By James Graham, CFO - CMP.LY
I know that we all have the holidays on our mind, but the FTC has issued a reminder to advertisers this week that should be noted. Apparently, there was a promotional program in which a number of bloggers were given incentives (Amazon gift cards) and asked to promote the brand's Superbowl commercials by linking to and/or commenting on them. This drew the attention of the FTC, who announced this week that they have decided not to investigate this matter further. There are some blog posts that are presenting this most recent reminder as highlighting that both advertisers and agencies should have a social media policy, which is valid, but there is more at play here; all that one needs to do is read the FTC's own blog post on the matter to see the more complete picture.
The story goes that Hyundai's first defense was that it wasn't their fault, but the fault of their advertising agency. However, as the FTC clearly reminded Hyundai, advertisers are legally responsible for the actions of agencies working directly or indirectly for them. According to most of the accounts that we have seen regarding this matter, the focus of this letter was that the actions in question were contrary to both to Hyundai's established social media policy, which calls for bloggers to disclose their receipt of compensation, and to the policies of the media firm in question. It is easy to assume, therefore, that having a social media policy in place is the moral of this story. However, that's not exactly the whole story. If you read the actual text of the FTC letter, you'll see this:
Upon careful review of this matter, including non-public information submitted to the staff, we have determined not to recommend enforcement action at this time. We considered
several factors in reaching this decision. First, it appears that Hyundai did not know in advance about use of these incentives, that a relatively small number of bloggers received the gift certificates, and that some of them did, in fact, disclose this information.
Second, the actions with which we are most concerned here were taken not by Hyundai employees, but by an individual who was working for a media firm hired to conduct the blogging campaign. Although advertisers are legally responsible for the actions of those working directly or indirectly for them, the actions at issue here were contrary both to Hyundai's established social media policy, which calls for bloggers to disclose their receipt of compensation, and to the policies of the media firm in question. Moreover, upon learning of the misconduct, the media firm promptly took action to address it.
Yes, the policies are important - there is no doubt. But, based on what the FTC wrote to Hyundai, any of the following could have lead to a different outcome:
- had the actions been part of a campaign actually approved by Hyundai;
- had they been conducted on a larger scale;
- had some of the bloggers not individually recognized their obligations and voluntarily opted to disclose; and
- perhaps most importantly, had the agency not immediately taken remedial action to remedy the situation upon learning of the rogue actions.
The FTC has been kind enough in this holiday season to create and share a new mnemonic device for us all to remember:
MMM -
1) Mandate a disclosure policy that complies with the law;
2) Make sure people who work for you or with you know what the rules are; and
3) Monitor what they're doing on your behalf.
So, policies are important in protecting companies and agencies against unscrupulous agents who go off the reservation - but, if you actually want to run responsible promotions, you need a whole lot more to be compliant. Things to keep in mind are:
- Making sure that your social media policies are clearly communicated to your employees, agencies and influencers, and that they understand their responsibilities
- Ensuring that your process for training and communication of your policies is documented
- Monitoring for disclosures may be harder than you think, especially when you are monitoring for the omission of required disclosures or across multiple platforms (blogs, Twitter, Facebook, G+)
- Advertisers have more responsibilities (and more at stake) than individual influencers when it comes to issues of transparency and disclosure
- Remember that the advertiser's name is prominent, and that they will be the one to get the dreaded phone call. Who do you think they will call next?
One last thought is that folks will be quick to point out that the FTC decided not to take further action in this case. The lesson here is that just because they did not take further action in this case, does not mean that you should not take action. Make sure your social media policies are up to date, clearly communicated, shared with your agencies and that you are effectively monitoring for compliance with your policies.
For more information:
FTC Blog Post - http://business.ftc.gov/blog/2011/12/using-social-media-your-marketing-staff-closing-letter-worth-read
FTC Closing Letter (PDF) - http://www.ftc.gov/os/closings/111116hyundaimotorletter.pdf
About CMP.LY
CMP.LY is the leading solution for social media compliance and disclosure.CMP.LY empowers companies to create, document, measure and monitor disclosures on Facebook, Twitter, LinkedIn, blogs, and other digital media channels. CMP.LY provides the first commercial platform to address disclosure requirements and automate disclosure monitoring in social media channels and has been powering social disclosures for leading advertisers and agencies since 2009. The company has developed a patent-pending framework based on easily identifiable icons and URLs that embed necessary disclosures in every communication. CMP.LY also offers solutions for financial services, healthcare and pharmaceuticals, rules and promotions, agencies and affiliate marketers. CMP.LY helps companies address social media disclosure and compliance requirements across various regulatory agencies, including FTC, SEC, FINRA, FDA, OFT, and ASA. For more information, visit: http://CMP.LY.