The FTC (Federal Trade Commission) has some rules about online marketing that may surprise you - they certainly surprised me.
Recently, SEOmoz's own Sarah Bird was interviewed by Eric Enge on a wide variety of contract and legal topics. As I was proudly browsing through the piece, I was especially curious about what Sarah had to say around marketing on social media networks:
(the FTC) made clear that online advertisers are covered by rules about so called stealth marketing. This basically means that if it's not obvious that the advertiser is being paid to do this advertisement, there needs to be a disclaimer saying he or she is in fact being financially compensated.
Like Tiger Woods advertising golf balls, we all know he is being paid to do that, so they don't have to put a little disclaimer up there saying "Tiger Woods received money to do this." However, there are more subtle things, like if you are going through a chat room and you leave a comment on a blog about a product and link to it, it is not necessarily obvious that you have a financial association from the merchant that would require disclosure. It's considered to be material to the consumer's decision, because they never really know how much to trust this person and what they are saying about the product.
The consumer's perception is going to change if they realize that that person is being paid by the company that makes that product. So if you are an affiliate for someone and you write a nice post talking about how great of a product it is, you should disclose somewhere on your site that you make money every time someone buys the product you are talking about. I think that has people really scared.
In the online marketing world right now, there are people who think that that's really not a fair law. I personally think it maybe makes marketing much more difficult, and I feel like it hampers people's creativity, but it's probably a good thing for consumers to know if someone is being paid to talk about a product. So it's uncomfortable, but it's probably overall good for e-business. It will increase trust in the marketplace, which I think is always a good thing.
You can read through some of the FTC's formal guidelines around product and advertising endorsement here, and check out John Bell's top-notch coverage here as well. But, essentially, when I read Sarah's reply above, I got scared.
I had a great number of questions about exactly how, where and when these guidelines apply. When we in the SEO space engage in social media marketing, there's a lot of web activity that does not have explicit endorsements (and could never work if it did). Everything from posting links on Digg to leaving comments on blogs to growing corporate Facebook & Twitter accounts and beyond seems to be potentially at risk.
Luckily, I was able to ask Sarah about many of these issues and get some great replies. Here were my questions and her answers (below each question as relevant):
Does this mean that if a company pays you to do social media, you need to disclose your relationship in every account you create, with every post you make, with any piece of content you submit or any connection (friending) that's made?
The FTC's official position is that if you're being compensated to talk about someone's product, then you need to disclose it. Unless it's really obvious from context it's a paid endorsement (like Tiger Woods). The bottom line is that it is considered misleading to consumers if you're endorsing a product, but not disclosing that you're compensated.
So if your company pays you to do social media marketing, and you're posting about the product or linking to the product, then you should also be disclosing your relationship. If you're just blogging and friending people, and it's not in the context of talking about a product, then you probably don't have to disclose. Disclosure is really only relevant when you're actually pushing a product. There is a lot of other stuff that SMM may do that isn't talking about product--tweeting, friending, some non-product related blogging....
What about microsites where companies publish some viral content, and only later add their name or redirect it?
The FTC rules don't talk about link buying or linking (without something more). So I doubt the new guidelines apply to things like building microsites and then re-directing them. So long as you're not talking about the product, the disclosure stuff doesn't come in. After all, how can a consumer be confused about whether you're being paid to endorse a product if you aren't selling the product in a piece of link bait. If what you're doing is purely PageRank sculpting through various, relevant link grabs--but you're not talking about the product--then I don't think this rule requires you to disclose.
What about link building contracts - does the agency need to disclose to anyone they talk to (directories, resource lists, bloggers, etc.) that they're being paid to get the links (even if they don't have to pay the individual publishers)?
I also don't think the new rules require you to disclose to the webmaster that someone is paying you to ask him for a link. That's not an interaction that is relevant to the consumer's perception of the product.
Has the FTC said that link purchases also need disclosure? Everyone knows that sidebar links under a section called "supporters" or "sponsors" is paid, but Google demands use of nofollow - how about the FTC? Do they recognize nofollow as sufficient for saying a link is paid?
The FTC doesn't specifically address link buying or or link bait in its new regulations. If someone pays you for links, then you should probably say 'sponsored link' or something if it's not obvious from context that the link was purchased. I don't think the FTC would care about follow and no-follow because consumers have no idea whether a link is followed. That's probably just a SE relevancy thing and unrelated to the FTC since they only care about whether a consumer gets the wrong impression.
