Endorsement guides 082810
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Endorsement guides 082810






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Endorsement guides 082810 Endorsement guides 082810 Presentation Transcript

  • International Food Blogger Conference August 27-29, 2010 Seattle, Washington Current Issues with the FTC’s Endorsement Guides Presented by Bob Schroeder Director, Northwest Regional Office Federal Trade Commission
    • Section 5 of the FTC Act broadly prohibits “unfair or deceptive acts or practices in commerce”
    • The Endorsement Guides explain how Section 5 applies when endorsements and testimonials are used in advertising, to make it easier for advertisers to comply with Section 5
      • The Guides aren’t law, and they don’t change the law or anyone’s responsibilities under the law
      • There are no fines for violating the Guides
      • If FTC challenges practices inconsistent with the Guides, the FTC still has to prove a violation of Section 5
    Endorsement Guides
  • What Is an Endorsement?
    • An advertising message that consumers perceive to represent the personal views of a speaker other than the sponsoring advertiser
      • If there’s not a sponsoring advertiser, there’s no endorsement under the Guides
  • The Revised Guides: Principal Changes
    • Requiring disclosure when advertiser has paid for study touted in ad
    • Deletion of “results not typical” safe harbor
    • Addition of examples of disclosing material connections in social media marketing
  • Material Connections Between Advertisers & Endorsers
    • When an advertiser and an endorser have a relationship that the audience wouldn’t reasonably expect (a “material connection”), relationship should be disclosed
    • Examples of such connections include:
      • Seller is compensating endorser
      • Endorser is employee or business associate of seller
      • Endorser is related to seller
  • Financial Ties -- Context Matters
    • Financial tie between seller and endorser should be disclosed, unless the tie is clear from the context
    • If audience reading product review article or visiting product review website/blog understands that the reviewer didn’t buy the products he’s reviewing, disclosure isn’t needed to avoid deception
  • Celebrity Endorsers
    • In conventional ads, it’s not necessary for an ad to disclose that a celebrity is being paid, because in that context payment would be understood
    • Outside of conventional ads (on talk shows, social networking sites): the relationship with the advertiser should be disclosed when a celebrity talks up a product because payment isn’t obvious in that context
  • How Should Material Connections Be Effectively Disclosed?
    • Disclosure should be part of the message so it can’t be missed. E.g.:
      • Acme Co. provided this product
      • XYZ Co. sent me to Adventureland to experience its theme park
      • On Twitter: #paid, #ad
    • Word of Mouth Marketing Ass’n: Social Media Marketing Disclosure Guide
  • When Is Marketer Liable for Endorser’s Statement?
    • If endorser makes false or unsubstantiated claims for product, advertiser is potentially liable. To limit potential liability:
      • Advertiser should ensure its endorsers receive guidance/training re need to ensure statements are truthful/substantiated
      • Advertiser should monitor sponsored bloggers/brand ambassadors and take steps to halt continued publication of deceptive claims when discovered
  • FTC Enforcement
    • FTC has several endorsement-related investigations underway (non-public)
    • Investigations are focusing on marketers
    • Issues include:
      • positive reviews posted on message boards, review sites by employees or affiliates w/o disclosure of relationship
      • positive reviews by compensated bloggers w/o disclosure of compensation
  • Points to Remember
    • Consumers need to know when they’re being pitched a product – advertising should be identifiable as advertising
    • Disclose unexpected material connections
    • Policy and training will be essential – and make sure message reaches agencies/p.r. firms used
    • Both advertisers and consumer endorsers being sponsored by the advertiser are potentially liable, but:
    • FTC enforcement will focus on advertisers and will look to see if reasonable policies are in place
  • Federal Trade Commission
    • For more information, visit www.ftc.gov
    • Send questions to [email_address]