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New guidelines announced Monday by the Federal Trade Commission (FTC) will affect marketers who use blogs, Facebook, Twitter, and the like for word-of-mouth and viral campaigns.

Starting December 1, the FTC says that a blogger who endorses a product must disclose whether he or she received money, gifts, or any type of compensation from the product's manufacturer, seller, or a third party connected in some way to the product. Individuals who comment about a product on Twitter or Facebook are required to disclose the same connections.

From the FTC's news release (Oct. 5):

The revised Guides also add new examples to illustrate the long standing principle that "material connections" (sometimes payments or free products) between advertisers and endorsers—connections that consumers would not expect—must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other "word-of-mouth" marketers. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.

The new rules mark the first time in nearly 30 years that the FTC has changed its guidelines concerning endorsements and testimonials, which also govern celebrity endorsements and product testimonials. Like bloggers, celebrities who endorse a product must disclose any compensation they receive for doing so. Product testimonials must be based on real experience and can't emphasize unusual experiences, such as losing 100 lbs. on a program whose participants typically lose only 5 or 10 lbs.

For many marketers, the FTC's new guidelines simply formalize the ethical marketing practices they already follow. But with fines reaching $11,000 for not following them, several marketing bloggers explore the nuances of the new rules:

Andy Sernovitz, author of Word of Mouth Marketing, has posted two entries—1 and 2— to his blog commenting on how the rules will affect marketers; here are some highlights:

  • Explain to everyone who participates in your social media campaigns that they must practice disclosure and train them what this means. "The FTC specifically says this step may limit potential liability and will be considered in any prosecution."
  • When working with bloggers, you are responsible for their writing truthful, substantiated posts.
  • Disclosure must be clear, conspicuous, and easily understood by the average consumer. Hard-to-find or unclear disclosure may be interpreted as an attempt to skirt the rules.
  • Because endorsements must be based on real experiences, you should never ask bloggers to write a post about a product they have not actually used—and you are required to stop an endorsement that is being run if an endorser stops using your product.

For more on what the new FTC guidelines mean to marketers, see this list of links that David Schwab, managing director of First Call, has put together.

Posts that raise intriguing questions about how the rules will be applied:

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