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Are You Breaking the Law with Social Media Marketing?

624824_restrainedDoes anyone else hear Judas Priest after reading that headline? No?

Um, anyway, the FTC has been cracking down on the newer methods of marketing, and social media marketing is not immune as SEOmoz’s general counsel, Sarah Bird, pointed out recently in an interview with Eric Enge. The new guidelines, available from the FTC, appear to threaten the future of SMM. The bottom line?

If you’re being compensated to talk about someone’s product, then you need to disclose it.

Rand Fishkin (you know, Sarah’s bossman) summarizes a few important points for us:

  • Most SMM is okay: “Want to create accounts for your client or project at social sites, interact with the community under those accounts or build up popularity/followers? You’re in the clear, and can do so without saying who’s paying you or why you’re engaging in those activities.”
  • This doesn’t apply to link building: “it’s not relevant to the consumer that an agency or consultant is doing link acquisition, this doesn’t fall under something the FTC cares about.”
  • Nofollow isn’t good enough for the FTC: “you need to label links that have been purchased in visual ways on the page (“sponsored links,” “advertisements,” “supporters,” etc.) to clearly indicate the financial relationship. Google’s guidelines don’t request this human-visible disclosure, but instead want those links to use rel=”nofollow”"
  • Most linkbait, viral content and microsites are okay: “Since viral content is typically free, generally not specifically endorsing a product/service and doesn’t fall under the “paid links” issue, it’s pretty safe to engage in without disclosure”

Rand also offers an important clarification:

It only gets hairy if/when you’re leaving comments or content that endorses a product or company that’s paid you to do so. For example, if SEOmoz hired a social media crew to go say nice things about our tools or post a link to them in every forum on the web where SEO was discussed, they’d need to state their relationship with us each time they engaged in that fashion.

I’m gonna come right out and say what I’m thinking: Did anyone seriously think it was perfectly fine to take money for talking up a product without mentioning you’re getting paid? This goes beyond the paid links/Google/nofollow polemic.

I think the FTC is right to lay down these guidelines (but I do think it’s going to have a really hard time enforcing them). If they turned a blind eye to this, ultimately, it would undermine the foundations of social media marketing itself.

When we pose as average consumers—even if we have tried the product and genuinely like it—and go out to promote a product as part of earning our pay and purposefully gloss over that fact, can we really expect anyone to take any endorsements seriously?

Take off your marketer hat and let’s pretend we’re on Amazon. We’re looking at a book/CD/$6000 television you’re thinking of buying. Better check the reviews. Hm . . . There are 10 reviews—all 5 star reviews. Must be a perfect product, right? Let’s say instead these reviews are posted across the web on various blogs, forums and review sites. They’re clearly written by different people. Convinced to buy that product yet?

Or maybe the company hired a social media marketer. Without disclosure, there’s no way of knowing. Those posts look like organic feedback, genuine buzz for the product. (Hope that $6000 TV works out for you.)

Ultimately, someone, somewhere is going to figure out that all these glowing reviews are coming from someone with a dog in the fight. Once people realize what’s going on, will they trust anyone’s reviews? When you can’t tell the paid reviews (sometimes we call these “ads“) from the genuine ones, you have to discount them all.

Is all social media marketing illegal or unethical? Of course not. It’s one thing to buy ads on MySpace, to create a page for your brand on Facebook, to build an iPhone app. These are situations where it should be obvious—situations the FTC likens to Tiger Woods pimping golf balls on a commercial. We all know he’s getting paid, don’t we?

As Sarah and Rand pointed out, most SMM is perfectly okay. It’s only when we start to pose as consumers while trying to generate buzz, leads and sales for our clients that we run into serious ethics problems—and now the law.

What do you think? Is it unethical to promote a product without disclosing your relationships? Or is that just par for the course these days? And seriously, how is the FTC going to enforce these guidelines?

Photo by Penny Mathews

  • http://www.ignitesocialmedia.com Brian Chappell

    I don’t think its the FTC’s place. They don’t control the internet, right?

  • http://byrneseyeview.tumblr.com Byrne

    That’s a pretty weak argument from the FTC. If the problem is that someone is making a claim for their own benefit rather than because they believe it, that covers a pretty broad set of interactions. And if they’re just talking about pitching products, they’re being unreasonably narrow. If someone says “I like the New York Times,” even though they read the Post, it might be a good way to sound educated, and thus to get access to better jobs or better company.

