Paul M. Rand

Long list of exposed falsehoods shows why federal guidelines are nice, but strict laws are unneeded

Paul M. Rand is president and CEO of Zócalo Group and president-elect of the Word of Mouth Marketing Association.

What was your reaction the last time someone told you something that turned out to be greatly exaggerated or even untrue? Do you remember how you felt, and how many people you told, after you bought an overhyped product that underdelivered? I'm willing to bet that in both cases, you began to doubt the credibility of the person or company behind the misrepresentation. And if you ever felt duped by them again, you probably quit listening and stopped buying the brand.

This same process of vetting information is happening online. People are talking voraciously about brands they find informative, helpful, or remarkable. Falsehoods are quickly exposed, often in brutal fashion. Individuals and companies find their reputations quickly built or destroyed based on whether readers believe what is being written. In this self-correcting online world, are government regulations needed? No. But everyone from bloggers to marketers can benefit from guidelines and best practices, and those can be provided without slipping into the "what about free speech?" morass guaranteed to accompany proposed legal restrictions.

Sometime after Labor Day, the Federal Trade Commission is expected to revise guidelines regarding the "Use of Endorsements and Testimonials in Advertising." These guidelines have not been updated since the 1980s. It's time for a revision. The explosive growth of the Internet and resulting popularity of blogging and other online channels have transformed how people communicate and marketers market. The new guidelines are expected to cover social media as well as paid media (advertising) and should provide clear direction to help prevent misleading endorsements, ensure effective disclosure, and dissuade financial incentives to write only favorable comments.

Since 2005, the Word of Mouth Marketing Association has led the charge for ethical online disclosure and transparency. The organization's guidelines are regarded as the industry standard for what is and isn't acceptable for online marketers. The FTC guidelines will reinforce and possibly even expand upon what has been a clear and credible guide for marketers and bloggers to date. Still, the Word of Mouth and even FTC guidelines aren't enough on their own. This is where the unforgiving self-policing ways of the online world come into play.

Bloggers and brands have learned firsthand that they'll not only be called out but very likely be vilified for trying to deceive online readers. Remember the Working Families for Wal-Mart blogging fiasco? The Wal-Marting Across America blog was shut down in 2006 and the retailer tarnished after it was revealed that the company was behind the supposed fan-based site. Today, Wal-Mart has not only learned its lesson but is showing other companies and bloggers how to do things right.

Then there was Motorola, flagged last year for posting propaganda for its Krave phone. "MGOODE08"--a consultant paid by the company--repeatedly posted comments mentioning the phone without acknowledging his status. MGOODE08 overdid it, writing loads of comments, all with similar and often laughable wording. Bloggers exposed the company within hours, and apologies flowed.

And Belkin? Earlier this year, an employee at the electronics company was exposed for paying bloggers and reviewers (many of whom had not even tried its products) to write dozens of reviews--all without disclosure. Again, within hours, the CEO was out professing, "Belkin does not participate in, nor does it endorse, unethical practices like this."

One more? Royal Caribbean Cruise Lines roiled the online seas last winter when it created a club called the Royal Champions. Cruisers were wined and dined, then asked to write favorable reviews on travel sites--all without disclosure of the perks received. Storm clouds quickly gathered, and Royal Caribbean made the necessary clarifications.

We've seen time and again that word of mouth works best when it is 100 percent credible. Credibility cuts both ways as bloggers, endorsers, and companies must disclose relationships with one another. Full disclosure assures consumers that testimonials are truthful and trustworthy, and it offers marketers and advertisers a proven way to reach audiences with credible information.

A few weeks ago, our association released a simple assessment method to guide marketers and bloggers. It states that marketers must be clear and distinct in asking bloggers to disclose relationships with brands and products and any compensation they receive for participating in marketing initiatives. Likewise, bloggers should disclose if they have been asked by a marketer to be part of a consumer outreach program. Marketers must encourage and expect bloggers to express honest and genuine opinions, while bloggers' responsibility is to always do so and to be accurate and truthful in communicating their identity. Finally, marketers must carefully analyze marketing programs to be sure they accurately reflect the company's philosophy and uphold its integrity.

Following these guidelines will most likely ensure that marketers, advertisers, and bloggers are in compliance with the coming FTC direction. More important, voluntary relationship disclosure will make legal restrictions unnecessary in the future.

The online world is changing rapidly. Rules are evolving, and ethical practices are still being defined. However, our intolerance for being lied to, hoodwinked, or manipulated remains consistent, and that will continue to govern. Laws may be needed if self-policing stops or proves inadequate. But for now, let's stick with the common-sense approach that is helping sort out this new world.