Pay Per Post Changes Disclosure Policy Following FTC Announcement

by Marianne Richmond on December 18, 2006

Pay per Post is scheduled to announce a change in their disclosure policy and will require bloggers to disclose that they are being paid for their posts. Techcrunch has an advance copy of the press release and notes that "FTC" is mentioned a number of times thereby indicating that the change was no doubt inspired by the recent FTC announcement on word of mouth marketing.

On December 11th the FTC took the position that companies engaging in word of mouth marketing must disclose the financial relationships that they have with those endorsing their products. They declined to field a full scale investigation of word of mouth marketing practices as requested by Commercial Alert. This announcement highlighted the prominence of the word "disclosure" in a world where traditional advertising has become less believable than personal recommendations and consumer generated media and brand "ambassadorships" are becoming increasingly common.

WOMMA (Word of Mouth Marketing Association) distinguishes between word of mouth marketing, which involves disclosure of relationships, and stealth marketing, which does not. WOMMA recently issued an Ethics Adoption Toolkit for use by companies to develop ethical policies and guidelines for their word of mouth marketing efforts. They have endorsed the FTC position. (Full disclosure: I have blogged for WOMMA conferences and received comped conference fees and hotels)

 Commercial Alert, a consumer advocacy group, believes that word of mouth marketers are "perpetuating large scale deception" and that " word of mouth, or buzz marketing as it’s also known, {is} "fundamentally fraudulent and misleading." In October, they petitioned the FTC to require paid "agents" to disclose their relationships and financial compensation with those whose products and services they are endorsing. According to Annys Shin of the Washington Post, Commercial Alert mentioned Sony Ericsson‘s use of fake tourists in a New York and Seattle campaign in 2002 as well as P&G’s Tremor‘s use of teenage volunteers to promote their brands.

 The FTC already has a policy on commercial endorsements and deceptive advertising but according to Mary Engle, the FTC director of advertising practices as quoted in the Washington Post, the FTC wanted to be clear on disclosure in light on the increase in word of mouth marketing and the likelihood that consumers would make decisions based upon a presumed independence on the part of product recommendations that was in fact, not independent.

While Commercial Alert calls the FTC announcement a giant Christmas present for the word of mouth marketing industry, Andy Sernovitz, CEO of WOMMA calls the FTC’s efforts "supportive of the industry."

It would seem that the Pay Per Post announcement, which is a reversal of their prior positions on disclosure, indicates that they heard the FTC message as the warning it seems intended to be. This is a good thing.

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