    The main difference between astroturfing for pitches, and plain old dishonesty, is that the pitches are more obvious. But what really matters isn’t why a recommendation was made, but whether or not it’s true. If someone can make an honest case for using a particular product, “I’m getting paid by the company” is about as relevant as “Liking this product makes me feel cool,” or “I only use it because my psycho ex works for their main competitor.”

    Byrne’s last blog post..Zero to Forbes in Under a Week?

  • http://www.marketingpilgrim.com Jordan McCollum

    @Brian—the FTC regulates marketing messages on all media.

    @Byrne—Wanting to look good is a far cry from being paid, don’t you think? Are you saying that if someone told you “I prefer X, but mostly because it looks good/it has social currency/I don’t like their competitor [for unrelated reason-Y]” (which, by the way, are all factors that influence all of our purchase decisions), that review would hold equal weight with someone saying “I prefer X, but mostly because they’re paying me $1000 a month to say that”?

    If someone can make an “honest case” for the product, their honesty had better reach to the fact that they’re receiving quid pro quo for that review—else why believe the rest of their review is honest (or, by extension anyone else’s, if no one’s disclosing)? “Liking this product makes me feel cool” can actually be useful to a purchase decision—if you’re buying the product to feel cool (hello name brands).

    Personally, I have a hard time believing a paycheck doesn’t in some way taint someone’s opinion toward the positive most of the time, but if making an “honest case” is that compelling, then how could admitting that they’re getting paid by the company hurt?

  • http://www.brianchappell.com Brian Chappell

    Media is a vague word IMO.

    How about this scenario. What if I am on a proxy located in Holland (I reside in Texas). Pitch a site to talk about my product, and pay them. They dont disclose that in the blog post.

    The owner of that site I just got coverage on has a server in France. They use a proxy as well.

    How does all that get regulated?

    I wont even get into what is payment and how is that defined cus that gets beaten to death with the whole payola link buying blah blah that has been beaten to death over the last 3 years.

  • http://byrneseyeview.tumblr.com Byrne

    @Jordan

    I think wanting to look good is actually far more harmful than getting paid. Money is a lot easier to measure, and it’s a lot easier to calibrate; social trends are much harder to control. To take the most extreme examples, ideologies that people joined because they were fashionable (communism, nazism, etc.) have killed far more people than ideologies people joined because they were remunerative.

    This is just one of those things people tend to get used to. Someone interested in the history of law might read something by Cicero, knowing that at his time, it would be considered shameful for a legal advocate to accept monetary payment. Now, of course, lawyers are often very well-paid, and few people claim that we’d have a better legal system if it were run on a volunteer basis.

    An honest case about a product is not a serious and in-depth analysis of one’s psychological state. Simply saying “Flooz brand widgets are just as effective as Fleez, even though the cost half as much!” is true or false, regardless of whether Flooz is paying me to say it. If the worst you can say about someone is that they’re helpful and correct, and they make a living at it besides, you have a weak argument.

    There is a lot of information out there, and a lot of people are looking for it. As a social media marketer and an SEO, I get information to the people who want it. This isn’t a charity; it’s a business. It’s a business that is only rewarding because there’s demand on both sides. And if I have a choice between being self-righteously opposed to this behavior, versus answering consumers’ questions and marketing a company’s product, I know which one I’ll choose.

    Byrne’s last blog post..Zero to Forbes in Under a Week?

  • http://www.silverbackmarketing.com/about-us/brian-ratzker.html Brian Ratzker

    The only way this can be enforced is by knowing what someone is saying, what is being said and who is paying them. It is easy to know what someone is saying if they define who they are, otherwise it may be difficult to identify them. If you can identify them, you can also track their revenue through the IRS. This is somewhat doable but not very realistic. These rules will likely only be enforced when it applies to marketing services where they try to hide that it is sponsored marketing, like the paid blog post issue.

  • http://www.mariareyesmcdavis.com Maria Reyes-McDavis

    It’s about time the FTC started regulating social media, if you’re worried are you doing biz right? Many are complaining and I think the loudest voices are doing questionable things. Consumer/business protection should be a first consideration in regulating the Internet.

