The blogosphere has been alight with concern and frustration over the FTC’s new guidelines on endorsements and testimonials, which, among other things, require the disclosure of “material connections” between bloggers and other Web 2.0 commenters and advertisers who give them compensation or free products in the hope of generating favorable reviews. I posted a detailed explanation of these rules and some compliance tips on this blog about a month ago. Since that time the Interactive Advertising Bureau (including the biggest players in the online advertising market, such as Google and Yahoo!) has fired off an open letter to the FTC declaring the new rules unconstitutional and demanding their retraction. Worried bloggers and web marketers have also been contacting me with questions about what the rules mean for marketing affiliate sites (i.e., sites that provide real estate for online ads and are compensated for transactions or other actions by consumers linking over from those sites) and combined blog/affiliate sites, as well as how prominent the disclosure should be.
In my view, the disclosure requirements don’t apply to a typical sponsored ad run by an affiliate site because someone looking at the ad is likely to understand it as advertising for which the site is (presumably) being compensated. The disclosure requirements apply to an “endorsement,” which the new rules define as an advertising message that consumers will likely believe reflects the opinions, beliefs, findings or experience of a party OTHER THAN THE SPONSORING ADVERTISER, whether the endorser’s statements are the same as or different from the sponsoring advertiser’s. If a consumer perusing a site is likely to think it is the site owner or blogger speaking, not the seller of the product being written about, then there may be a disclosure obligation if the site owner or blogger is being comped or incentivized somehow for making the posts.
If disclosure is required, it must be “clear and conspicuous.” In FTC parlance, this requires, among other things, putting the disclosure somewhere near the post that constitutes the “endorsement” (i.e., the advertising). I would NOT bury it in the site T&C’s — the FTC has criticized this practice in other contexts (such as behavioral advertising) where it favors clear disclosures. So if there are multiple posts that constitute endorsements, you may need to include a short disclosure at the end of each post (unless you can associate a single disclosure with multiple posts in a way that makes it clear the disclosure relates to all of them).
Having said that, I also don’t think it is necessary to include a paragraph of legalese in each case. You might think about including a simple link entitled “Advertising Disclosure” after each post that causes a pop-up box to appear with a one-sentence disclosure (e.g., “The product reviewed here was provided by ____ free of charge.”). The bottom line is that I don’t believe the FTC is going to take a hard line on bloggers, particularly where there is some good-faith attempt to comply (as described above). The FTC itself has signaled that its primary target for enforcement will be advertisers, not bloggers. On the other hand, the product sellers may end up dictating what sort of disclosure they want, since they are also liable if bloggers don’t make the required disclosure.
Finally, with regard to affiliates who are also bloggers, a big question is what kind of incentive are they getting for writing favorable blog posts? Is it merely the affiliate advertising revenue (i.e., they want to say good things about the product they are running affiliate ads for) or are they getting something else too?
The latter case is easy — I would say include disclosure near the relevant blog posts, as discussed above. In the former case, one could make the argument that the presence of the ad means consumers are likely to suspect that the site owner has a compensated relationship with the product seller and therefore that the blog posts are sponsored advertising; ergo, no additional disclosure is needed. To be safe, I would probably still include some kind of short disclosure about the relationship, but the point is at least arguable. I think an ordinary blogger/affiliate running a site out of his house who isn’t realizing a significant amount of revenue and hasn’t previously been warned by the FTC is not facing a huge risk. (That said, if the FTC reads this blog or my article and comments on ReveNews, they may disagree with me!)
Now for my own disclosure: the foregoing is provided for informational purposes only and does not constitute legal advice on a specific matter. You should consult with an attorney (hopefully me!) before taking any definite action on this or any other legal matter.