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.
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!!
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).