ReveNews
IAB Takes Up Arms Against the FTC’s Latest Endorsement Regulation Campaign
If the Federal Trade Commission had the intention to spark off a wave of sometimes worried, sometimes angry and often indignant blog posts and forum chatter with their “Final Guides Concerning the Use of Endorsements and Testimonials in Advertising”, they’ve certainly succeeded.
About a week ago, ReveNews contributor Andrew M. Baer, Esq, wrote “FTC Regulates Blogger, Viral Marketing Relationships: Analysis and compliance tips” stating why he’s not concerned about the FTC intentions.
The guides which come into force on 1st December, are aimed at addressing endorsements by consumers, experts, organizations, and celebrities, with the intention of holding bloggers or other “word of mouth” marketers accountable, with the enforcement mechanism of a possible $11,000 fine.
As short-sighted and ambiguous as some bloggers have painted the guides to be, many bloggers’ objections have been equal in the fear, uncertainty, and doubt camp as they accuse their detractors. Many blogs painting worst-case scenarios and posting what-if scenarios with $11,000 fines for receiving cheap paperbacks as a freebie in the mail, writing a positive review and linking it to an Amazon affiliate link.
The Interactive Advertising Bureau (IAB), which comprises more than 375 leading media and technology companies is responsible for selling 86% of online advertising in the United States and includes organizations like:
* AOL Advertising
* AT&T Internet Services
* BBC Worldwide
* Google Inc
* Microsoft Advertising
* Yahoo! Inc
* Sony Computer Entertainment America, Inc
* Harvard Business Review
* CNN.com
* FOX Interactive Media
* Nokia Inc
and other technology/internet/news heavyweights in its membership roster. IAB has come out swinging off the ropes with IAB CEO Randall Rothenberg firing off an open letter to FTC chairman, Jon Leibowitz, published on the IAB website and the Huffington Post, expressing his disagreement with the guides on the basis that they are unconstitutional and should be retracted.
In case you’re wondering if the IAB is shooting from the hip, take note that the organization has attempted to start a dialogue with the FTC since March this year, with correspondence detailing(pdf) feedback on the proposed guides. The attempt to have the industry self-regulate appears to have failed, given that the FTC has expressed its intention to keep an eye and active hand in the industry.
In a FTC arranged media call on 14th October to address reporter’s inquiries on the guides, FTC’s Bureau Consumer Protection’s Associate Director for Advertising Practices, Mary Engle, stated:
Although the [Interactive Advertising Bureau (IAB)] contends the FTC’s Endorsement Guides are unconstitutional, the Guides apply only to marketing and they attempt to illustrate some of the factors relevant to distinguishing advertising from editorial content,” says Mary Engle, the FTC’s director of the division of advertising practices, in an email statement released today. “If particular communications do not in fact constitute advertising, as the IAB appears to be suggesting, then the Guides do not apply. Where the message is advertising, however, disseminators have an obligation to ensure it is not misleading. This includes, when it is not otherwise clear from the context, identifying when the endorser has been paid for the endorsement. Although IAB may disagree with the policy, nothing in this approach is unconstitutional,” .
From FTC’s Engle terse reply, it’s unlikely to halt the IAB’s attempt to rescind the FTC’s guides.
Even with the FTC contention that the primary targets are advertisers, rather than bloggers, have failed to assuage Rothenberg.
IAB’s Rothenberg contends that even with the FTC’s intention to go after advertisers, rather than bloggers, doesn’t mean that bloggers are off the hook. By it’s “social” nature, bloggers and their blogs are the advertising medium, hence they could still be looking at $11,000 fines.
How will this play out as the December 1st enforcement date draws near?
It’s unlikely that the FTC or IAB are going to back down at the moment, but the IAB’s Washington DC Public Policy office will be keeping very busy till then.
If merchants are forced to police every single site in their program, I suspect the ruling will result in merchants dumping all their small affiliates.
It is strange how progressive policies usually have the effect of destroying small businesses in favor of the large … marketing dominating kind.
I am all for transparency but the ramifications of this ruling can be bigger than the FTC anticipated. @Kevin is right with his assessment. The affiliate programs are going to be tougher to manage and will most likely lead to small affiliates getting dumped by advertisers.
The guidelines are ambiguous as well. We should protect consumers, but the rules shouldn’t target small businesses and independent media in these tough economic times. To be honest, there are many other areas that we see deceptive advertising practices but large corporations get away with those practices.
What exactly is required to fulfill these new FTC guidelines on the publisher side? Would a small amendment to the existing site privacy policy or about us sections be enough? If so, whats the big deal.
ROLMAO as I get to say I told you so to all my affiliate extert detractors. Now the Liberal progressives elected to Congress in 2006 bring us more marketing restrictions, regulations, desperation taxes, and 17% unemployment in any state carried by Obama. Next up a backlash from small merchants as they can’t get stocking loans for supporting even dismal Christmas sales because the limo liberals fat cat banksters took hundreds of billions and gave back NOTHING.
Thank God my merchant clients listened and actually are growing and prospering in these bad times. Once it hits the larger affiliate enabled merchants they’ve been double dipped for years on sales that deserved no commissions… they will revolt by firing some Adwhores in management.
@mike hyland, I would say those generalizations are a bit broad…but glad to see the “Adwhore” Drinking Game is still alive and well with you.
[...] take on this issue at the Performance Marketing Alliance’s site or at Revenews.com here and here. Filed under Recent Craigslist Changes I Solved The Craigslist Phone Verification Problem [...]
How exactly are advertisers supposed to monitor affiliates some who don’t even live in the advertisers country?What happens to small affiliates and what are the general rules,today being the 2nd of December I would like to know how people out there are getting on
[...] IAB Takes Up Arms Against the FTC’s Latest Endorsement Regulation Campaign (revenews.com) [...]