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FTC To Regulate Blogs, From "Marketwise"
By Kenneth Hein
December 2009

Beginning this month, bloggers must now reveal any free gifts or payments they have received to potentially tout a company or a brand.
 
The Federal Trade Commission (FTC) made waves among the advertising community in October when it announced several significant changes to the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising. The guides, which hadn’t been revised since 1980, were updated to include the many changes in the way advertisers are now marketing their products.

Among the most controversial was a guideline regarding bloggers. Under the new terms, “The post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.”

The change is the federal government’s initial effort at regulating much of the content on the Internet. This is meant “to illustrate the long-standing principle that ‘material connections’ (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed,” according to the Guides. The guidelines are available in full at www.ftc.gov.

The blogosphere was ablaze following the issuance of the new rules. The Interactive Advertising Bureau (IAB) immediately called for the FTC to withdraw the new guidelines regarding bloggers citing First Amendment rights. The IAB questioned why bloggers, and not traditional media, are being singled out. “What concerns us the most in these revisions is that the Internet, the cheapest, most widely accessible communications medium ever invented, would have less freedom than other media,” says Randall Rothenberg, president and CEO of the IAB, in a statement.

The guides actually call out the double standard, Rothenberg notes. It reads that “Bloggers may be subject to different disclosure requirements than reviewers in traditional media.”
 “We’ve heard from a lot of sites. They have applauded and thanked us for standing up for free speech online,” says Mike Zeneis, vice president of public policy for the IAB.

In terms of receiving product samples, review copies or promotional products, Zeneis says, “There is some uncertainty about how and when these regulations apply. Our beef is less with the substance of the guidelines. We’re not in favor of payola where people are paid to write nice things. But, we want to know: What is the scope? How widely applicable may it be? If anybody receives anything for free and writes about it, does it have to be disclosed?”

As far as determining whether promotional products will be considered part of the blog-based endorsements that the FTC is trying to regulate, the FTC hasn’t yet determined a price-point for items that fall under this umbrella. Zeneis says determining that will be tricky because the value of an ad specialty item is perceived differently by each person who receives it.

The FTC expects to release further explanation of the guidelines in 2010. – KH

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