FTC tells PayPerPost to knock it off

Facebooktwittergoogle_plusredditpinterestlinkedinmail

From my friend Leigh Himel, CEO of Oponia Networks, comes word that the U.S. Federal Trade Commission has put out a statement on word-of-mouth marketing practices — you know, the kind where someone gives you a phone or something and hopes that you write about it on your blog. The FTC was asked to look into it by Commercial Alert, a non-profit organization that says it tries to keep commercial culture from “subverting the higher values of family, community, environmental integrity and democracy.”

wordofrmouth.jpg

Call this one the PayPerPost rule, after the blog payola company that pays you to write about their clients but doesn’t make you disclose your compensation (I’ve written about them here and here). As the FTC statement puts it (PDF link), the petition from Commercial Alert:

Raised concerns about a specific type of amplified word-of-mouth marketing, specifically the practice of marketers paying a consumer (the “sponsored consumer”) to distribute a message to other consumers without disclosing the nature of the sponsored consumer’s relationship with the marketer.

As the Washington Post story describes it, word-of-mouth marketing is already covered by existing legislation, but the FTC wanted to make a specific statement to the effect that not disclosing the relationship between seller and consumer advocate is misleading, and that “such marketing could be deceptive if consumers were more likely to trust the product’s endorser “based on their assumed independence from the marketer.” Which is, of course, the whole raison d’etre behind PayPerPost.

Dr. Tony at Deep Jive Interests points out that this could have a spinoff effects on affiliate marketing as well. But wait, my friend Stuart says: what about those travel reviews in the newspaper where the writer got a free trip to Cabo? They’d better hope the FTC isn’t reading. According to the statement, “staff will determine on a case-by-case basis whether law enforcement action is appropriate.” Scott Karp at Publishing 2.0 has some thoughts about it too.

Comments (4)

  1. Tom Hynes wrote::

    Mathew,
    Here at Dealarmy.com we are just getting into the affiliates programs. I see the posting of a link to an affiliate deal on one’s site as something very different compared to writing a blog entry endorsing a particular product or service. Do you agree?

    Tuesday, December 12, 2006 at 10:50 pm #
  2. Mathew Ingram wrote::

    I would agree, Tom — depending on how it is done. In any case, the FTC seems to consider it to be the seller’s responsibility to disclose any relationship (i.e. the one offering the affiliate deal). But IANAL.

    Tuesday, December 12, 2006 at 10:55 pm #
  3. Shawn Honnick wrote::

    Bad idea to bring in FTC on this kind of thing. Movies that are paid for product placement in scenes are not required to disclose this information in the credits. While I do feel strongly that PayPerPost is especially tacky and insulting to all who write and read blogs, government regulation can also get a little stinky and rude at times.

    Wednesday, December 13, 2006 at 12:06 am #
  4. Mathew Ingram wrote::

    Thanks for the comment, Shawn. I don’t think there are the same trust issues with movies, but I see your point about government involvement.

    Wednesday, December 13, 2006 at 8:54 am #

Trackbacks/Pingbacks (15)

  1. ニュースサバイバー on Wednesday, December 13, 2006 at 5:28 pm

    ■メール営業崩壊の兆し/『オンライン不動産ブログ』から(Google Blog Search: WEB2.0) http://fudou3.jugem.cc/?eid=2763 â– FTC tells PayPerPost to knock it off(Google Blog Search: WEB2.0) http://www.mathewingram.com/work/2006/12/12/ftc-tells-payperpost-to-knock-it-off/ â– Second shot from Paris(Google Blog Search: WEB2.0) http://www.megite.com/technology/1165964357/1#item_10 â– Google is in Firefox’s corner now…(Google Blog Search: WEB2.0) http://clipmarks.com/clipmark/6D84F4C8-F599-451B-8A0D-379428886BAB/

  2. Techmeme on Wednesday, December 13, 2006 at 3:24 pm

    Pay Per Post is screwed, big timeMathew Ingram / mathewingram.com/work: FTC tells PayPerPost to knock it off

  3. Web.Impact on Friday, December 15, 2006 at 3:18 pm

    review products without having to disclose the agreement. Quote: “such marketing could be deceptive if consumers were more likely to trust the product’s endorser “based on their assumed independence from the marketer.” For more information see here and here.

