FTC To Clamp Down On Social Media Marketing

Some sites like MySpace have begun policing ads:

The main reason that they killed the dating ads was that people were using copyright images as well as girls under 18 to advertise for CPA sites. It got to a point where the ad approval team couldn’t police them anymore. The dieting ads were killed cause the FTC is just starting to crack down on the fake blogs that promote the diet offers.

But the efforts might be too little too late, and the Federal Trade Commission (FTC) is planning to regulate online social marketing. Yes, that includes blogs, Facebook, Twitter, and other forms of social networking.

In December 2008, the FTC proposed rule changes relating to endorsements, where bloggers and other site owners may be help liable for claims made about a product or service.

For example, companies giving trial products to bloggers might constitute an endorsement. So flippant comments about the product or service in a social media context may come under the same scrutiny as print advertising. So, best be careful blogging or Twittering about the efficacy of that affiliate weight loss program ;)

Is Regulation a Bad Thing?

In this interview with Shoemoney, Seth Godin explained why he thought this regulation was good, noting that

  • there will always be someone operating sleazier than you are
  • the sleazy operators steal from everyone on the network, and increase the trust barrier that legitimate businesses must overcome

If the internet was not anonymous then you wouldn't have Google AdWords ad reps stealing your keywords from your AdWords account and bidding on your trademark. Much of the advertising & affiliate driven fraud would quickly disappear.

If these measures are approved, what will this mean for social media marketers?

1. Go Easy On The Snake Oil

If a claim is outrageous, best be careful about repeating it. Check that any claim has studies to back it up.

2. Typical Results

Not only do results have to be shown to be achievable, they must be typical. The FTC will likely investigate claims if the average consumer is likely to be mislead about results that can be achieved.

This can be tricky, as most testimonials in the internet marketing space are essentially nepotistic or bought (particularly for "all-in-on" Earth shattering courses costing $1,997). Perry Marshall highlighted how hard it is to find out the "average" when your customers have little incentive to tell you something is working (and if they actually put in any effort when it is not).

3. Affiliates Beware Of Being Thrown Under A Bus

The FTC are likely to focus on endorsements by third parties.

Often, parent companies may be unwilling to make certain claims, but are more than happy for their affiliates to do so. This, of course, transfers risk to the affiliate.

Make sure both your stories are in sync.

4. Disclose

If you're being compensated for something, whether by money or materials, it's best to say so.

Meanwhile, the FDA is also tightening regulation, and this will have an impact on search advertising:

Last week the U.S. Food and Drug Administration wagged its finger at more than a dozen pharmaceutical companies over their use of paid search advertising.In one day, the agency sent an unheard-of 14 warning letters to pharmaceutical companies regarding their use of search ads on behalf of more than 40 drugs. The list of brands mentioned included such top sellers as Lexapro (an antidepressant) and Plavix (a blood thinner). GlaxoSmithKline, Sanofi-Aventis, Merck, and Eli Lilly were among those to receive letters.

Industry observer Mark Senak said it looked like the FDA was trying to clean up pharmaceutical search engine marketing by playing "whack the mole" rather than issuing some regulatory guidance. But an FDA spokesperson said the agency found "a plethora of violations across all classes of drugs," and noted the FDA's policy is to enforce the same standards in all media.

The common thread is that enforcement bodies are looking to apply the same standards found in print to online media.

Published: April 14, 2009 by A Reader in marketing


April 14, 2009 - 1:47pm

I don't see how they're not going to be playing "wack the mole" perpetually. It's certainly smart not to keep your neck stuck out there if you're playing in the aff. game (especially in weight loss and some of the other "problem" areas). But most smart affiliates left the acai game, for example, a while before the excrement hit the air conditioning on that one.

In short, I'd say the regulation was a good thing if I had confidence in government's ability to regulate effectively. Good luck to the feds in cleaning up the cesspool one spanking at a time.

April 14, 2009 - 4:00pm

Good point MikeTek. Those Obama Government Grant offers are still all over AdWords/AdSense over a month after the FTC spoke with Google about cleaning them up.

April 15, 2009 - 4:12pm

For as long as people have been willing to spend money on goods and services, there have been slimeballs engaged in questionable (sleazy?) marketing tactics.

Responsibility in social media marketing is a good thing if you ask me. I don't know if that will end turn and burn affiliate marketing or not though.

April 16, 2009 - 6:54am

If you ask me, all this creates a huge opportunity for anyone willing to go the extra mile, add some real value, and *NOT* bilk their customers.

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