MarketingSherpa Blog

There has been a lot of talk this month about the future of behavioral advertising and privacy on the Internet. This coming year could change if and how your team uses ads that target people’s browsing history.

The Federal Trade Commission published preliminary proposals for targeting online ads on Dec. 1, and the Department of Commerce published preliminary proposals for protecting consumer privacy on Dec. 16.

These statements came about two months after the Digital Advertising Alliance (DAA) launched a program that lets users ‘opt-out’ of behavioral tracking. The DAA is a coalition of industry groups that supports industry-based self-regulation for behavioral ads.

Outcome far from certain

What does all this mean? No one is entirely sure. The FTC and the Commerce Department’s proposals are not laws, but folks from the FTC have been speaking with Congress about the issue. And FTC Chairman Jon Leibowitz has expressed dissatisfaction with the industry’s self regulation.

This much is clear: behaviorally targeted advertising is raising privacy concerns. Consumers are seeing the shoes they just shopped for appear in ads on other websites, and that is freaking some people out. Two solutions have been floated:

– The FTC’s preliminary proposal: have a browser-based solution that signals to websites that a consumer has ‘opted-out’ of tracking

– The DAA’s program: let users ‘opt-out’ by clicking on an icon next to an ad. This program has been adopted by at least one major media-buying agency.

The potential for impact

Should either of these options — or some other ‘opt-out’ system — become a wide-spread reality, it could have serious implications for online advertising. Here are two stats to consider:

– An Interactive Advertising Bureau survey of ad agencies earlier this year found that 80% or more of digital advertising campaigns were touched by behavioral targeting.

– A USA Today/Gallup poll in December found that 67% of U.S. Internet users say advertisers should not be allowed to match ads to their browsing history.

A tremendous leap of faith is not required to assume that a sizeable portion of that 67% would gladly opt-out of all behaviorally based ads.

What you can do in the meantime

While Washington and the industry figure out what, if anything, will change, your team should look at its marketing and understand the importance of behavioral ads and tracking in your programs.

Consider what would happen if the ads stopped working as well, stopped working completely, or did not change — and what you should do in each case.

Also, talk to your agencies, affiliates and ad-networks. Find out what this means for the marketing they do on your behalf. The last thing you want to do is to be caught off guard by any changes.

Related resources:

Follow the FTC’s Street Team Guidelines: 4 Recommendations for Offline and Online Promos

FTC’s New Endorsement Guidelines: 6 Key Areas to Examine

The Google Slap: Affiliate Marketers must stay in compliance with Google and the FTC

The Federal Trade Commission on Monday published the final version of its Guides Concerning the Use of Endorsements and Testimonials in Advertising. These new rules will govern how companies can use consumer, expert and organizational endorsements to make claims about products.

There are many important updates, which become effective Dec. 1. MarketingSherpa is working on an article describing the changes that marketers need to know. In the meantime, I want to point out one change that should concern anyone who sends free products to bloggers to generate buzz.

If a blogger writes a positive review of a product that you sent free-of-charge, that post may be considered an “endorsement.” It depends on the value of the product and whether the blogger routinely receives such requests.

“If the blogger frequently receives products from manufacturers because he or she is known to have wide readership within a particular demographic group…the blogger’s statements are likely to be deemed to be ‘endorsements,’” according to the guidelines.

“Similarly, consumers who join word-of-mouth marketing programs that periodically provide them products to review publicly (as opposed to simply giving feedback to the advertiser) will also likely be viewed as giving sponsored messages.”

Now here’s the kicker: if the post is deemed an “endorsement” and the blogger writes false claims into the review, the blogger and the advertiser are liable for the misleading statements.

So if you, a phone manufacturer, send a free phone to a popular tech blogger who writes a positive review that the phone also makes a fantastic life raft — you are liable for that claim.

The guidelines suggest that advertisers who send free products to bloggers (directly or through a service) make sure that they provide guidance to ensure that the bloggers’ statements are truthful and substantiated.

“The advertiser should also monitor bloggers who are being paid to promote its products and take steps necessary to halt the continued publication of deceptive representations when they are discovered,” according to the guidelines.

So if you are sending out free products to bloggers, your job might be more difficult after Dec. 1. Stay tuned for more info as MarketingSherpa digs into the details.

While we wait for the Federal Trade Commission to release its updated testimonials and endorsement guidelines, I’ve been talking to several experts to get a better idea of what the revisions might mean.

Last week, I spoke with Todd Harrison, Partner, Venable LLP, who focuses his practice on consumer protection agencies’ rules and regulations on drugs, foods, dietary supplements and other products.

Harrison went over situations where an advertiser might have to disclose more information, or remove certain claims, to be within the FTC’s proposed guidelines. Other practices might be explicitly prohibited altogether. One method in particular stood out to me: flogging.

‘Flogs,’ or fake blogs, are set up by companies or affiliates to look like independent websites, but in fact only promote a company’s products. There are variations on this theme with sites posing as product review sites and news sites. All the content — the articles, the comments, the ratings — is false.

“They’re not real testimonials, but they’re representing real testimonials,” Harrison says.  “The FTC is probably going to make it clear that you can’t have ‘flogs’…Even under existing law, those material connections are supposed to be disclosed.”

Harrison mentions that some companies may have affiliates that are flogging without the companies’ knowledge. They might be selling products through an affiliate network that attracts unscrupulous sellers and have no idea.

My suggestion is that marketers to take a look at their affiliates’ websites and tactics to make sure that they’re not deceptive or unsavory. If you use an affiliate network, contact its administrators. A simple checkup should help ensure that you’re providing your customers with an honest experience, and that you won’t attract any unnecessary attention from the FTC.

Advertisers beware: the FTC is reviewing changes to its guidelines for testimonials and endorsements–the first such changes since 1980. If approved, they could impact everything from social media marketing to late-night TV ads.

The proposed changes, outlined in this lengthy legal document, seek to curb ads with testimonials that emphasize best-case scenario product performance without mentioning a product’s typical results.

“On the issue of consumer endorsements, the proposed revisions state that testimonials that do not describe typical consumer experiences should be accompanied by clear and conspicuous disclosure of the results consumers can generally expect to achieve from the advertised product or program,” according to a FTC press release.

That means ads like this weight loss ad that features a testimonial from a woman who lost 150 pounds, and 22 pounds in the first six weeks, would have to include a “clear and conspicuous” disclosure of the program’s typical results.

The Financial Times reported last week that the changes may also impact social media marketing and blogging:

“If a blogger received a free sample of skin lotion and then incorrectly claimed the product cured eczema, the FTC could sue the company for making false or unsubstantiated statements. The blogger could be sued for making false representations,” according to the article.

The changes may also impact spokesmen such as Subway’s Jared Fogle, according to a report from the Chicago Tribune.

However, the changes are not official–yet. The FTC’s commissioners are likely to vote by the end of the summer on whether to adopt or revise the amendments, said Betsy Lordan from the FTC Office of Public Affairs. Until then, you might want to plan a new strategy if your ads or blogging partners make high-flying product claims.