Posted by: Matt Browner Hamlin | October 5, 2009

FTC, Freebies & Astroturf

Updated Twice Below

This is interesting. The AP reports that “the Federal Trade Commission will require bloggers to clearly disclose any freebies or payments they get from companies for reviewing their products.” The rules will take place on December 1st, 2009. The FTC’s ruling can be read here (PDF link). It seems pretty clear that cocktail blogs like this one are very much what the FTC has in mind with this requirement. From the new rules:

Example 7: A college student who has earned a reputation as a video game expert maintains a personal weblog or “blog” where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review. Because his review is disseminated via a form of consumer-generated media in which his relationship to the advertiser is not inherently obvious, readers are unlikely to know that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact likely would materially affect the credibility they attach to his endorsement. Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge.

The manufacturer should advise him at the time it provides the gaming system that this connection should be disclosed, and it should have procedures in place to try to monitor his postings for compliance.

Many, though certainly not all, of the reviews of spirits that I post on this blog are made possible because of free samples I receive from liquor companies or their public relations agents. While we’re talking about a lot less valuable products than the video game system cited in the FTC example above, liquor costs money and it adds up.  This blog is a hobby for me and  I’ve never received monetary compensation for writing or nor have I sold advertising here. Frankly, reviews wouldn’t make up as much of the content on this site if I was only reviewing products that I purchased myself.

I can say with confidence that the fact that I have never written positively about a product because a sample was given to me for free. But the FTC is right — my assertion of that isn’t good enough. So I look at these new requirements as something that makes total sense, both in terms of helping my readers know if and when my review could have been influenced by a receiving complimentary sample, as well as telling readers which companies are doing outreach to cocktail bloggers like myself.

There’s another part of the FTC rules that is relevant to the realm of cocktail blogging: it puts a pretty hard restriction on astroturfing by companies and their agents in the comments of a blog. Astroturf is commonly used to describe comments left by the agent of  corporation or brand who does not disclose their connection and whose comments give the illusion of grassroots support for their product.

Example 8: An online message board designated for discussions of new music download technology is frequented by MP3 player enthusiasts. They exchange information about new products, utilities, and the functionality of numerous playback devices. Unbeknownst to the message board community, an employee of a leading playback device manufacturer has been posting messages on the discussion board promoting the manufacturer’s product. Knowledge of this poster’s employment likely would affect the weight or credibility of her endorsement. Therefore, the poster should clearly and conspicuously disclose her relationship to the manufacturer to members and readers of the message board.

Or, to put it another way, the astroturfing by Cashmere Agency earlier this year would be specifically banned by the FTC. Now companies have an expectation not to do this sort of engagement with blogs without disclosing their connection — again, something that both makes sense and will likely benefit the people who are leaving these comments.

Honesty and transparency are hallmarks of blogging. I’m going to start ensuring that my reviews of products that were given to me for free come with a clear disclaimer of this fact. Doug at Pegu Blog has a great way of doing this already with his Liquor Fairy. I may not end up with something so snazzy or with art by Dr. Bamboo, but in any even clarity will prevail.

Update:

Well it looks like the video game example I quoted above may not be exactly relevant to my blogging and the sorts of samples I receive.

Early in the rules, the FTC has a somewhat troubling take about regular reviewers of products. From page 9-10:

. . . Again, the issue is whether the consumer-generated statement can be considered “sponsored.”

Thus, a consumer who purchases a product with his or her own money and praises it on a personal blog or on an electronic message board will not be deemed to be providing an endorsement.   In contrast, postings by a blogger who is paid to speak about an advertiser’s product will be covered by the Guides, regardless of whether the blogger is paid directly by the marketer itself or by a third party on behalf of the marketer.

Although other situations between these two ends of the spectrum will depend on the specific facts present, the Commission believes that certain fact patterns are sufficiently clear cut to be addressed here.  For example, a blogger could receive merchandise from a marketer with a request to review it, but with no compensation paid other than the value of the product itself.  In this situation, whether or not any positive statement the blogger posts would be deemed an “endorsement” within the meaning of the Guides would depend on, among other things, the value of that product, and on whether the blogger routinely receives such requests. If that blogger frequently receives products from manufacturers because he or she is known to have wide readership within a particular demographic group that is the manufacturers’ target market, the blogger’s statements are likely to be deemed to be “endorsements,” as are postings by participants in network marketing programs. 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.22

What’s tough about this is that the mere act of reviewing a special type of product creates the presumption that the review is an endorsement. Blogs operate in niches. Mine is a cocktail and spirits blog. People who read this site come because they want to read about cocktails, bars, and spirits…and not, say, video games or biochemical engineering.

What isn’t addressed by the FTC is what happens when a blogger in this situation gives a product they’ve received for free and of the type that they regularly review a negative review? Is that an endorsement? In a sense there’s a presumption that if someone gets the product for free, regardless of cost, they will produce a positive review.

