The views expressed here are those of Charles Harwood and not necessarily the views of FTC Commissioners or other FTC staff members.
Current commentary and constitutionality:
Q. How does the FTC respond to some recent commentary that the Guides may present constitutional questions as it applies to “new media,” allegedly because on-line communicators are being treated differently from communications made through traditional media, or that on-line speech is being chilled or restricted?
A. The Guides do not raise significant constitutional issues. The Guides apply only to sponsored advertising messages, that is, commercial speech. Online commercial speech that is misleading is subject to the same restrictions as traditional advertising. Moreover, the Endorsement Guides apply across the board. The issue is – and always has been – does the audience understand the reviewer’s relationship to the company whose products are being reviewed? If yes, then a disclosure isn’t needed. If no, then a disclosure is needed. Here’s why that’s the case. For a review in a newspaper, on TV, or on a website with content similar to what you’d find in a publication or on TV, it’s usually clear to the audience that the reviewer didn’t pay for the product being reviewing. It’s their job to write reviews and no one expects that they paid for what they’re reviewing. But in other instances – for example, on a personal blog or social networking page – the reader wouldn’t expect the reviewer to have a relationship with the company whose products are mentioned or reviewed. Disclosure of that relationship helps the audience evaluate potential bias and avoid deception.
Implementation and effective date:
Q. The effective date of the Guides is December 1, 2009. Are current advertising campaigns using social marketing platforms that are scheduled to run past December 1 or are to be rolled out before December 1 subject to the new revisions or examples provided in the Guides?
A. We recognize that some current campaigns might run past December 1, and that others might be in final form already, even though they haven’t rolled out yet. We certainly encourage everyone to bring their campaigns into compliance with the Guides by December 1 if they can, but we realize that this might not be possible in every case. However, the longer a campaign is in effect after December 1, the more we would expect to see changes made to reflect the principles articulated in the Guides. The fact that a campaign was rolled out before December 1 will not protect an advertiser from scrutiny indefinitely.
Disclosure challenges:
Q. How do the requirements for “material disclosure” apply to social media platforms that have a limited number of characters, like Twitter, or to visual platforms that have a limited capability?
A. As noted above, the requirements apply across-the-board. Social media platforms should develop protocols that give consumers the information they need to evaluate sponsored statements. For example, hashtags such as “#paid” or “#ad” only use 5 and 3 characters, respectively. If a particular medium cannot accommodate the requisite disclosure, the staff believes that an advertiser should not use that medium for that particular advertising message.
“Clear and conspicuous” standard: Guidance and role of self-regulation:
Q. Will the FTC provide any business guidance on the application of the “clear and conspicuous” standard for on-line disclosures? What role can self-regulation play here? Will the FTC consider partnering with WOMMA to educate the industry?
A. Because of the almost infinite number of ads that are possible online, the Commission will – as it does in most other contexts – apply a performance standard with respect to these disclosures, rather than defining specific requirements for them. In a nutshell, the question is whether, in the context of the entire ad, consumers will likely see and understand the information that is being provided to them.
WOMMA members might want to consult the Commission’s “Dot Com Disclosures: Information about Online Advertising” for guidance, which is available at http://www.ftc.gov/bcp/edu/pubs/business/ecommerce/bus41.pdf. And we believe WOMMA and other industry self-regulatory groups can play an important role in educating advertisers and those who work with them about how the importance of making their disclosures clear, conspicuous, and meaningful to consumers.
Policies by Advertisers: Guidance and role of self-regulation:
Q. Will the FTC provide any business guidance on the content for the policies that are required for advertisers to educate, train, and monitor their social marketing agents? What role can self-regulation play here? Will the FTC consider partnering with WOMMA to educate the industry?
A. The staff is working to develop education materials that will be available on the FTC website, and also plans to participate in programs addressing these issues.
The Commission has long been a strong supporter of industry self-regulatory programs. In this specific context, industry groups such as WOMMA can play an important role by articulating and widely disseminating the standards that should guide the conduct of both marketers who use social media, and individuals who act on their behalf.
Enforcement of the Guides; role of self-regulation:
Q. How does the FTC intend to monitor compliance by both advertisers and bloggers (sponsored agents) with the Guides? What role will complaints by consumers, business competitors, and consumer groups play in initiating an investigation concerning compliance with the Guides? How can self-regulation play a part in policing the industry? What can WOMMA do to assist in preserving the integrity of the industry through its enforcement of its Code of Ethics and Standards of Conduct?
A. Our primary focus will be, as it always has been, on advertisers, not on consumer endorsers. Moreover, we will not be concentrating our resources specifically on advertising claims disseminated by social media. Rather, our goal will continue to be to protect consumers from misleading claims regardless of the medium by which they are disseminated.
We do not bring law enforcement actions based on, or to enforce, the Guides. The Guides are not binding law. They are intended to be educational – to inform advertisers and others how the Commission will view the use of endorsements as it enforces the prohibition in Section 5 of the Federal Trade Commission Act against deceptive and unfair practices.
We assume that the targets of our law enforcement actions will come to our attention by the same means as always, including the staff’s own viewing of ads and our monitoring of current events and advertising trends, consumer complaints, competitor complaints, and referrals from self-regulatory bodies.
Without knowing more about what WOMMA is doing to enforce its Code of Ethics, it is hard to say what else should be done, but this sounds like a good topic for future discussions. However, the staff believes that WOMMA’s longstanding support for transparency in the use of social media is fully consistent with the principles embodied in the revised Guides, and will help both preserve the integrity of the industry and protect consumers.
Celebrity:
Q. What is the definition of “celebrity” for purposes of the Guides?
A. Although the Commission has not formally defined that term, the basic question is whether the individual is known to a significant portion of the viewing public, so that consumers seeing that person endorse a particular product or service are likely to assume that he or she would not appear in an advertisement without being paid for his or her time. If consumers assume that the individual is being compensated, they are not misled if the advertisement fails to disclose that information.
Product placements:
Q. Do the disclosure requirements in the Guides apply to “product placement” or “branded entertainment” used by advertisers in contexts such as television shows, video games, or in movies?
A. That depends on whether claims are being made for the product. If so, then the rationale that lies behind the principle that material relationships between advertisers and endorsers should be disclosed applies. Indeed, the Commission can initiate a law enforcement action if false or misleading claims about the product are made through the product placement. However, if the product simply appears on onscreen without anything being said about it, claims being made about it, or even comment being made about it, then the rationale would not appear to be present.
I should also note that the Federal Communications Commission has regulations regarding disclosure of product placement and is currently considering the issues of sponsorship identification that arise from the use of so-called “embedded advertising” on broadcast television and radio and cable television, so that the FTC staff’s view is not the only one that advertisers should consider on this issue.
WOMMA is pleased to announce that it has formed a Legal Affairs Committee.
Amanda Chapel 5:41 am on October 29, 2009 Permalink
Who’s on that committee? I want names.
- Amanda