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Posted by Sean Corcoran on October 5, 2009
By Sean Corcoran
The FTC made it official today.The proposal to update the guidelines governing endorsements and testimonials were approved and are now essentially the law. The bottom line is that anytime a blogger or any other endorser receives "material connections" from a company (e.g. cash payment, product samples, etc.) that a reader "would not expect" then that blogger must disclose the relationship. If the blogger does no disclose, then the blogger or even the company could be held liable - which could mean a hefty fine. And keep in mind the FTC doesn't care if you're paying a blogger in cash or simply sending free product, either way it is a "material connection."
So does this mean the end of marketer-blogger relationships (or "Sponsored Conversation")? We don't think so. In fact, over the long term we believe this will help strengthen those relationships by providing incentives to both companies and bloggers to do this the right way - with open disclosure, with authenticity, within the right context, and through a long term conversation versus short term PR spin or ad campaigns. It's that last point that many people miss. You can't use sponsored conversation like it's 1995 in which a brand pushes a message through an influential in exchange for compensation in a quid pro quo manner. The smart marketers in this space recognize that they can't talk and walk away. It's about creating conversation about the brand - whether good or bad - and adjusting to it through customer service, public relations and product development. Marketers should be listening to the community and creating a full feedback loop to improve their business.
Another key point is that marketers shouldn't be thinking of this as a way to replace organic endorsements. You can't buy your way into social media, you have to earn it. However, there is a role for Word of Mouth marketing to help influence and accelerate the conversation, but you need to know the rules before you jump in. The Word Of Mouth Marketing Association's Code of Ethics is a good place to start.
Finally, this isn't just about blogging as it impacts all social media. New challenges arise in emerging channels. For instance, how do you disclose material connections in a meaningful way through 140 characters on Twitter? Even using something like #Ad or similar, while a good start, would still be alien language to most of the 20-50 million people using Twitter. This is just another reason standards are necessary in this space and will slowly emerge.
At Forrester we plan to update our research in this area very soon. In the meantime, we encourage interactive marketers to follow the recommendations we recently published to ensure you're not breaking the rules.