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Social Media Disclosure

Best Practices in Protecting Consumers and

Marketers

March 1, 2010

Today’s Presenters

Moderator: Paul M. RandWOMMA PresidentCEO, Zócalo Group

Panelists: Gary SpanglerWOMMA Board MembereMarketing Manager, DuPont

Anthony DiRestaWOMMA General CounselPartner, Manatt, Phelps & Phillips

LLP

Patrick ThoburnCo-Chair, WOMMA Member Ethics

Advisory PanelCo-Founder, Matchstick

Today’s Discussion

•Introduce the FTC’s Guide to Endorsements & Testimonials

•Explain the role and interplay of WOMMA

•Explore the new role of marketers & bloggers

•Understand the Guide and best practices

•Share resources and how to get involved

•Answer questions or concerns

The FTC’s Guide in Review Key Concepts

• In 2007, the FTC began the process of reviewing its “Guides Concerning the Use of Endorsements and Testimonials in Advertising” – Not revised since 1980, when they were issued

• FTC recognizes the role of self-regulation on “new” social media platforms, but notes that it must be backed up with enforcement - The updated Guide went into effect December 1, 2009

• Only “sponsored” communications are subject to regulation and transparent disclosure is required for “material connections”

• There is potential liability for advertisers, advertising agencies, and endorsers for misleading and unsubstantiated statements made by the endorser

• Don’t look at the FTC Guides in isolation - - theyhave legal implications in other contexts

Understanding the GuideWhat is an Endorsement?

• Any advertising message that consumers are likely to believe reflects personal opinions, beliefs, findings, or experiences of a person or organization other than the sponsoring advertiser

• Endorsements include: – Verbal statements – Demonstrations– Depictions of the name, signature, likeness or other identifying personal characteristics of an individual

– The name or seal of an organization

• Endorsements do not include:– Fictional dramatization of a real life situation

– Statements by an identified company spokesperson

Understanding the GuideWork with an Endorsement

• Must reflect the honest opinions, findings, beliefs, or experience of the endorser

• May not convey any express or implied representation that would be deceptive if made directly by the advertiser

• Advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose material connections between themselves and their endorsers

• Endorsers also may be liable for false or misleading statements made in the course of their endorsements

Understanding the GuideDisclosure of Material Connections

• The Guides require the disclosure of any “material connection” between the advertiser/seller and its endorser– A “material connection” is information that could impact the weight or credibility a consumer gives to the endorsement

– Disclosure must be clear and prominent– Language should be easily understood and unambiguous

– Placement must be easily viewed and appear in a readable and noticeable font size/color

• Types of “material connections”– Consideration given to a speaker or blogger by an advertiser in the form of benefits or incentives (e.g., cash; free products; prizes; special access privileges)

– Relationship between the advertiser and speaker (e.g., employment)

Understanding the GuideLiability Issues

• All stakeholders – whether advertisers, brands/companies, ad agencies, and bloggers or other agents – are liable for:– Their failure to disclose “material connections” and

– The speaker’s making unsubstantiated claims about the products/services of the advertiser or brand

• FTC now mandates that advertisers and brands develop policies that:– Educate their agents/endorsers about their responsibilities; and

– Monitor the communications/statements/claims by their agents/endorsers.

A Partner Is NeededThe Role of WOMMA

• WOMMA launched Ethics Code in 2005 to provide consumers with insight into ethical standards online

• In early 2009, began working with members and the FTC to submit comments regarding the Guide on behalf of the Word of Mouth industry

• Through WOMMA’s “Living Ethics” project and in anticipation of the FTC Guide update, announced changes to Ethics Code re: compensation and transparent disclosure

• New FTC Guidelines publicly noted WOMMA’s work on behalf of the WOM industry, specifically calling attention to the WOMMA Ethics Code

• Today, WOMMA has:– Active, ongoing involvement with FTC to shape Guidelines

– Advanced knowledge/understanding of the guidelines

Looking ForwardThe Role of Marketers

• Educate “bloggers” regarding responsibilitiesEducate internal corporate audiences regarding responsibilities:– Create a “culture of compliance”

• Require disclosure from “bloggers”– “If you choose to review or share this product please be sure to disclose that it was provided to you by the company.”

• Monitor to ensure disclosure is happening– Remind those who “forget” to disclose– Determine “cut off” policy for those who do not comply

Looking ForwardThe Role of Bloggers

• “Blogger” responsibilities:– Confirm understanding of responsibilities with marketers

– Disclose all material connections on relevant platforms

– Communicate proactively with marketer to demonstrate compliance

Best PracticesBlog Disclosure

• Personal and Editorial blogs – Disclose any product, service or compensation provided by a marketer

– Disclosure requirement: • As part of editorial copy

– “I received (product or sample) from (company name)

– (Company name) sent me (product or name)

Best PracticesBlog Disclosure

• Review blog – Disclose any product, service or compensation provided by a marketer

– Disclosure requirements: • As part of editorial copy

– “I received (X product or service) from (company X) to review”

– “I was paid by (company X) to review”

Best PracticesReview Blogs: Disclosure & Relationships

Section

WOMMA strongly recommends creating and prominently posting a “Disclosure and Relationships Statement” on review blogs to fully disclose how the blogger works with companies in accepting and reviewing products – and listing any conflicts of interest that may affect the credibility of their reviews.

Best PracticesComments in Online Discussions

• I received (product or sample) from (company name)

• I was paid by (company name)

• I am an employee or representative of (company name)

Best PracticesMicroblogs

• Twitter – Disclosure requirement:

• Must clearly state hash tag within tweet – #spon (sponsored)– #paid (paid)– #samp (sample)

– Create link to “Disclosures and Relationships” section on profile

Best PracticesStatus Updates on Social Networks

• Social networks: – Disclosure options:

• As part of photo or video description (see photo and video sharing sites best practices)

• As part of status update – “I received (X product or service) from (company X)

– “I was paid by (company X)

– Create “Disclosures and Relationships” section on profile

Best PracticesStatus Updates on Social Networks

Best PracticesVideo & Photo Sharing Sites

• Video sharing sites – Disclosure options:

• As part of video content – “I received (X product or service) from (company X) to review/create this video

– “I was paid by (company X) to review/create this video”

– As part of video description

– Youtube user Jenergizer“I was contacted by the people at Harajuku Lovers fragrance… they’ve asked me to hold a contest…I’ve created an e-mail address for the contest and the deadline is September 21st to send me 5 pictures of you and your friends that resemble the individual Harajuku dolls.”

Best PracticesVideo & Photo Sharing Sites

• Photo sharing sites – Disclosure requirement:

• As part of photo description – “I received (X product or service) from (company X) to create this

– “I was paid by (company X) to create this”

Best PracticesPodcasts

• Include as part of the audio content and part of the written description– “I received (product or sample) from (company name)”

– “I was paid by (company name)”

• “…before we start I just wanted to let everyone know that today’s episode is sponsored by Tim Grace of Apartments.com”

• episode 11: Apartment Marketing gone digital

Resources Are At Your fingertips

Word of Mouth Marketing Associationwomma.org

Guide to Social Media Disclosurewomma.org/ethics/disclosure

Become a member of WOMMAwomma.org/members

Getting Involved

Questions?