  4. Hey Bloggers, PayPerPost is Illegal « //engtech on Wednesday, December 13, 2006 at 4:11 am

    […] Matthew Ingram and Tony Hung go into it in more detail, but the FCC has made a ruling on schemes (like PayPerPost) where bloggers get paid to review products without having to disclose the agreement. Quote: “such marketing could be deceptive if consumers were more likely to trust the product’s endorser “based on their assumed independence from the marketer.” Raised concerns about a specific type of amplified word-of-mouth marketing, specifically the practice of marketers paying a consumer (the “sponsored consumer”) to distribute a message to other consumers without disclosing the nature of the sponsored consumer’s relationship with the marketer. […]

  5. […] Ingram on the FTC booting PayPerPost. […]

  6. FTC Tells PayPerPosters to Disclose! | The Last Podcast on Wednesday, December 13, 2006 at 11:55 am

    […] Matthew Ingram is quite ecstatic as well, and Deep Jives wonders how this applies to affiliate marketing. […]

  7. AdAge >> FTC Rejects Call for Probe into WOM... on Wednesday, December 13, 2006 at 3:37 pm

    AdAge >> FTC Rejects Call for Probe into WOM……

    …The ruling could lead to increased spending in an area that’s already growing in popularity with marketers, whose audiences are harder to reach in an era of increased media fragmentation. Today’s consumers are also less likely to be swayed by trad…

  8. […] I’m going to official break my own oathe to never mention PayPerPost again today because of this whole FTC story. Suffice it to say, PPP is screwed, yes? The rest of the world, and Jason Calacanis (so it must be true, j/k) seems to think so. […]

  9. FTC | Word of Mouth and Affiliates - Andy Beard on Thursday, December 14, 2006 at 6:26 am

    […] FTC May Regulate Pay Per Post @ Techcrunch – The Techcrunch post targets Pay Per Post, which in my opinion is actually totally missing out on the much target picture. It also affects many of the companies Techcrunch cover who use affiliate programs for monetization. FTC tells PayPerPost to knock it off at Matthew Ingram – Matthew does mention affiliate marketing, thus why target PPP with this. This affects Google more than PPP. […]

  10. Mapping The Web » PayPerPost Deservedly Slapped on Thursday, December 14, 2006 at 11:55 pm

    […] NOTE: Factual information for this post was pulled from a Mathew Ingram post.    […]

  11. […] It’s not clear whether this change has come about because PayPerPost decided its initial policy was wrong, or because it wasn’t getting enough uptake among bloggers or advertisers, or because of the recent FTC ruling on word-of-mouth marketing and the requirement to disclose, which I wrote about here. It’s possible that it was a combination of all the above. […]

  12. […] FTC tells PayPerPost to knock it off » Mathew Ingram: mathewingram.com/work : December 12th, 2006 at 6:10 pm | Permalink […]

  13. Hey Bloggers, PayPerPost is Illegal « Internet Duct Tape on Friday, July 20, 2007 at 3:16 am

    […] Bloggers, PayPerPost is Illegal Matthew Ingram and Tony Hung go into it in more detail, but the FCC FTC has made a ruling on schemes (like […]

  14. Jaysinism.com » Blog Archive » Say NO to PayPerPost!! on Thursday, August 9, 2007 at 4:57 pm

    […] FTC tells PayPerPost to knock it off […]

  15. […] PayPerPost.com, ReviewMe.com and SponsoredReviews.com. Then it really escalated: first the FTC stuck a major red flag on it all, then it got as bad as it gets — Google spanked the […]