However, things may get a little wonky when the webmaster gets paid for the link. The webmaster should disclose that he got paid to add the link when there is a risk that it could look like an endorsement of the product. The webmaster shouldn't add the link to a 'stuff I like' list without also revealing that he got paid to put it there. He shouldn't write a blog post about how great the product is and link to it without some kind of disclosure. If he just links to it somewhere on his site, without context and with non-endorsing anchor text, then maybe a disclosure isn't necessary. It depends on the perception of the consumer.
I learned a lot from this conversation, but I'll try to distill my takeaways as they relate to SMM:
- Most Social Media Marketing is Legal Without Disclosure
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. 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. - Link Builders Don't Have to Disclose Their Relationships
As Sarah said, since 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. - Google & the FTC Have Very Different Requirements About Paid Links
If you buy links and put nofollow on them, that's NOT good enough for the FTC and you may be breaking the law. Instead, 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" so they can remove the value those citations pass from their link graph. This dichotomy is certainly frustrating. - Linkbait, Viral Content & Microsites Don't Require Disclosure (most of the time)
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, whether on a subdomain, subfolder or microsite.
Big thanks to Sarah for helping out, and I'm sure she'll make some time for replying to comments & questions as well. I'd also like to take this opportunity to note that for the past year, Sarah's not only been our legal blogger and chief counsel, but also our COO. She's fulfilled that role amazingly well and I'm incredibly proud of her. I know this has meant long absences from the blog, but it's awesome that I don't have to deal with our upcoming 785 page financial audit, HR issues, etc. Thanks Sarah! :-)
p.s. Note that the FTC governs the United States only, so rules may vary widely in other geographies.
Interesting. While the FTC governs the US only, the UK authorities got similar ideas and rules.
While all of these rules souns very strict and precise I wonder how in fact ANYONE even with unlimited powers inluding those of Google would police this and check for proof of paid relationships on the whole web.
If a link building company builds 100s of new links for clients every month without any footprint, how would the link building company be found?
Who has proof that the user's endorsements are actually being paid for unless they are made in a stupid, semi-automatic way?
And - who should pay all these officials to go after small (or large? who knows) link building projects?
Cheers,Christoph
Link building is one thing, which is as you point out impossible to regulate, but seeding false reviews about companies is indeed illegal in the uk under a clause of the advertising standards council rules.
Its not something that I have heard anyone falling foul of, and ultimate culpability would be nigh on impossible to prove, yet its something that Ive no doubt we will see some test cases on over the next few years.
As for US based advertising, the rules govern US based advertisers, but not foreign advertisers - targetting the US market, as the FTC has no jurus diction over international entities.
Aye having seen some of OUT-LAW presentations on this - (seriously good legal site on online law) in the UK the CIO can really mess you up if you fall foul of the rules, including jail time!
Will I've not heard of anyone being caught out yet, neither would I want to be the test bunny in any test cases!
"seeding false reviews about companies is indeed illegal in the uk under a clause of the advertising standards council rules"
The ASA is a voluntary body, from 61.10 of the CAP Code you can find the legal underpinning - the Consumer Protection from Unfair Trading Regulations 2008 and the Business Protection from Misleading Marketing Regulations 2008.
The new "blacklist" of marketting practices, see OUT-LAW, is great .. most companies I see advertising at the moment appear to breach at least one of those terms. The UK Government for example advertising digital TV on the BBC say it is "free" when in fact you have to buy a receiver.
I don't wish to come across as "that guy" grousing about the gub'mint, but I do wonder if the FTC is built to move quickly enough to keep up with the rapid changes in SMM. Somehow I imagine any government regulation of these practices will be akin to closing the barn door long after the horse gets out.
From an SEO, link building, and marketing standpoint, this could make things harder, but who is really going to monitor this, and where would the FTC start?
From the user standpoint, it would be convenient if everything you searched for had an objective take, it is really hard to find anything through search (especially through Google) that isn't marketing related these days.
Look at what has become of Twitter, the famous individuals with the most followers now are simply spammers sending their 1 million plus followers to all these marketing links, they should have to disclose that that are now just a new gimmick for informercials, just like on television.
Kelly, I agree except as easily as we follow, we can unfollow so if we're the victims of twitter spam it's too often because we chose to be. Regards - oh yeah, and follow me on twitter @tomjgray - no spammy marketing links, I promise!
It's only a matter of time before ALL Social Media outlets become havens for spam, just as myspace has (I think someone already mentioned this). Some Social Media outlets have some credibility (considering we all tend to trust the mouths of our friends & those we follow, etc), but I'm betting on its credibility to go flushing down the toilet with myspace in no time.
