Flogs and Farticles

New media such as blogs and social networks have opened vast territory for information dissemination, networking and connectivity. Due to their low costs, every “netizen” with an opinion can set up a Web-based soapbox from which to broadcast to the world. As a result, like-minded communities of writers and followers have sprung up around any number of topics large and small: from politics to film, video games to parenting tips.

The word-of-mouth, informal style that prevails on blogs and social networking sites, and the interactive exchanges that regularly occur between author and readers, create a certain level of trust within that community. That familiarity and trust is bolstered by the fact that most contributors are unpaid for their efforts, and are instead motivated entirely by an interest in the subject matter at hand.

This level of comfort is particularly valuable in the context of product reviews. Readers looking to make purchases have come to expect and appreciate honest appraisals from impartial and informed reviewers who are not, themselves, looking to sell anything.

Advertisers have begun to take notice of the enormous potential that blogs and social networking sites have as vehicles to promote products and services. Riding this trend, some advertisers are providing free samples to review sites. Others are creating corporate sites to provide real-time updates on product releases and foster interaction with their consumer base.

More Than Just a Blog
Affiliate marketers and other publishers have discovered the advantages inherent in this environment. Many now incorporate product promotion within various blogs and Web pages. Some have even begun creating fake blogs and profiles masquerading as review sites, known as “flogs” in industry jargon. Going even farther, some aggressive marketers have penned fake articles (or “farticles”) and include fake or paid testimonials extolling the virtues of a given product that they promote on their blog or other Web venues.

While potentially lucrative, this conflation of marketing and social media carries significant risk and potential liability. Because of the nature of the medium as a place for amateurs and average citizens to voice their opinions, there is an expectation on the part of the consumer that the author is not a paid spokesman or salesman. But when a publisher is engaged in marketing products and services for a fee, or when that person is an employee of a company selling the products discussed, there is an inherent conflict of interest. Under those circumstances, flogs, farticles and
dubious testimonials amount to a form of deceptive marketing, and the Federal Trade Commission (FTC), various state attorneys general and other regulatory bodies are cracking down.

For example, in June 2009, as part of the increasing attention that governmental regulators have directed toward these practices, Lifestyle Lift, a cosmetic surgery franchise, paid $300,000 in penalties to the New York Attorney General to settle allegations that it had posted fake customer reviews of its services on Lifestyle Lift’s blog and other websites.

A Code Is Born
In turn, the FTC recently issued a draft of proposed revisions to its Guides Concerning the Use of Endorsements and Testimonials in Advertising designed to address marketing efforts now proliferating in new media. The essence of the proposed guideline revisions is that online marketing forums must fully inform the unsuspecting reader of any and all financial interests that the subject bloggers or writers have in connection with blog posts, social networking site pages, articles or testimonials.

Pursuant to the draft guidelines, if writers would receive a commission for the sale of a given product or are employed by the company making the product, they must disclose this fact prominently. Even where the author has received the product for free for review purposes, the reader must be made aware through an appropriate disclosure.

Similarly, the author of a fake article (perhaps the riskiest form of marketing) must disclose prominently and explicitly at the top of the piece (or other suitable location) that the article is not from a real news organization, that it is not a real article but, rather, that it is a marketing device and what, if anything, the author stands to gain by virtue of the products or services promoted therein.

The draft guidelines also contain provisions that are applicable to the use of testimonials. First and foremost, fake or fictitious testimonials are strictly prohibited. Second, when using a testimonial, the blogger or writer must not edit or change it from the original in any material way (outside of correcting grammatical or spelling errors, and cutting down the size when doing so does not distort the testimonial itself). Lastly, where the provider of the testimonial is paid or stands to gain by providing the testimonial, this fact must be disclosed to the reader in close proximity to the testimonial itself.

When properly utilized, the sense of community, group interaction and citizen input facilitated by blogs, social networking sites and other new media can greatly enhance your business, whether you are an advertiser, marketer or both. However, in order to steer clear of regulatory scrutiny, you must take steps to ensure that you aren’t deceiving consumers by pretending to be an average Joe with an opinion when you’re really just utilizing a different medium through which to make your sales pitch.

Please note that this is only a brief overview of some of the legal issues surrounding new media advertising on the Internet. Remember to obtain guidance from a licensed legal professional prior to engaging in such advertising.