1. Product Reviews – the FTC’s Perspective BlogPaws 2010 April 10, 2010 Mary K. Engle Associate Director for Advertising Practices Federal Trade Commission

2. What Is the FTC? Nation’s consumer protection agency Small, independent agency of 1,100 employees -- lawyers and economists Enforce truth-in-advertising, antitrust laws

3. FTC Advertising Law 101 Federal Trade Commission Act, Section 5: Prohibits deceptive commercial practices Ads must be truthful and substantiated Ads are deceptive if they are likely to mislead consumers about something important to decision to use/purchase Express and implied claims be misleading

4. FTC Endorsement Guides The Guides are interpretations of the law – that is, they explain how the FTC would apply Section 5 of the FTC Act to particular uses of endorsements and testimonials in advertising They are not rules or regulations There are no fines associated with them

5. What Is an Endorsement? An endorsement is any advertising message that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a person or organization other than the sponsoring advertiser Statements are perceived to represent the personal views of the speaker

6. What the Endorsement Guides Say Endorsements must reflect the honest opinions, findings, beliefs, or experience of the endorser When an advertiser and an endorser have a relationship that consumers wouldn’t reasonably expect (a “material connection”), the relationship should be disclosed Consumers reasonably may judge what someone says differently depending on whether speaker is independent from the seller Consumers wouldn’t normally expect that another consumer has been compensated to talk to them about a product

7. Principles apply to . . . Viral Marketing Stealth Marketing

8. And . . . Blogs (and Flogs) Blog Advertising

9. And . . . Buzz Marketing Viral Video

10. As well as . . . Social Networking Sites

11. Who Is an Endorser? The FTC is not concerned with independent, unsolicited, unpaid consumer promotions or product reviews These types of product promotion are not likely to present issues under the FTC Act But when consumers are endorsing products as part of an advertiser’s social media marketing campaign, then the endorsement may become marketing subject to the FTC Act

12. Independent Product Review –social networking, personal blog example A cat lover has a blog where she writes regularly about her cats’ antics The blog mentions a new tick medicine she has tried and how it has kept her cat tick-free The blogger updates her social networking page to say how great it is to finally find tick medicine that works The blogger received the medicine for free during a recent visit to a pet store, as part of a sampling program The blogger received the medicine for free because she got a coupon in the Sunday newspaper Because there is no relationship between the cat lover and the tick medicine marketer, she doesn’t need to say she received the medicine for free

13. Sponsored Product Review – social networking, personal blog example A cat lover has a blog where she writes regularly about her cats’ antics The blog mentions a new tick medicine she has tried and how it has kept her cat tick-free The blogger updates her social networking page to say how great it is to finally find tick medicine that works The tick medicine was sent to the blogger free of charge by a marketer reaching out to potential influencers Because it wouldn’t be obvious to the cat lover’s readers that she received the medicine for free from the marketer, this fact should be disclosed – on both her blog and her social networking page

14. Context Matters Is the connection between the reviewer and the marketer obvious from the context? Independent product review sites/articles, whether online or offline: When audience reading product review article or visiting product review website understands the relationship between the reviewer and the marketer (that the reviewer didn’t buy the products she’s reviewing), disclosure is not needed to avoid deception

15. Free Products – product review site example A dog groomer has a blog devoted to the review of a variety of pet care products Product manufacturers regularly send the blogger free samples in the hope she will write about them The blogger writes a favorable review Given the blog’s nature as a product review site, it’s obvious to readers that the blogger doesn’t pay for the products she reviews The blogger does not need to disclose that she received the products free of charge

16. How Should Material Connections Be Disclosed? Disclosure should be part of the message so it can’t be missed. E.g.: ABC Co. sent me this product I was given this product to try by ABC Co. On Twitter: #paid, #ad Word of Mouth Marketing Association has a Social Media Marketing Disclosure Guide

17. Wrapping Up Value of social media marketing depends on transparency of relationships FTC will rely on complaints to decide what practices to investigate FTC enforcement will focus on advertisers, agencies – not individual bloggers, brand ambassadors

18. Thank You! For more information, visit www.ftc.gov