Social media: How to stop blogger payola

FTC orders bloggers to come clean about taking payoffs from advertisers.

To disclose or not to disclose. For bloggers, Twitterers and other online writers, that’s now the question — or it will be come Dec. 1, when newly announced regulations from the U.S. Federal Trade Commission come into effect, requiring them to disclose payments or handouts they accept from the makers or suppliers of items they endorse in their posts. Failure to do so could bring a fine of up to $16,000 per infraction.

While some social media participants — mostly those already disclosing freebies — are in favour of the new rules, reaction from most writers and commentators in the U.S. has been overwhelmingly negative. Dan Gillmor, director of the Knight Center for Digital Media Entrepreneurship at Arizona State University’s Walter Cronkite School of Journalism and Mass Communication, speaks for many observers when he says the guidelines are puzzling, impractical and will do more harm than good. “[The FTC] is hopelessly confused about what this online medium is. That’s not the time you put out regulations.”

The idea of incorporating a disclaimer into every Facebook post and 140-character Twitter tweet sure sounds unworkable. So does monitoring it, a fact that even Richard Cleland, an FTC spokesperson, acknowledges. Cleland says the real aim of the rules is to compel advertisers to monitor disclosure on any blogs being paid to endorse their products, not to fine the individual consumer endorser. Failure to comply with the new guidelines will be judged on a “case-by-case basis,” and Cleland doesn’t expect the FTC will be knocking on every suburban blogger’s door.

But the complaints don’t stop there. Many bloggers also object to the FTC worrying about this at all, especially when members of the traditional media are under no obligation to mention any gratis products that show up at their office. The latter argument overlooks one important fact, however — most papers and traditional media groups have their own strict rules in place that disallow payola. And the reason they do is to protect their credibility with their audience.

From that perspective, it’s possible to see ways in which these new guidelines might actually aid, and indeed further advance, online communities. Far from limiting product-related speech on the Internet, for example, disclosure might actually increase writers’ credibility. That, according to Joe Chernov, vice-president of communications at BzzAgent, a word-of-mouth marketing company, could make a huge difference to an already-skeptical audience. “Word-of-mouth marketing travels three times as far when consumers assess a review as being honest and unscripted,” he says. The fact that the FTC made these guidelines a priority can also be seen as an endorsement of the growing influence and legitimacy of social media as a tool for marketers.

As with most regulation, then, it comes down to enforcement. Done badly, it will be a disaster. But if these guidelines merely give the public a unified place to direct complaints about online scams while serving as a formal warning to the “cloggers” filling cyberspace up with false advertising, the fury may prove unwarranted. And since a new blog is started somewhere in the world every second of every day, it might even mean a little more space for online voices to have a conversation.