First it pushed the online ad industry to establish stricter standards around behavioral targeting; now, the Federal Trade Commission is moving to regulate social-media advertising. The FTC is planning to hold marketers liable for false statements published on blogs and social networksmeaning companies or bloggers could get sued for saying a product was good if it really wasn't. According to the FT, ad trade organizations like the 4A's are worried that such regulation will cause social media spending to grind to a halt.
The FTC is revising its guidelines for endorsements and testimonials for the first time since 1980; since companies are increasingly seeding discussion boards and social networks with comments from paid "brand evangelists," and bloggers are making money off of pay-per-review blog posts, the FTC contends that these kinds of social-media campaigns should be held to the new standards. "Word-of-mouth marketing is not exempt from the laws of truthful advertising," Richard Cleland, the assistant director for the FTC's division of advertising practices, told the FT.
But in a letter to the FTC, 4A's VP Richard O'Brien argued that the proposed regulations were too harshand that "bloggers and other viral marketers will be discouraged from publishing content for fear of being held liable for any potentially misleading claim." The FTC would face its own challenges in proving that a given blogger or forum member outright lied, or that a brand paid them to do so. But O'Brien argues that the mere threat of legal action could spook advertisers already fearful of tapping social media, particularly at a time when social network marketing budgets are under pressure.
Photo Credit: jusamovebout
By Tameka Kee