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Thread: WOW - FTC Wants To Regulate The Oldest Form Of Marketing...

  1. #1
    You do realize by 'gay' I mean a man who has sex with other men?
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    WOW - FTC Wants To Regulate The Oldest Form Of Marketing...

    The Federal Trade Commission yesterday said that companies engaging in word-of-mouth marketing, in which people are compensated to promote products to their peers, must disclose those relationships.

    In a staff opinion issued yesterday, the consumer protection agency weighed in for the first time on the practice. Though no accurate figures exist on how much money advertisers spend on such marketing, it is quickly becoming a preferred method for reaching consumers who are skeptical of other forms of advertising.

    Word-of-mouth marketing can take any form of peer-to-peer communication, such as a post on a Web blog, a MySpace.com page for a movie character, or the comments of a stranger on a bus.

    As the practice has taken hold over the past several years, however, some advocacy groups have questioned whether marketers are using such tactics to dupe consumers into believing they are getting unbiased information.

    In October 2005, Commercial Alert, an advertising and marketing watchdog group in Portland, Ore., petitioned the FTC to consider taking action against word-of-mouth marketers.

    The group called for the FTC to issue guidelines requiring paid agents to disclose their relationship to the company whose product they are promoting, including any compensation.

    The group cited a 2002 Wall Street Journal article on a marketing campaign by Sony Ericsson Mobile for its T68i mobile phone and digital camera. The initiative, called "Fake Tourist," involved placing 60 actors posing as tourists at attractions in New York and Seattle to demonstrate the camera phone. The actors asked passersby to take their photo, which demonstrated the camera phone's capabilities, but the actors did not identify themselves as representatives for Sony Ericsson.

    Commercial Alert also singled out Tremor, a marketing division of Procter & Gamble, which has assembled a volunteer force of 250,000 teenagers to promote the company's products to friends and relatives.

    Procter & Gamble spokesman Terry Loftus said participants in its word-of-mouth campaigns are free to talk negatively or positively about a product or service and do not receive compensation. Volunteers are not required to disclose their relationship with the company, he said. Some participants receive sample products, he said, so they can offer an opinion on a product.

    Word-of-mouth advertising is already covered under existing FTC regulations that govern commercial endorsements. What the FTC sought to do yesterday in its staff opinion was to note 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."

    "The petition to us did raise a question about compliance with the FTC act," said Mary K. Engle, FTC associate director for advertising practices. "We wanted to make clear . . . if you're being paid, you should disclose that."

    The FTC said it would investigate cases where there is a relationship between the endorser of a product and the seller that is not disclosed and could affect the endorsement. The FTC staff said it would go after violators on a case-by-case basis. Consequences could include a cease-and-desist order, fines and civil penalties ranging from thousands of dollars to millions of dollars. Engle said the agency had not brought any cases against word-of-mouth marketers.

    Though the staff's opinion fell short of Commercial Alert's original request, the group's executive director, Gary Ruskin, said he was pleased the staff agreed that word-of-mouth marketing could be deceptive.

    "This letter tells marketers like Procter & Gamble that their 'sponsored consumers' must disclose that they are shilling, or they are probably in violation of the prohibition against deceptive advertising. That's big," he said. "It will change practices in the word-of-mouth marketing industry."

    Andy Sernovitz, chief executive of the Word of Mouth Marketing Association, said the FTC's decision was an endorsement of the industry's efforts to police itself. The Chicago-based association, which has more than 300 members, last year issued a code of ethics stating that marketers should disclose ties to sponsors.

    The group has also tried to hold members accountable. Sernovitz said the group is reviewing the membership status of the Edelman public relations firm after Wal-Mart, one of the firm's clients, reportedly gave positive comments to bloggers who then posted the comments without mentioning the source. Edelman later admitted that some of its employees had written the blogs.

    Procter & Gamble, which is not a member of the association, recruits volunteer marketers online, Loftus said. The company chooses volunteers based on their answers to a survey on the Tremor Web site, which tells participants if they join the Tremor Crew they could "name the next big movie" or "help design a video game."

    Peter Blackshaw, chief marketing officer for Nielsen BuzzMetrics, which tracks the effectiveness of word-of-mouth marketing, said brands have more than a moral incentive to be upfront with consumers. "There's a high turn-off factor if consumers learn that the person making a recommendation is actually on contract," with an incentive to push a product, he said.

