Affiliate Marketing, WOMM, Buzz Marketing & Full Disclosure?

By admin

Oh now things are getting interesting as the net is maturing: New FTC Position May Force Changes For PayPerPost and Affiliate Marketers:

The FTC issued an official opinion stating that people who endorse of a products, and who are compensated for their efforts, must disclose the nature of that relationship to their “customers”. While its not a law per se (as far as I can determine), sometime in the future, persons or companies in violation of this position might be the target of cease and desist orders or civil fines in the order of millions of dollars.

There’s a Washington Post article that started this flury of concern: FTC Moves to Unmask Word-of-Mouth Marketing

The Federal Trade Commission yesterday said that companies engaging in word-of-mouth marketing, in which people are compensated to promote products to their peers, must disclose those relationships.

Another quote:

In October 2005, Commercial Alert, an advertising and marketing watchdog group in Portland, Ore., petitioned the FTC to consider taking action against word-of-mouth marketers. The group called for the FTC to issue guidelines requiring paid agents to disclose their relationship to the company whose product they are promoting, including any compensation.

The language used is: WOMM (Word of Mouth Marketing) and the question on everyone’s mind is–does affiliate marketing fall under the WOMM umbrella? No definite answers, but I think absolutely it does. And hell-to-the-no, I’m not interested in going up against the FTC to question that.

What are my intentions? Well I’m a Canadian, not an American. But I do host through plenty of U.S. based hosting companies, and I do target U.S. customers for the most part, and I do work mainly with U.S. affiliate merchants/networks. Why not throw a disclosure blurb up on my terms or about pages?

My question is: do we really want to see transparency on the web? And how transparent does one need to be? It could shake things up right to the core IMO.

An example situation: I’ve talked before about ‘big personalities’ pushing google kool-aid. While they’re pouring the kool-aid, should they reveal that they’re big investors of Google stock and have a financial interest in goog’s success?

Or reveal that they’re heavy players in the adsense game while they’re poo-pooing all the ‘hysteria’ about clickfraud?

What about relationships that don’t exchange money, but do exchange ‘perks’? One example: Online links and chatter are worth more than a mere $25 cash exchange. Should ‘buzz backscratchers’ (you buzz me, I buzz you) disclose what’s going on even if no “cash” is being exchanged–or suffer legal consequences?

Or what about paid bloggers? Where people are paid to write blog posts for a share of revenue (not product/service reviews per se, but content writers). “My posts here are financially motivated. I earn a share of $1,000 a month for writing posts on this blog and that money comes from paid advertising and adsense clicks“.

Lots of questions, interesting kettle of fish. It would implode the blogosphere and social net as we know it!! :lol:

I think that this FTC “WOMM” policy will grow to cover self-interested kool-aid pushing and buzz playpals. And it could be a good thing. But…I think we’re a long way away from any serious repercussions.

As an affiliate marketer–I’m not too worried about this. I will set something up to disclose my interests, and move along.

You can read the FTC position here (pdf file).

5 Responses to “Affiliate Marketing, WOMM, Buzz Marketing & Full Disclosure?”

  1. Interesting… I think this is the beginning of new stuff on disclosures. Keep us posted.

    My first thought as you brought up stuff about aff marketing is that Oh yeah–the little guys who aren’t making the BIG bucks and really aren’t doing anything wrong are the ones who will get pounded and the big marketers (the adsense page type stuff) will probably go unnoticed.

  2. Terry, this has been brewing for awhile — particularly the more prevalent and hidden forms of non-cash influence you mentioned. Note that the FTC did mention such non-cash conflict (free product, free passes, affiliations/friends) as disclosable.

    If you’re going to draft some sitewide disclosure anyway, check out http://www.disclosurepolicy.org/. There is even a DP Generator. It’s beta version, but gets you started with something you can edit for your own affiliations, practices and voice. Then link to it from your pages as “Disclosure Policy”.

    Better safe than sorry…

  3. Hi Terry,
    I am amazed that Affiliate Marketers get away with showing their checks and income statements. This will send you to jail in MLM.

    BTW: Cool Blog!

    Steve Renner

  4. Hmm. Some disclosure may be necessary to ensure fair trade, but if you go overboard, you can kill free trade.

    Offline stores aren’t required to post on the front door that they are owned by the same parent company as three of their competitors, selling roughly the same stuff at roughly the same price. It’s a matter of public knowledge, but customers have to look for it. To have a similar level of disclosure for online marketers, you’d need a registry somewhere in which relationships are disclosed… but making everyone state it clearly on their site would be more like posting it on the store’s front door.

    I don’t think the web should be held to a higher standard than offline stores are.

  5. Good points Sapphire, but those offline companies aren’t ‘recommending’ each other or ‘pushing traffic’ to each other to secretly profit off that somehow or share in profits either. That’s where the problem is that the FTC wants to shut down (IMO).

    For my examples I was thinking more ‘media world’ rather than commerce.

    FCC Commissioner Says Broadcasting VNRs Without Disclosure May Violate Federal Law

    Adelstein says, “There’s a federal law that requires that the public be informed about the source of who is behind what goes on broadcast media. Failure to disclose that to the public is a violation of federal law and in fact can be subject to criminal penalties of up to a year in jail.”

    When CNN discloses that a company or business they just did a story on shares their parent company (Time Warner), do they do that because they’re being thorough or because it’s law? It’s a genuine question–I really don’t know media law :lol: .

    Is blogging or online publishing defined as media, or commerce? Neither as far as I know–but the net is growing up. I’m sure it will be legally defined eventually.