New FTC Regulations for Word-of-Mouth Marketing?

Word-of-mouth marketing has been elevated from a side benefit of owning a great brand to an important piece in many firms' marketing strategies. The explosion of blogging and social media makes it easier than ever for person-to-person communications about anything and everything, including consumption experiences. As a result, proactive companies have sought out bloggers and enlisted "buzz agents" to try and review products.

The Federal Trade Commission is considering guidelines to regulate viral and word-of-mouth marketing. Current rules pertaining to these practices were developed long before word-of-mouth as practiced today came into existence. The main piece of the FTC's proposed guidelines is to create transparency in product reviews and other communications. Someone who was compensated by a company, whether it be in cash or free product, would have to disclose his or her relationship with that company.

Some practitioners cringe at the thought of government regulation, but the FTC's intent in this case appears to be bringing regulation of social media communications in line with media advertising. If someone is paid to make claims about a product in a TV commercial, that relationship has to be disclosed. It should be no different for a blogger. The aim is transparency. Why would a company want to have its relationships with influencers called into question?

The proposed FTC guidelines are aimed at the unethical players; companies that value how customers perceive them are likely to operate above board when it comes to disclosing relationships in word-of-mouth marketing channels.
Link: Ad Age - "Bloggers Be Warned: FTC May Monitor What You Say"

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