There’s more on reviews of products on pages 47-48:

The Commission acknowledges that bloggers may be subject to different disclosure requirements than reviewers in traditional media. In general, under usual circumstances, the Commission does not consider reviews published in traditional media (i.e., where a newspaper, magazine, or television or radio station with independent editorial responsibility assigns an employee to review various products or services as part of his or her official duties, and then publishes those reviews) to be sponsored advertising messages. Accordingly, such reviews are not “endorsements” within the meaning of the Guides. Under these circumstances, the Commission believes, knowing whether the media entity that published the review paid for the item in question would not affect the weight consumers give to the reviewer’s statements.101 Of course, this view could be different if the reviewer were receiving a benefit directly from the manufacturer (or its agent).

In contrast, if a blogger’s statement on his personal blog or elsewhere (e.g., the site of an online retailer of electronic products) qualifies as an “endorsement” – i.e., as a sponsored message – due to the blogger’s relationship with the advertiser or the value of the merchandise he has received and has been asked to review by that advertiser, knowing these facts might affect the weight consumers give to his review.

So reviews by blogs aren’t considered endorsements or sponsored advertising if it’s along the same lines as reviews traditional media outlets do. And a run-down of a spirit is most certainly something that can be found in many newspapers and magazines. The exception comes in when the blogger is, in fact, being paid to write that review by the advertiser or when the value of the product being reviewed for free is high enough that the gift itself would be viewed by payment.

What is tough is that the FTC doesn’t set out any dollar-amount bright line where the act of writing positively (presumably) becomes an endorsement if the sample was provided for free. A video game system can run between $200-500. While spirits can certainly run that high, I’ve yet to find a liquor company or PR firm that is sending out bottles of pricey spirits for free to be reviewed. Most of the products I review run in the $15-75 price range, with the bulk coming in between $25-50. I’ve read elsewhere that books being provided by publishers to bloggers for review aren’t problematic for the FTC. The price range of a new hardcover book is generally similar to the price of most fifths of liquor that I’ve received for review. Though there isn’t much explanation from the FTC on price levels, this would make me think I’m in the clear.

The closest thing to a bright line is I’ve seen is this:

[I]n analyzing statements made via these new media, the fundamental question is whether, viewed objectively, the relationship between the advertiser and the speaker is such that the speaker’s statement can be considered “sponsored” by the advertiser and therefore an “advertising message.” In other words, in disseminating positive statements about a product or service, is the speaker: (1) acting solely independently, in whichcase there is no endorsement, or (2) acting on behalf of the advertiser or its agent, such that the speaker’s statement is an “endorsement” that is part of an overall marketing campaign? The facts and circumstances that will determine the answer to this question are extremely varied and cannot be fully enumerated here, but would include: whether the speaker is compensated by the advertiser or its agent; whether the product or service in question was provided for free by the advertiser; the terms of any agreement; the length of the relationship; the previous receipt of products or services from the same or similar advertisers, or the likelihood of future receipt of such products or services; and the value of the items or services received. An advertiser’s lack of control over the specific statement made via these new forms of consumer-generated media would not automatically disqualify that statement from being deemed an “endorsement” within the meaning of the Guides. Again, the issue is whether the consumer-generated statement can be considered “sponsored.”

And we’re back in unclear territory again!

When I am approached to review a product, I have full autonomy of the review. As I say in my site’s section on reviews, “the outcome of the review will depend on the quality of your product.” I’ve never been told, nor would I accept, input from a PR person about what the review says. If someone tried, I’d tell them to piss off. Yes, many of the products I review I receive for free, but there are only a couple PR people who I’ve worked with more than once but no agreement is ever in place about what I will write or even when. There have been plenty of times where I’ve been given a bottle to review and it takes me multiple months to do so. I’ve also received products that I’ve never written reviews of. I’m a blogger – no one pays me to do this and I don’t have deadlines. But this is clearly something that the FTC might, do to the lack of clarity of their position in these rules, consider as a sponsored post and thus an “advertising message,” which is honestly kind of depressing.

Update II:
There are a couple points I want to make about how I handle reviews of products on this blog.

  • Generally speaking, I will only accept a sample for review if it is something that I would otherwise be interested in reviewing. I can promise you that I have passed on accepting dozens of bottles of flavored vodka and other repugnant products in the last year.
  • I don’t write reviews of products that I purchased any differently from reviews of products I was provided for free.
  • I’ve never received more than a fifth of any product to be reviewed. That is, it’s not like people send me a case of the spirit to sample — something that would increase the value and conceivably influence the review.
  • To make an adequate review, it’s necessary for me to try a product neat, on ice, and usually in two or three cocktails to get a sense of what it’s like and what it’s good for. As a result, small airplane bottles don’t cut it and usually will not be able to do a fair review. That means I often won’t review products if the sample is a tiny bottle. The side effect of that is that most products that I’ve been given for sample finish a review with a substantial part of the bottle unused.

All of this is to say, I think my first inclination of greater disclosure on this blog is the right one, both for the health of my relationship with readers and for keeping the folks at the FTC happy. Transparency is a good thing and I don’t believe that there’s anything in my relationship with liquor companies who have provided me with sample bottles for review that would merit hiding from reviews. The FTC’s actions seem to be, as they apply to me, a lot about things that someone who has no clue what is going on would think is suspicious but from a practical standpoint is totally benign.

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Responses

  1. […] 7 Dark Honey It looks like the fine folks at Seagram’s are unfamiliar with new FTC regulations requiring disclosure when paid staff or consultants leave comments in support of their products […]


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