    A 2005 survey of 800 consumers by market research firm Intelliseek found that 29 percent of participants age 20 to 34 and 41 percent of those age 35 to 49 said they would be unlikely to trust a recommendation again from a friend whom they later learned was compensated for making the suggestion.

    http://www.washingtonpost.com/wp-dyn...121101389.html

    So in other words, the next time you tell someone about the new Coke product, you have to also say to them, that you are a customer of the Coca-Cola company or you could be fined heavily :eek:

    Crazy stuff, and everyone thought this type of shit would get better if the Dems got in LOL

    Regards,

    Lee


  2. #2
    On the other hand.... You have different fingers
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    Quote Originally Posted by Lee View Post
    So in other words, the next time you tell someone about the new Coke product, you have to also say to them, that you are a customer of the Coca-Cola company or you could be fined heavily :eek:

    Crazy stuff, and everyone thought this type of shit would get better if the Dems got in LOL

    Regards,

    Lee
    No, I don't think that's what it's saying. If you drink Coke and you make recommendations to your friends you are not being paid by the Coca-Cola company to do so. The regs will go to people who are paid to advertise a product while pretending to be a "friend" just making a recommendation. I don't think there's a need for it, though. People have been marketing this way for years.
    Don Mike
    DonMikeCali@gmail.com


  3. #3
    Paco
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    ..companies engaging in word-of-mouth marketing, in which people are compensated to promote products to their peers, must disclose those relationships.
    Excellent. Looks like companies, such as Apple, will need to modify their methods of promoting their product.


  4. #4
    On the other hand.... You have different fingers
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    Okay, I admit it. I'm working on behalf of myself to promote the fact that I'm so damn cool. But I keep an unbiased opinion, I really do think I'm cool. So it's cool. And I don't pay myself well enough to lie.
    Don Mike
    DonMikeCali@gmail.com


  5. #5
    Paco
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    Quote Originally Posted by DonMike View Post
    And I don't pay myself well enough to lie.
    no even with me?


  6. #6
    On the other hand.... You have different fingers
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    Quote Originally Posted by Paco View Post
    no even with me?
    Oooh, now how can I resist that?
    Don Mike
    DonMikeCali@gmail.com


  7. #7
    Carrie
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    What a load of :bullcrap:
    Next thing you know, they'll be passing laws that coffee cups say "Caution: this product is hot".
    Oh wait...

    The Sony Ericcson example is particularly funny. The potential consumer got to actually USE the product, hold it in their hands, and judge for THEMSELVES how well it worked. That's hardly word-of-mouth advertising.
    If they bought one completely on that experience and never bothered trying out a different cameraphone or comparing prices/features, etc, it's their own stupidity.

    You can't legislate or regulate stupidity out of people.


  8. #8
    Hot guys & hard cocks Squirt's Avatar
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    Quote Originally Posted by Carrie View Post
    You can't legislate or regulate stupidity out of people.
    THAT IS SO TRUE!

    How messed up are things getting now? Cigarettes are legal, as is alcohol, but trans fats are being banned? :high: It's all about money and lobbying power, not about our safety, health, or government caring about it's citizens. If that were the case, minimally, school lunches would be very healthy (just an example).

    This word of mouth disclosure is rediculous as you can't legislate morality and companies that sell softdrinks (SUGAR WATER) are not after the best interest of the consumer, just their bottom line. Just like the fast food chains, cigarette companies, alcohol companies, etc.

    What will happen more frequently, then it already does, is that people will promote the product, without prior contract, and not have to disclose, getting paid after the fact. Pretty simple really.. then where do we go? No talking about any product? In an age where the clothes that we pay for have logos promoting the company (free advertising) you'd think we'd have more sense, evidently not.
    Naked Straight Men on Squirtit & StraightBro

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  9. #9
    The Prince of Dorkness Jasun's Avatar
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    I'm smart enough to know when I'm getting jacked.

    When someone makes a big deal out of a product, I'm sure I'd be able to realize that they're just trying to sell me one.

    But I think it's pretty obvious that when a company hires actors to dupe tourists into demoing a product that companies have stepped over the line LONG before the FTC has had to step in.
    Jasun Mark. Crass of the Titans.


  10. #10
    Xstr8guy
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    Quote Originally Posted by Jasun View Post
    I'm smart enough to know when I'm getting jacked.
    Surprisingly, most people aren't.


  11. #11
    glowlite
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    Quote Originally Posted by Squirt View Post
    ... It's all about money and lobbying power, not about our safety, health, or government caring about it's citizens. If that were the case, minimally, school lunches would be very healthy (just an example)....
    I would have to agree, it's all about the money $$$$


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