Photo Credit: Me!

Two weeks ago, John Oliver's bit on Native Advertising went viral--at least in marketing circles--but it was hardly the most disturbing thing to be published that week on the alarming and growing practice of sponsored content in mainstream media. While I enjoyed the humorous (and accurate) critique on Oliver's "Last Week Tonight," AdAge.com featured an even more troublesome item, entitled "New York Times Tones Down Labeling on Its Sponsored Posts."

The New York Times, long considered a U.S. national "newspaper of record" due to its professional ethics and reporting standards, has decided to appease advertisers desperate to bypass consumers' natural aversion and avoidance of advertising. The newspaper "shrunk the labels that distinguish articles bought by advertisers from articles generated in its newsroom and made the language in the labels less explicit."

What is so disappointing about The New York Times' action is that studies demonstrate a substantial level of confusion on the part of consumers about sponsored content. Consumers do not recognize Native Advertising as paid media, nor do they understand what "promoted content" means:

• The IAB published a study last month that found business and entertainment news audiences could generally identify sponsored content, but "the general news audience had more trouble, with less than half (41%) recognizing that the material was advertising."
    
• A 2013 study by David Franklyn, law professor at the University of San Francisco, found that people “didn’t remember seeing ‘sponsored by’ posts when asked to read a web page and the majority (over 50 percent) also didn't know what the word ‘sponsored’ actually meant.”
   
• A recent study by Contently found that "while a plurality (48 percent) of respondents believe that 'Sponsored Content' means that an advertiser paid for the article to be created and had influence on the article’s content, more than half (52 percent) thought it meant something different." The study further found that:
• Two-thirds of readers have felt deceived upon realizing that an article or video was sponsored by a brand.
• 54 percent of readers don’t trust sponsored content.
• 59 percent of readers believe a news site loses credibility if it runs articles sponsored by a brand.
• Every single age group would prefer news sites stick to banner ads versus sponsored content. (This may be the first study in history to find a preference for banner ads, which makes evident consumers' perspective on Native Advertising.)
    

"Several marketers have bristled at all the labeling, suggesting it turned away readers before they had a chance to judge the content based on its quality."

In my last blog post, "The Rapidly Diminishing Authenticity of Social Media Marketing," I explored how social media professionals have turned to tactics that undermine some of the core tenets promised by social media. We set larger fan counts as a goal above authentic advocacy, and when meaningful engagement became difficult to achieve, we settled for anything that would earn a like, reply or retweet rather than striving for content that fostered relationships and created value.

I will not rehash how I think these poor priorities and tactics undermined brand success in social media. (You can read my last blog post for that.) Instead, I want to explore a more sensitive question: Have social media marketers acted ethically or not?

For example, if we accept that a basic principle of social media is that "likes" represented something important--authentic brand affinity that others would see and rely upon--then what are we to think of those marketers and brands that took shortcuts to accumulate new fans who had no established relationship with the brand? Was it ethical to launch sweepstakes, contests and giveaways that motivated "likes" from people who otherwise were not inclined to express affinity for our brands?

And if we further agree that engagement such as replies, retweets and shares ought to be authentic signals of interest in what brands have to say, then are we acting ethically when we solicit engagement merely to elevate our brands' EdgeRank? Is asking Facebook users to "like" a post if they are on "team peanut butter" an ethical way to collect signals of affinity between consumer and brand, or is this a dishonest way to get our content into more users' news feeds?

Social Media Ethics on Display (or Not) During Week of Boston Marathon Tragedy

Instead of considering this in the abstract, let's examine two brands' actions last week, during the frightening events in Boston. NBC Bay Area posted a photo of a young bombing victim and implored people to "'Like' this to wish him a continued speedy recovery."  This desperate attempt to trade on people's feelings for a young victim of the bombing in order to receive a bit of EdgeRank-building engagement is horrifyingly unethical, in my book. (And if you do not agree, then please tell me how "liking" an NBC post lends support to or otherwise helps this poor hospitalized child.)

Ford, a brand I praised for authenticity in my last blog post, waded into dubious water with a Facebook status update following the capture of the second bombing suspect. The brand said, "To the first responders of Boston: Thank you. You are true American heroes." Nothing wrong with that--in fact, I love that a brand like Ford feels it can express sincere appreciation for the sacrifices of those who serve. The problem was that Ford didn't post that as text but included it within a beauty shot of their products, complete with the Ford logo and tagline.

Not everyone will agree, but I feel that Ford's use of brand imagery not only reduced the sincerity of the message but demonstrated questionable ethics. Before you disagree, I would ask you to view the two status updates below--one Ford could have posted and the other it actually did--and consider three questions:

1. Which is a more authentic expression of appreciation to people who sacrificed their safety to protect us?
2. What does the product and brand imagery of the post on the right add (if anything) to the sincerity of the gratitude compared to the simple text version?
3. Which version more clearly puts the focus on the heroes in Boston? 

The version on the left imagines what Ford could have posted as text while the one on the right is what Ford actually posted following the capture of the second bombing suspect in Watertown, MA.

Issues of ethics are difficult to discuss. They often are not clear cut, and while it is easy to see when a company crosses the line with both feet (as did NBC Bay Area), it can tough to discern as brands toe the gray line (as did Ford, in my opinion).