This is why I refuse to put much effort into this marketing channel. Sorry...
i think social media campaigns also make a big difference with what product is being promoted and even how it is promoted, indirect measures such as SEOmoz promotes its blog but has related services that people can also view...
I dont see that as a legal issue, i think this might be more of an issue for monitored companies in pharma or charity industries. I think these industries may need to disclose relationships under their requirements to remain registered.
I love this post. My biggest fear of Social Media is that so many "marketers" are jumping on the bandwagon that every social outlet will become spammy. This has happened already to MySpace.
I have raised issues with this (or at least the similar law in the EU) before. My understanding is that if there is anything commercial about a page, then even such a simple act as 'digging' something or thumbing it up on SU could be illegal (as there is no opportunity for disclosure). I wonder whether any Apple employees have 'dugg' stories about new iPhone releases for example (not picking on them - just using an example of what I think is a pretty innocuous practice that I believe would fall outside the law).
Great title Rand.
My take is that this doesn't change much though; it's kind of backing up the way sensible and decent people have been doing things for a while ('good' bloggers make disclosures as a matter of course these days, many brands run their own social media stuff so things are often pretty clear, and the rest of social media is just out there).
OK, it makes non-disclosure illegal where appropriate - that's grand. There will always be grey areas, and it will be hard to police though.
The paid links thing: very frustrating, certainly. But a dichotomy it is not (there is a middle ground).
Wow, this is very informative thanks for asking some great Q&A on this as reading anything from the FTC is like reading stereo instructions. This should be required reading in my opinion.
Good post overall. Enjoyed reading it.
Great read rand.
Usually Australia has bery similar laws, so i think we should be safe here too.
I don't think there will be many issues. Internet related laws are newer and have a lot of refining to go through.
I really don't think they are going to target SEO's who are out there creating Diggs, forum posts, etc. for client websites.
Probably things like review sites with affiliate links that have no mention there is an insentive there.
What I'd like to know is: If you have a site with Affiliate links or paid links or whatever, Is the privacy/disclamer pages sufficient?
As for spam on most of the Social Media sites... Stop following and friending the spamers. You chose to follow them so in actuality you wanted to recieve whatever they sent you and it really isn't spam.
Sites like Digg are a whole nother story but usually the real spam doesn't make it very far.
If it's obvious Tiger Woods is paid to endorse things then it's obvious that I am as well. Why? Define "obvious" in a court of law in order to successfully win your case, and you'll see why this law is just words on paper.
I'm one of the most famous guys in my niche - so it's obvious that I sell things, right?
But, the difference is that everyone in the world knows Tiger Woods. Really now? And aside from that extreme example, of which there are relatively few compared to the number of people who are in business around the world, like radio stations, we only know something is a paid ad because of how it sounds.
It doesn't sound like music or news or a DJ talking about a concert coming up (for which he is heavily incentivized to talk about without a word about it) so it must be an ad.
This whole FTC thing comes up every so often and it goes away just as fast. Once we realize the difference between a law on the books and a law that is actually enforced (or even enforceable, which this isn't) we calm right back down about it.
Politicians and government pencil pushers have proven time and again they will never understand the web and we must diligently thwart their every attempt at getting their regulatory hands on it. It will be the end of the game for anyone who makes any kind of living online if they do.
Thanks Rand,
Another interesting one.
Would you have any idea (or does anyone else) on the standards for the UK (possibly set by the AAA)?
Thanks !
I have to tell you, I have no problem at all with requiring disclosure if you're being paid to endorse or promote a product. In my view, it's a violation of trust not to do so. I always disclose affiliate relationships when recommending stuff but then I have personal experience with everything I recommend and my litmus test is would I recommend it even without being paid for it? That's just integrity and marketing in all media is uplifted when you add integrity to the formula.
Well like any piece of legislation, its important to "know" it and understand how it applies to the way we market things, but of course it's not without a certain degree of hipocracy and undoubtably much harder to police.
It's laughable to talk about what the FTC says or thinks. If Google can advertise 'healing water' as a cure for cancer, the FTC does not exist anymore (except in your mind). End of story.
If you want to talk about something relevant, tell me about something the FTC has done recently on the Internet to clean up the stink.
There should be some kind of regulation on how someone associated with the product presents it on social media websites or any popular website for that matter. Even in epinions.com it is becoming a little unclear as to whether a great opinion on a product is written by someone who has an agency or a franchise selling it. There are diamonds in the rough and when you consider purchasing a product that is considered having a ground-breaking value to it, you tend to research for real prople opinions. Even in popular sites like Amazon.com the reviews on new products seem a little questionable. The microsites are very mis-leading, so are some conversations that take place on product forums. Guess the comedy of errors will result in the evolution of an intelligent trait of consumer, hopefully.