    Thanks for carrying us through all the developments so well!

    Maria Reyes-McDavis’s last blog post..12 for 12k – Changing the World Through Social Media

  • http://www.marketingpilgrim.com Jordan McCollum

    @Brian Chappell—Which is why I said above that I don’t know how they plan to be able to enforce this.

    @Byrne—I didn’t say wanting to look good was a good motivator for purchases, just something that really influences our decisions. Mentioning “this makes me look good” in a review would probably encourage someone to buy it, not take the review with a grain of salt. Because we can “control” money, it makes it okay not to say that we’ve been paid for our reviews, but commenting on things outside of our control is “harmful”?

    Let’s talk history. The word “integrity” comes from Cicero’s Latin integer, meaning whole, complete (like English “integer” means whole number). If we want the truth about a product, we need the whole truth. Let’s say I’m reviewing a chamois. Which of these truths would you want excluded?

    • This chamois does absolutely everything it says on the commercial. I soaked up a gallon of milk with it!
    • Of course, when I put it in the washing machine after that one use, it shredded to bits.
    • I work for Chamoisie as a freelance marketer.

    If you’re being paid to promote them, you want them to do well, right? Are you really going to include the fact that the product has no durability whatsoever, the full truth about the product? If so, I applaud you—then why not include the truth about yourself? Where is the line?

    The whole truth can actually work in favor of a product, too. “I used to use SoSoSoap, but after SuperDuperDishSoap hired me, I got to try their product—and even though SoSoSoap is cheaper, I am never going back. My clothes are so much cleaner and the colors are brighter.” “After my baby loved HealthyBaby baby food, I was so excited about the company that I approached them to work with them.”

    I have no problem with getting information to people who want it—all the information they need to make an informed decision about a product and about my review. I have no problem making money off those services, either. There are LOTS of completely ethical ways to accomplish this without posing as a disinterested consumer.

    If I compromise my integrity, it’s no longer whole or complete—I have no integrity. Why, then should I believe people willing to withhold information about their relationship to a company would willingly tell the whole truth in the rest of their review?

    @Brian Ratzker—Another serious problem in enforcing it. But you know what? People find out. A LOT.

  • http://byrneseyeview.tumblr.com Byrne

    It sounds like you’re equating two completely different issues: dishonest product reviews, and reasons someone might write a dishonest product review. Of all the reasons out there, pecuniary interest seems to be among the least harmful.

    The meat of your argument focuses on harmful dishonesty, but the policies you advocate don’t say “We must punish people who state incorrect information in their reviews,” but “We must punish people paid to write reviews, regardless of how accurate they are, unless those people become the only category of Internet posters required to disclose their motivations for the statements they make.”

    You need to do a more effective job of linking these, and to explain why it is 1) okay for someone to say “Do X because it’s good!” when bad but X is popular, but 2 not okay to say “Do Y because it’s good,” when Y is good and they’re paid to say so.

    Your hypothetical cases in which this bad law would have good effects are certainly useful, but they don’t cover every scenario, and they distract from the main point: the problem you claim to be interested in solving will not be solved by the rule you support, and the rule you support will, as a side effect, do a great deal of harm to people who are doing a great deal of good.

    Byrne’s last blog post..Zero to Forbes in Under a Week?

  • http://www.marketingpilgrim.com Jordan McCollum

    And it sounds like you’re splitting hairs. Dishonesty is dishonesty. Failure to disclose a paid relationship, which is ultimately unlike more subtle (and, from your analysis, apparently insidious) psychological factors which we may or may not control or even be aware of, is fundamentally dishonest.

    It’s a “punishment” to make sure consumers receive all the information they need to evaluate a review and a product? If being paid to review something is more straightforward and superior to being influenced by amorphous psychology, how could it be a punishment to ask that we include that information? The rules actually don’t state anything about “punishing” people who are paid for writing reviews, only that they must state that fact. It’s when they are purposefully misleading or downright dishonest about that fact that the FTC is concerned.

    I maintain my argument that if you want to make an “honest case” about a product—the objective, logical argument for why someone should buy a product, if I’m reading between your lines correctly—you can’t hurt an “honest case” by being honest about your relationship with a company. Partial integrity is no integrity at all.

