Tuesday, December 12, 2006
Article in the Washington Post -- FTC Moves to Unmask Word-of-Mouth Marketing: Endorser Must Disclose Link to Seller, by Annys Shin:
The Federal Trade Commission yesterday said that companies engaging in word-of-mouth marketing, in which people are compensated to promote products to their peers, must disclose those relationships.
In a staff opinion issued yesterday, the consumer protection agency weighed in for the first time on the practice. Though no accurate figures exist on how much money advertisers spend on such marketing, it is quickly becoming a preferred method for reaching consumers who are skeptical of other forms of advertising.
Word-of-mouth marketing can take any form of peer-to-peer communication, such as a post on a Web blog, a MySpace.com page for a movie character, or the comments of a stranger on a bus.
As the practice has taken hold over the past several years, however, some advocacy groups have questioned whether marketers are using such tactics to dupe consumers into believing they are getting unbiased information.