The Case for Self-Regulation: Word-of-Mouth Marketing

A general rule of business is that an industry is better off if it is able to self-regulate its practices rather than come under governmental regulation. This view is not meant to advocate a lawless society, but rather it is a view that businesses understand it is in their best interests to act ethically. Ultimately, customers will be the final arbiter, passing judgment on firms and deciding whether to business with them.

Advocating the position of self-regulation is brought up again because of what is about to happen in the U.K. Beginning later this month, a new law makes it an offense for companies to orchestrate the sending of messages online without identifying the origin of the messages. The law is designed to crack down on contrived word-of-mouth marketing campaigns in which the message sender appears to be a non-corporate entity but actually is a firm sending messages for commercial purposes. The U.K. joins other European countries that enacted the same law at the beginning of this year.

While it is laudible that a government be concerned enough about its citizens to pass laws intended to protect them, this area seems to be a low priority. Consumers are more saavy than ever, and a disingenuous marketing effort can create more problems for a firm than any benefits it could potentially create. An unforgiving marketplace would exact more punishment on a company that tries to deceive its audience using seeded marketing messages than any regulatory agency could.

AdAge: "U.K. Cracks Down on Word-of-Mouth with Tough Restrictions"

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