January 2010 – Column: Your Association, Your Bottom Line

Issues Arise as Guides Take Effect

It’s been just over one month since the FTC’s revised Guides Concerning Endorsements and Testimonials in Advertising have taken effect. In order to ease the transition to the new standards, ERA recently hosted two Spotlight Sessions on the revised Guides, assembling panels comprised of FTC representatives, leading legal experts and marketers to address the real-world issues that have emerged.

Both sessions made it abundantly clear that there’s a lack of clarity for many marketers regarding the Guides, causing an immediate and significant impact on the businesses of many ERA member companies and others in direct-to-consumer commerce.

To help settle the confusion and provide actionable advice for ERA Members implementing the changes set forth in the revised Guides, here are a few of the key takeaways:

Network clearance issues are already arising. Shows are already being blocked for failing to satisfy the Guides. According to Product Partners, LLC’s Jonathan Gelfand, the problems lie not with the Guides themselves, but with networks’ misinterpretation or excessively conservative reading of the Guides. Gelfand called for further clarification from the FTC to provide additional guidance to the stations and networks. I urge you to bring these issues to ERA’s attention as they occur; we will compile these accounts and present them to the FTC to urge the Commission to provide clarification regarding the exact language of the Guides that is proving to be problematic in execution.

Regarding social media marketing, have a plan. Social media marketing will only grow and increase in effectiveness as more marketers harness the power of their consumer base, influential bloggers and others to spread their message. But as the FTC’s assistant director Rich Cleland stresses, you must have a reasonable social media policy and monitoring program in place. The FTC acknowledges that complete control over your social media agents is impossible; you simply need to have policies in place and take reasonable steps to monitor your agents and enforce the policies.

With celebrity endorsers, know when to disclose. In the context of an ad, it’s assumed that celebrity endorsers are being compensated, so no disclosure is required. Outside of this context, however, disclosure of the connection between the celebrity and the marketer is likely to be required should a discussion turn to the celebrity’s use of your product.

The FTC has clear priorities in social media. High on the FTC’s enforcement list? Fake blogs or “flogs,” phony product review sites and “astroturfing”—enlisting agents or company employees to post positive reviews about your products or negative ones regarding your competitors’ without disclosing their connection to your company. Inadvertent mistakes where a social media agent has “gone off the reservation” in speaking about your product without your knowledge and despite your social media policy? Not a priority.

Clarification is on the way. Look for the FTC to publish FAQs regarding the revised Guides soon. In addition, ERA, as your association of record, will continue to provide guidance to our members. Specifically, I urge you to attend The Great Ideas Summit (held Feb. 1-3 at the Hilton New Orleans Riverside) where keynote speakers (including David Vladeck, director of the FTC’s Bureau of Consumer Protection) and educational sessions will address the topic in detail. For more information, please visit www.eragreatideas.org.

I look forward to your thoughts and concerns on this issue. Please contact me at any time at jcoons@retailing.org. I look forward to seeing you in New Orleans!