FTC Rules on Word-of-Mouth
Word-of-mouth marketing is certainly a hot trend. It's growing to the point where complex strategies and programs have been put in place to make them happen. But with growth comes the potential for misuse. So last week the FTC ruled that companies engaging in word-of-mouth marketing, in which people are compensated to promote products to their peers, must disclose those relationships.
According to the Washington Post, word-of-mouth advertising is already covered under existing FTC regulations that govern commercial endorsements. The recent FTC 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."
For instance, there was a case last summer where a family taking a cross-country RV vacation blogged about their travels and their wonderful Wal-Mart experiences, which was later revealed to have been sponsored by Wal-Mart. And in 2002, Sony Ericsson hired 60 "tourists" to walk around New York and Seattle, asking other tourists to take their pictures, then touting the great features of their camera phones.
A customer relationship should be build on trust -- a basic 1to1 principle. Anyone using tactics to "dupe" a customer will find a long-term problem. The Word of Mouth Marketing Association states: "Word of mouth can't be faked or invented. Attempting to fake word of mouth is unethical and creates a backlash, damages the brand, and tarnishes the corporate reputation. Legitimate word of mouth marketing acknowledges consumers’ intelligence -- it never attempts to fool them. Ethical marketers reject all tactics related to manipulation, deception, infiltration, or dishonesty." It's unfortunate that we need a federal agency to regulate this kind of thing, when ideally it should be an honest business practice.
