IAB Blasts FTC Online Endorsement Guidelines

  |  October 15, 2009   |  Comments

Asks the Federal Trade Commission to withdraw its new guidelines for social media endorsements.

The president and CEO of the Interactive Advertising Bureau has taken a tough stance against the Federal Trade Commission's new guidelines for online product endorsements.

In an extensive essay posted on the trade association's blog yesterday, IAB President and CEO Randall Rothenberg wrote, "I urge the Commission to retract the current set of Guides and to commence a fair and open process in order to develop a roadmap by which responsible online actors can engage with consumers and continue to provide their invaluable content and services."

Implying the new voluntary guideliness are Orwellian in nature, Rothenberg contended the FTC's call for disclosure of "material connections" between advertisers and endorsers in social media platforms will place undue restraint on an otherwise democratized Internet. The FTC guidelines "would specifically shackle online media while exempting our offline cousins and competitors from equivalent constraint," he suggested in his lengthy missive addressed to FTC Chairman Jon Leibowitz.

The guidelines, unveiled following a comment period, have stirred some confusion since their release on October 5. Whether or not an online endorsement or testimonial should carry a disclaimer depends on "whether the speaker is compensated by the advertiser or its agent; whether the product or service in question was provided for free by the advertiser; the terms of any agreement; the length of the relationship; the previous receipt of products or services from the same or similar advertisers, or the likelihood of future receipt of such products or services; and the value of the items or services received," according to the FTC document.

The FTC also expects word of mouth marketers to disclose their affiliations with such efforts. That rule has already met the approval of the Word of Mouth Marketing Association (WOMMA), the primary trade organization associated with WOM marketing. WOMMA has long required that its members' representatives disclose their affiliations with marketing campaigns and sponsors, along with related compensation. WOMMA states on its site that its "Ethics Code also is consistent with the Federal Trade Commission's recent revisions to its guideline for the use of testimonials and endorsements in advertising. WOMMA was extremely pleased with the industry and general public response."

The IAB's main concern is that the FTC appears to favor traditional media over digital media.

"[T]he new conversational media should be accorded the same rights and freedoms as other communications channels," argued Rothenberg, who noted in his letter, "We agree that paid testimonials and endorsements should be labeled." Since releasing its guidelines, the FTC has indicated that product reviewers writing for newspapers or other traditional media are not subject to the same rules as Web reviewers.

"IAB does not believe that the FTC's distinction between traditional offline media and online media is legitimate or necessary," IAB VP Public Policy Mike Zaneis told ClickZ News. "The First Amendment does not create a dual set of protections for free speech, one that is higher for printed speech and one that is lower for digital speech. Messages are protected, not delivery mechanisms, and IAB will not back down from protecting free speech in the online ecosystem simply for political expediency."

The IAB was an original detractor of the FTC's proposed guidelines, months before they were made official. In a letter sent to the FTC in March, the organization wrote, "Due to the evolving nature of the marketing industry in response to developing technologies, and the need for further inquiry on this complex topic, we believe that there has not been sufficient discussion to revise the Guides explicitly to address new media at this time. We therefore urge the Commission to refrain from adopting the proposed examples pertaining to new media."

Although the FTC allowed for public comments on the proposed guidelines for several months, the IAB wants the commission to hold a public hearing. "One round of written, formal comments is not enough information gathering to extend, for the first time ever, burdensome regulatory requirements to the Internet," suggested Zaneis.


Kate Kaye

Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.

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