Great - something else to worry about...
So how would this work with article posts and directory submissions for example? Does the bio tag/footer link need to have a "*the author has been paid to promote _________".
I'm curious why this doesn't seem to apply to traditional forms of media. While we usually recognize a commercial when we see it, the best marketing seems to be product placement. When the actors on the TV show "Chuck" spend 90 seconds discussing the merits of a 5$ Foot-long Sweet Onion Teriyaki Subway Sandwich* there is no disclaimer that it is a paid promotion.
*The author would totally accept compensation for promoting this product.
wow - that's a really good point -
and what about more subtle product placement? like the Toyota Prius that Sally Field drives on Brothers & Sisters... not specifically talked about like Chuck's Subway discussion, but still obvious product placement...
seems the same standard should apply...
Hey guys,
These are great questions! I wanted to quickly try and clear up a couple things. First, the same standards about endorsements do apply to other media, including radio and television. If an advertiser is paying you to endorse something, then you must disclose it--UNLESS it is obvious from the context that it is a paid endorsement. That is why they don't need to put a disclaimer on a commercial showing TigerWoods using a particular golf ball--It's obvious that he's being paid to do that. He didn't just wake up and decide to take time out of his Pro golf schedule to promote a particular golf ball. So, the FTC is actually trying to adapt the laws that have goverened other media to online media with these new guidelines.
The issue of product placement has been percolating at the FTC for a long time. As far as I know, there are currently no regulations governing product placement. There's a line somewhere between Sally Field driving a particular kind of car in a movie and Tiger Woods using a golf ball on a commercial... But where the exact location of that line is not always clear. The FTC examines many factors, including context (is this a commerical or a movie?), is a product being actively or passively promoted?? Does the FTC need to protect consumers from product placement the same way it needs to protect people from seeded comments in a blog post?
I really don't think this is a case of the FTC treating online advertisers differently. It's closer to the truth to say that the FTC is trying to treat online advertising more like traditional advertising. But the boundaries of permissable are not always clearly defined, and trying to translate general guidelines from one medium to another creates even more uncertainty... at least in the short term!
Thanks for your comments!
Well, the prospect of something illegal should delight the 'squelchers' lurking in large organizations. I've always thought social media carries risks (lasting brand damage potential) and that some social media marketing experts underplay the risks and oversell the rewards (so campaign benefits need to be weighed before proceeding). But at the other extreme, you can always count on the squelchers to be delighted when they can refer back to scary "laws" that might even carry "jail time."
Great post, Rand, one of your finest in recent memory IMO.
I also read Sarah's interview with great enthusiasm but I think I was too distracted thinking about Tiger when I got to that section & didn't really read it the same way you did (even though your impression is probably the one I should have come away with).
I wonder how much Google's lobbying and political contributions weighed into the FTC's decision. Personally I would say even in the less Draconian interpretation offered by Sarah that they're overstepping their bounds on the publisher's freedom of speech a bit, and coming awfully close to Google's paid link policy with this:
"The webmaster shouldn't add the link to a 'stuff I like' list without also revealing that he got paid to put it there."
I think that utilizing social media (I'm thinking Twitter) can be an effective way to generate traffic to your website, BUT I think you have to be very careful about how you use it and craft the language in your "Tweets" very carefully as well.
As far as the FTC regulating promotion of products on social media sites - how would they REALLY know the affiliations of a particular person? Say I provide a guest blog post about product X. I could work for the company that manufactures/markets product X, but no one would ever know unless I explicitly stated it in my blog post or signature. Or, I could just be a consumer who loves product X and also happens to blog - unless I was explicit, again, how can the FTC or equivalent organizations actually regulate this?
When it comes to comment spam (linking to your website in your blog comment) it isn't too hard to tell who is spamming and who isn't. I don't practice comment spam - decreases my credibility, in my opinion. And most comment spam is nofollowed anyway...but it still makes you look like a stinky spammer.
The good thing about twitter when it comes to identifying spam is that in 99% of the time, it stands out. I mean with only 140 characters to play with, spam is much easier to identify. Quelching the amount of spam seen in a profile when you are building follows is a different story...
But it's frustrating when people aren't putting an effective message accross and trying "brute force" messaging to get people to take action - and unfortunately for us it's a numbers game.
FTC? Ha ha ha. It's good to be in Canada....
Though we probably have something similar I'm choosing to ignore.