    Your arguments have yet to convince me that somehow omitting a relevant part of the truth (a paid relationship to a company) effects some sort of greater objectivity and greater good on the Internet. What is the “helpful dishonesty” that this law (if it can ever be enforced) will impede?

  • http://byrneseyeview.tumblr.com Byrne

    Failure to disclose the reasons for making true claims is surely not on the same level as making false claims. Nobody is going to make the wrong decision because I gave them good information and got paid for it. And if somebody does make the wrong decision because the information was wrong, that’s true regardless of my motivations. Again, we return to the fact that the FTC is meddling in trivialities and ignoring facts, but it is somehow viewed as virtuous because of this.

    I’m splitting hairs? You’re claiming that a rule that says “you must!” is not equivalent to a punishment if you don’t. It sounds like you’ve changed your views a bit. In your post, you say If you’re being compensated to talk about someone’s product, then you need to disclose it. And yet in your comment, you claim that It’s when they are purposefully misleading or downright dishonest about that fact that the FTC is concerned. Which is it? Every time they’re paid, or every time they’re lying and also getting paid?

    I don’t expect everyone to share my views about whether it’s better to be paid or popular. I certainly don’t think everyone should have to say “I have not rigorously analyzed the economics of the media industry, but I feel really really good about myself when I stake out the moral high ground,” particularly when it’s true. I just think that the FTC can start to focus on the state of my soul once it’s gotten rid of errors and misconceptions, regardless of their origin. They can start caring about why I say things that are true once they finish nabbing folks who say something false. Or they can admit that a massive government bureaucracy is not the right way to handle the whole issue.

    One other thing:

    I don’t see any disclosure in your post about 1) how writing that comment might make you feel, 2) how other people might view the fact that you claim to have the opinions you do, 3) how this might influence their opinion of you, 4) what potential advertisers would think of a long comment thread demonstrating high reader engagement and thus a high-value blog. From this, I can see that you have a massive undisclosed interest in perpetuating the clearly false belief that you think massive pecuniary interests in online comments should be disclosed. I don’t mind the motives, but I do mind the dishonesty.

    Byrne’s last blog post..Zero to Forbes in Under a Week?

  • http://omcsocial.com Lee Down

    The only reason this is being addressed is because of the broad-scale misbehavior of some marketers who are avidly promoting their bad-habits through the typical get-rich-quick-scheme.

    For most of us, running content specific niche sites, establishing ourselves already as online professionals through our personal and professional public profiles, our online relationships are often already “in-the-know” about what we do.

    Being smart about it, particularly when representing companies products or services, is a no-brainer; at least it should be a no-brainer. Using Social Media well, subtlety and consistency will carry you further and avoid these potential alarm-bells that end up creating more rules and enforcement.

    If we (the human race) could police ourselves better, none of this would be an issue. But we don’t, so will always be adapting to deal with new obstacles and shifting social and business landscapes. The smart ones know and understand this and stick with what works and does not penalize, nor offend their audience.

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  • http://www.gethighranks.com SEO India

    Thanks for sharing your information.

  • http://www.simplycast.com Michael

    I am pretty much thinking the same as Lee. There are always those who push things to far and ruin it for everyone trying to do it the right way.

    My brain hurts just thinking about how this could possibly be enforced. Shutting off the Internet would probably be an easier solution than what will happen.

    Thanks for sharing, this issue has been on my mind for some time.

  • JohnnyV

    This is quite a proposition that the FTC has put upon us. Looking at this from multiple angles, it definitely leaves a bad taste in my mouth. Like many rules, and regulations I agree with the spirit behind it. But the implementation is what scares me, and I have my extreme doubts about if the FTC is adequate enough to do a good job doing it. In essence, I don’t think the ends will justify the means.

    When reading about this, I couldn’t help but think about the Patriot Act and how big… ‘Big Brother’ is becoming. Looking at the Patriot Act in its most simple form would be this, “Allows the government to obtain information to supercede harm against the US”. Ends up not being quite that simple though does it?

