing is Legal?

Oct 4th

AdAge asks IS BUZZ MARKETING ILLEGAL?

As marketers more frequently look to recruit consumers brand agents to spread goodwill for brands, industry attorneys view buzz marketing as a likely area of regulatory involvement, especially around the issue of compensating people to participate in buzz programs when they fail to disclose their connections to marketers and agencies. While there is no legal precedent specific to word-of-mouth marketing, there are Federal Trade Commission guidelines for ads that are likely to apply.

How far can they stretch this line of thinking? Is affiliate marketing a paid endorsement? Does every affiliate link need to be identified? How the hell would they enforce that?

In the offline world when you read a billboard it does not usually say SPONSORED BY in huge red letters. Celebrities endorse products they never use. What makes one type of advertising legit and another illegal?

Sometimes big fans of a company who love their products are great people to employ, and sometimes you only find those people after they state how wonderful your products are. Proving causality will be tough.

Viral marketing might be illegal, but some of the true web gurus think it is what drives the web:

It is a truism that the greatest internet success stories don't advertise their products. Their adoption is driven by "viral marketing"--that is, recommendations propagating directly from one user to another. You can almost make the case that if a site or product relies on advertising to get the word out, it isn't Web 2.0.

Some of these same people talking up buzz marketing being illegal during the day are probably working on buzz marketing campaigns at night.

Published: October 4, 2005

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Comments

October 4, 2005 - 7:56pm

Well, they got you talking about it didn't they? ;) I agree that it would be tough to regulate something like that (and I kinda hope the industry can keep itself in check so that it doesn't come to that). Word of mouth marketing is a very intriguing idea, but it does ride a pretty fine line sometimes. Like the celebity thing. We kinda expect celebrities to endorse stuff. But we don't expect our best friend Bob to be getting kick-backs for recommending products to us. We trust Bob and assume that he has our best interests in mind when he says something is cool. Messing with that relationship kinda destroys the whole reason that WOM is effective. Not to mention the fact that it could make us all into distrustful and friendless consumer whores (in the worst of all worlds). Food for thought.

October 4, 2005 - 9:48pm

A study by Intelliseek finds that of consumers surveyed, "...one-third would be disappointed if a trusted contact did not carefully disclose a paid or incentive-based relationship, 26 percent said they would never trust the opinion of that friend again, and 30 percent said they would be less likely to buy a product/service."

October 4, 2005 - 9:59pm

>I kinda hope the industry can keep itself in check so that it doesn't come to that

Lots of other scams have been going on for a long time and left fairly unchecked. Look at the pharma mega corps.

IMHO if the government gets involved in the issue it will not be because people are getting ripped off, but because people in power are losing their market share to upstarts.

I think by the time people see it enough to care it is probably going to be too late for them to stop it. Especially if the new company plays David vs Goliath.

>A study by Intelliseek

Interesting that 2 out of 3 would not care! hehe

October 5, 2005 - 1:25pm

Confusing stealth with WOM hurts all marketers.

Inaccurate and misleading headlines like this hurt us all by scaring away legitimate marketers and leaving the field open for shady operators. We need to work together in the fight for higher standards, pointing out the bad actors, while supporting the early efforts of honest marketers.

If we fail to do so, we will repeat the unhappy history of email. Reporters started referring to all email marketers as "spammers,? lumping Target, J. Crew and other respected brands with email newsletters in with the pornographers. What happened? Everyone stopped talking about honest ways to use email. Few companies fought for anti-spam laws. And the spammers ran free, unopposed.

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