FTC Now Requires “Sponsored Post” Disclosure

News has broken today that the FTC is making a change to the “Guides Concerning the Use of Endorsements and Testimonials in Advertising” for the first time in almost 30 years.

Here’s what you need to read:

“The revised Guides also add new examples to illustrate the long standing principle that ‘material connections’ (sometimes payments or free products) between advertisers and endorsers–connections that consumers would not expect–must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other ‘word-of-mouth’ marketers. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.”

Source: http://news.cnet.com/8301-1023_3-10367464-93.html

Failure to disclose payment terms can now result in an $11,000 fine. A drop in the ocean for many successful affiliates, but the deterrent itself will probably shave off more profits than the fine.

Now while this is obviously relevant to floggers, it applies pretty directly to those of us in the affiliate marketing blogosphere. Personally, I think it’s a welcome change. It was only last week with the re-design of this blog that I added an Important Information page to vent my own frustrations with the blogging for riches business plan.

There are bloggers out there – hot shot super affiliates – who will shotgun their readers with any crap that pays a commission. It only takes one reputation built on sand and naive new marketers will buy in to just about anything. While some financial disclosure isn’t going to stop that, it will hopefully expose a level of doubt in what some of these super affiliates will sell their word for.

As far as flogging goes, I can’t see this change making life any more difficult than it already is. If you’re a flogger, you should already be painting your pages in an endless wall of disclaimers. It’s necessary to cover your back. As far as I can see, most of the high exposure flogs are already small printing in the fact that they’re paid a commission.

The real problem for the FTC is policing these changes. How do you tell the difference between word of mouth friendly praise and a second motive of money changing hands? Sure there are affiliate links being dropped, but it wouldn’t surprise me if some of these sketchy companies started implementing a new off-site method of tracking. A “we’ll catch your referral on the other side” type mentality. It’s also pretty damn hard to nail a Paypal transaction on a sponsored post. How are they going to bust these private sponsorship agreements?

Good luck to the FTC. You’ve got your work cut out.