    I also think that guidelines such as this further the point that there is no accountability for our common senses anymore. This is just my personal belief, but if I buy a product based solely on one review then the blame falls on me for trusting that lone person for my purchase. In the end, I think the fakers who are just doing it for the money can be weeded out. By us. That’s the joy of the internet, is that the community generally drives the success, not forceful regulation from the FTC.

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  • http://ilaarijs.blogspot.com Mr. Ilarijs

    Sometimes I like to spam :D

    Mr. Ilarijs’s last blog post..Marokas īpašās kāpelētājkazas

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  • http://www.susanjensensmith.com Susan J Smith

    The law is one thing, but think about common sense here…I’m not going to do anything to lose the trust of my readers. If I get paid on a product, yes I’m going to be open about that.

    So assuming that is the way to do business, what is the best way to let readers know what your doing? One blanket stmt in a widget sidebar, or with each post?

    Susan J Smith’s last blog post..Why I’m a Fan of Facebook Fan Pages

  • http://www.cindikate.com Aaron Ellsworth

    Jordan, thanks for the great insight. This is definintely a pervasive issue we are all facing. Rather than disect the argument, I’d like to applaud Susan Smith for her comment. Honestly, we know the FTC will do something about internet disclosure, we can’t really change that. What we need to do is figure out ways to properly disclose our relationships with brands and products in a way that benefits us and our followers, yet doesn’t detract from the honest opinion we are sharing. The quicker we can come up with robust solution(s), in my opinion, the more influence we will have on the final decisions of regulations made by the FTC. Thoughts?

  • Russ

    Personally I think they’ve got bigger fish to fry with trust busting since the FTC has ignored that part of it’s job for the last 30 years. Still it sounds like the right idea and hopefully they stay on the right track, only time will tell but saying the right thing and actually doing the right thing rarely go hand and hand where government is concerned.

  • Stu

    Well I don’t get it. This is done all the time on Radio and TV…FTC seems to say nothing.

    Howard Stern is on the radio saying, “I love MET-X” he never says he was paid to say that.

    Oprah Winfrey promotes book. I do not believe for a minute she is not compensated to review a book.

  • http://www.socialseo.com Brian Gilley

    LOL – The FTC can’t even regulate themselves much less billions upon billions of pages on the web. Never going to happen but if they decided to take the illegal music download approach and make a few examples as a scare tactic, then I’m 100% positive that multiple other methods like Brian Chappell’s mention of proxies and a few more that I would not even get into would be utilized full-force.

    FTC stands NO chance in this battle unless they want to start approving everything that gets published on the tens of thousands of social media websites. Good luck with that FTC. :-}

    Brian Gilley’s last blog post..Getting Crafty – Advanced Search Operators to Find the Best Backlinks

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  • http://www.mizzinformation.com Maggie McGary

    Yeah, my question is HOW would they enforce them? I recently blogged about an article I saw about how this applies to mommy bloggers, many of whom I guess get free products and services in exchange for blogging about them. It’s one thing to disclose that you were paid to say something, but how would the FTC ever know whether you got a discount at a certain restaurant or got some free passes to Disney or whatever. My only guess is that any guidelines related specifically to bloggers would have to be sort of “honor system” guidelines. I know if I were a blogger and knew I could potentially be breaking the law by not disclosing that I got this thing I’m blogging about for free or whatever I’d be too scared to do it. But then again, I have only gotten 2 things for free ever and I disclosed both in the posts. I don’t know how I’d feel if I were a blogger with all kinds of cool connections and discounts and nobody but me and the person giving me that stuff knew about it. I guess it will come down to personal ethics?

    The thing I think might be easier for them to crack down on are sites like IZEA where gigs are spelled right out: I’ve seen companies post stuff like “you will write a post with this language in it, then in your comment section leave a comment from someone else with this link in it, then posing as different people leave comments on X number of blogs.” I mean, if that’s not easy to track I don’t know what is–there’s a direct trail from the company who “sponsored” the post to the person who accepted the assignment.

    Maggie McGary’s last blog post..Is Social Media A Good Career Choice If You’re Old?

    • art

      How would this affect affiliate marketing? Many successful landing pages are built around reviews of products and typically the affiliate gets paid from all products mentioned. Are they going to be required to disclose which products provide compensation? Unpaid reviews such as consumer reports would be required or is this focused only on social media?a

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