After announcing the upcoming revisions in October, the Federal Trade Commission (FTC) released their guide for advertisers for the first time since 1980 in December with some notable revisions. With fines up to $11,000 per penalty, companies and endorsers engaged in social media campaigns have to be a lot more careful.

The FTC is cracking down on social media endorsements. From celebrities to tech bloggers, if the relationship, or “material connection,” between the endorser and companies using social media is not obvious to consumers, the endorser must disclose this information. The FTC has the consumers’ best interests in mind, but places the responsibility on advertisers to know what consumers take away from their ads and promotions.

Although the guidelines state that the connection between the company using social media and the endorser must be disclosed, they do not say specifically how or where it must be disclosed. The FTC does hold the endorser responsible for disclosure, but both the endorser and the company can be liable: “The Commission believes that the endorser is the party primarily responsible for disclosing material connections with the advertiser.  However, advertisers who sponsor these endorsers (either by providing free products – directly or through a middleman – or otherwise) in order to generate positive word of mouth and spur sales should establish procedures to advise endorsers that they should make the necessary disclosures and to monitor the conduct of those endorsers”(“Guides Concerning the Use of Endorsements and Testimonials in Advertising”, Federal Trade Commission, 39).

How will these new guidelines affect social media marketing? Andy Sernotivz of AdvertisingAge says the FTC’s new guidelines work to social media marketing’s advantage: “Now we have the clarity to properly invest in social media, without having to guess about legal risks,” and Dallas Lawrence of Mashable and Bulletproof Blog suggests that “there isn’t much companies should be doing now that they shouldn’t have been doing before these rules went into effect.” Here at PageOne, we excel in our social media marketing campaigns, all while complying with the new FTC guidelines.

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Craig Oda and Paulina Singhapok ( Twitter @sf_paulina)

Tags: law, social media

This entry was posted on Monday, July 5th, 2010 at 10:22 pm and is filed under blog. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.