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.”

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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.

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Mathew 2415 posts

I'm a Toronto-based former senior writer with Gigaom and my favorite things to write about are social technology, media and the evolution of online behavior

19 Responses to “FTC tells PayPerPost to knock it off”
  1. ■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. Pay Per Post is screwed, big timeMathew Ingram / mathewingram.com/work: FTC tells PayPerPost to knock it off

  3. 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. 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?

  5. 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.

  6. 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.

  7. […] 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. […]

  8. 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.

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

  10. 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…

  11. […] 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. […]

  12. […] 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. […]

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

  14. […] 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. […]

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

  16. […] 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 […]

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

  18. […] 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 […]

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