"FTC Moves to Unmask Word-of-Mouth Marketing: Endorser Must Disclose Link to Seller"
Not a minute too soon - there should be laws requiring full and clear disclosure on all such relationships.
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.
The group cited a 2002 Wall Street Journal article on a marketing campaign by Sony Ericsson Mobile for its T68i mobile phone and digital camera. The initiative, called "Fake Tourist," involved placing 60 actors posing as tourists at attractions in New York and Seattle to demonstrate the camera phone. The actors asked passersby to take their photo, which demonstrated the camera phone's capabilities, but the actors did not identify themselves as representatives for Sony Ericsson.
Commercial Alert also singled out Tremor, a marketing division of Procter & Gamble, which has assembled a volunteer force of 250,000 teenagers to promote the company's products to friends and relatives.