Thursday, April 2, 2009

Enter FTC: end of Amazon "reviews" system as we know it?

Turns out what we call shilling has a politically correct, scientific-sounding name: viral marketing. So, Harriet Klausner, Morris, Gunny, W.Boudville, et al. are not shills, they're viral marketeers. OK. There's a curious article in the Financial Times, Advertisers brace for online viral marketing curbs, check it out:
Advertisers in the US are bracing themselves for regulatory changes that they fear will curtail their efforts to tap into the fast-growing online social media phenomenon.

Revised guidelines on endorsements and testimonials by the Federal Trade Commission, now under review and expected to be adopted, would hold companies liable for untruthful statements made by bloggers and users of social networking sites who receive samples of their products.

The guidelines would also hold bloggers liable for the statements they make about products.

If a blogger received a free sample of skin lotion and then incorrectly claimed the product cured eczema, the FTC could sue the company for making false or unsubstantiated statements. The blogger could be sued for making false representations. [...]

Advertisers have significantly increased spending on social media and word-of-mouth campaigns, even during the recession. Through blogs and services such as Facebook and Twitter, companies are able to communicate more directly with consumers. Spending on social media marketing [read: shilling] reached $1.35bn in 2007 and is expected to reach $3.7bn by 2011, according to the Word of Mouth Marketing Association.

The advertising industry has argued that the revised regulations are too stringent and would stifle innovation in the emerging field of social media. It remains in favour of self-regulation. [yeah right] [...]

“The guides needed to be updated to address not only the changes in technology, but also the consequences of new marketing practices,” said Richard Cleland, assistant director for the FTC’s division of advertising practices. “Word-of-mouth marketing is not exempt from the laws of truthful advertising.” [tell this to Jeff Bezos]

The main target of the new guidelines appears to be the widespread practice of viral marketing in which companies recruit non- employees to talk up products in exchange for samples or promotions. [See our list of Our Friends Top Reviewers below]

Companies regularly offer free samples and concert tickets to bloggers and journalists, in the hope of generating press. However, determining which bloggers are acting as an agent of a company may prove difficult.[no kidding! They "forget" to mention themselves, and how would you know otherwise? LE Cantrell likes to push this point.]
Check it out, a curious article. I hope something comes out of this move by the FTC — it's about a decade overdue.


Deborah Hern said...

Very interesting idea. But I'm not sure exactly how it's going to work for people who review books or movies or music.

If you claim a soap cures acne, that's a physical product with a quantifiable result. If it doesn't cure acne, clearly, the person who made the claim is a lying liar who lies and there's going to be fines and a lawsuit over the false claims.

If you claim that a book is great or a movie entertaining or a piece of music good... how is that quantifiable? It's just so subjective. HK can claim that a book is a "great paranormal thriller noir cozy romance" and give it a 5. I can claim it's a piece of garbage for which too many trees lost their lives. How does one go about proving (legally, for purposes of discussion) that she's wrong and I'm right? Then there's the whole 'free speech' argument. Which I'm sure will be the shield HK and people like her will hide behind, since they're merely expressing opinions.

This is a step in the right direction for physical products, but I think when you're dealing with intellectual properties, the standards are just too subjective. Sadly, this will probably do nothing to curb HK.

Malleus said...

Yeah, you're right, I thought of that, but in the overall environment, if there's regulation, some of it may still "rub off" onto them, say, maybe the "top reviewers" working off of freebies and posting ten always-positive reviews a day will have to identify themselves. That would be an improvement, compared to today's "oh we just love to read books" BS. For example. And suppose they're being paid, then they'll have to openly state this fact.

Stanley H Nemeth said...

Yeah, and maybe regulation will force Amazon's hand into taking a more active role overseeing the contributions of its "top" reviewers. After all, it isn't a lone review involving difference of opinion, say between Deborah and Harriet, we're talking about. It's the patently aggressive, pretty daily shilling by the Klausners, Harps, et al., that everybody sees yet Amazon does practically nothing about. One could argue that the new rating system was Amazon's response in a small way to numerous customers' complaints about transparently phoney reviews and surrealistic vote totals. Like many a contemporary corporation, Amazon, I'm afraid, will do the right thing not because it wants to but only if it has to. Regulation of some sort, therefore, remains our assorted whistleblowers' last best hope!

Malleus said...

Yes, let's hope for improvement. I'm going to be watching this thing. After all, not only books are reviewed on Amazon: all kinds of stuff is sold there, some of it fitting the bill much better.