FTC Aggression: Killing? Or Curing? by Chris Trayhorn, Publisher of mThink Blue Book, July 20, 2011 The jury is in. And the verdict is that performance marketing has to clean up its act. Every week now we see evidence of the FTC’s newly aggressive approach utilizing a “master theory” about online marketing that they are applying across multiple verticals. EDU, health, beauty and financial services have been affected, but make no mistake: we are going to see it everywhere. The crux of the FTC’s approach is that a misrepresentation made at the beginning of a sales process can not be “cured” by later disclosures or disclaimers. What that means is that advertisers and merchants are now potentially liable for any misleading statement made by one or more of their affiliates. Is this a disaster for the performance marketing industry? Or is it perhaps a Good Thing? Performance marketing has always preferred to take the approach that so long as the final product landing page was compliant, and so long as the terms and conditions of the deal could be found somewhere, that everything would sort itself out. After all, the idea went, there is no way to police the actions and statements of thousands of independent publishers, so one could simply ensure the customer got all the correct information just before they completed the transaction. That approach no longer holds water. The FTC now says that if a misrepresentation is made at the beginning of the sales funnel, it can not be “cured” by a disclosure further down the sales funnel. The first impression or claim that a customer sees is the one upon which the FTC will now judge a campaign. The impact of the FTC’s new aggressiveness in applying their legal theory has been accumulating for some time. We have seen multiple prosecutions relating to flogs, fake news pages and illicitly used celebrity endorsements. The new rules on customer testimonials and the necessity (or otherwise) of having supporting affidavits have had bloggers abuzz for months. Fake review sites have been folding up shop all over the place. And just this month we have seen the online education sector in turmoil as new guidelines issued to schools make it clear that they will be held responsible for deceptive advertising by their affiliates or networks. This is an especially powerful threat for every online college due to their reliance upon Federal funding and accreditation. All of these actions by the FTC conform to the same theme: advertisers can no longer be hands-off when it comes to the promotion of their products. From the very beginning of the sales funnel on the website of the smallest publisher, the claims made must be honest and supported by evidence, and disclosures must be clear and easy to see. If they are not, then potentially the advertiser will now be held responsible. Deceptive claims made upon a publisher’s website may now incur penalties per creative, and ultimately might even result in the advertiser’s principals being barred from the industry. So, what does all this mean for performance marketing? Some say that it is going to kill it. They believe that without the flexibility to be “creative” in how they present products for sale, there is no way to make big bucks any more. Without the ability to make huge claims about the efficacy of a product – it WILL change your life!!! – then, they say, it won’t be possible to drive enough traffic to make the business viable. Screw those guys. The people that think that way are the ones that have been slowly strangling performance marketing. They’re the ones that always want to take shortcuts. That can’t be bothered to build sustainable businesses. They want to hit and run. For the rest of us, the ones who see the growth opportunities, and those that see the unique value that performance marketing can bring to major brands, the FTC’s new approach is a Good Thing. It’s a Good Thing because it will drive increased trust within our online customers. It’s a Good Thing because it will penalize those who can’t sell honestly and who have to resort to deception and fraud. And it’s a Good Thing because it will reassure brands that their brand equity will be protected and that performance marketing is not the Wild West. Performance marketing should be the future of marketing. Making it safer for brands is a vital step along the way. Everybody interested in the future of performance marketing should welcome the FTC’s stance. Filed under: Revenue Tagged under: Brand Equity, Fraud, Industry Trends, Legal About the Author Chris Trayhorn, Publisher of mThink Blue Book Chris Trayhorn is the Chairman of the Performance Marketing Industry Blue Ribbon Panel and the CEO of mThink.com, a leading online and content marketing agency. He has founded four successful marketing companies in London and San Francisco in the last 15 years, and is currently the founder and publisher of Revenue+Performance magazine, the magazine of the performance marketing industry since 2002.