It is even tougher to see when you yourself cross ethical lines. If your boss wants to know why your brand has half a million customers but only 25,000 fans on Facebook, a sweepstakes to accumulate fans may not seem unethical. Your perspective may change, however, if you put yourself on the other side of this equation; if you do not want to see your friends becoming shills for brands in return for freebies and giveaways, then your brand should not follow this path. It is unethical to treat your own customers in a way you would not appreciate from the brands you buy or the people you know. (Fifty years ago, David Ogilvy, the father of modern advertising, expressed the same sentiment when he said, "Never write an advertisement which you wouldn’t want your family to read. You wouldn’t tell lies to your own wife. Don’t tell them to mine.")

We are roughly five years into the social media era, and I think perhaps it is time to reset our moral compasses, not to save our souls but to improve business results. Study after study demonstrate that consumers want something more from brands than silly images and memes; they want ethical behaviors and communications. The 2012 Edelman Trust Barometer Study found that customers increasingly expect brands to "place customers ahead of profits and have ethical business practices," and Interbrand's 2012 brand study noted that "Consumers... want to feel that the brands they love are, in fact, worthy of that love."

I'd like to believe this is always the case in every business situation, but when it comes to social media marketing, the ethical path also happens to be the best one for enhancing brands and business results. How can we improve both the ethics of social media marketing and our brands? Here are three steps:

STEP ONE: Understand Long-Standing Marketing Ethics, Advertising Rules and Regulation

"Those that fail to learn from history, are doomed to repeat it". 
- Winston Churchill

I am frequently disappointed to find social media professionals who do not understand the basics of ethics and regulation in the advertising industry. Marketing has a long and well established history of recognizing and enforcing ethical practices, and government regulation of advertising is over one hundred years old. The issues we struggle with today in social media marketing are not new, nor are the core beliefs of ethical marketing. The latter can inform the former for those who care to learn history.

In 1911, the Associated Advertising Clubs issued the Ten Commandments of ethical advertising, and the first Commandment was unequivocal: "Thou shalt have no other gods in advertising but truth." (The italics are theirs, not mine.) Shortly thereafter, the Postal Act of 1912 required that advertising content be differentiated from editorial content. Together, these two actions established one of the most basic tenets of advertising ethics: That consumers must know when they are seeing advertising and not mistake it for editorial content. This is as true in the pages of newspapers as in the tweets and posts of your customers.

Although the core principles of ethical advertising have not changed in one hundred years, the regulatory language has evolved with technology. In 2009, the Federal Trade Commission (FTC) issued "Guides Concerning the Use of Endorsements and Testimonials in Advertising." This document established that "When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement, such connection must be fully disclosed." In other words, if it would impact a person's perception of a friend's post about a brand to know that the individual was posting in exchange for a contest entry or a giveaway, that creates a material connection that must be disclosed.

Just last month, the FTC updated disclosure guidelines, providing quite detailed guidance. For example, the FTC notes that "#spon" is not a sufficient disclosure of a sponsored tweet since, "Consumers might not understand that '#spon' means that the message was sponsored by an advertiser." And to those who might protest that Twitter's 140-character limit does not provide sufficient room for a clear and conspicuous disclosure, the FTC says, "Tough luck." (Really, what the agency says is, "If a particular platform does not provide an opportunity to make clear and conspicuous disclosures, then that platform should not be used to disseminate advertisements that require disclosures.")

An understanding of the history of advertising ethics and FTC regulations is only the start. The National Labor Relations Board (NLRB) has issued several decisions pertaining to social media that brands' must consider for their social media guidelines, monitoring policies and employment practices. The Federal Communications Commission (FCC) has oversight into how and when social media may be used to share information pertinent to investors. Different states have enacted laws with varied requirements for consumer and employee privacy in social media. And then there are the terms and conditions of the social networks themselves, which define what is and is not permissible. (It is shocking how often pages violate Facebook's Promotions rules as defined in the Facebook Pages Terms.)

In the relatively brief period since social media's birth, brands have been tripped up by a variety of unethical and unlawful behavior including meddling with competitors Wikipedia entries, fake community groups, fake endorsements, fake blogs, fake accounts, and other questionable activities. It is vital social media professionals know the laws, rules and ethical standards that have stood the test of time, and it is necessary for marketing leaders to ensure their social media teams are adequately trained and supervised.

STEP TWO: Improve Social Media Metrics

“Not everything that counts can be counted, and not everything that can be counted counts”
- Albert Einstein

Bad metrics lead to bad strategies. More than that, bad metrics can lead to unethical behaviors.

The Great Recession of 2009 was caused by many factors, but President Obama laid blame on the way executives were measured and compensated. He noted in a June 2009 speech that a "culture of irresponsibility" was an important cause of the crisis, and he criticized executive compensation that "rewarded recklessness rather than responsibility."

In some ways, many social media professionals are today being rewarded for recklessness rather than responsibility. Fans and engagement are not business metrics, but these are common line items on many social media scorecards and are used by social media agencies and vendors to validate performance. Any brand can count new fans, but how many are measuring the value delivered to the brand via social media? Instead of turning to the metrics that are easiest to collect, social media marketers must determine the metrics that best validate that their social media investments deliver upon the objectives (and if one of your goals is merely to collect fans, then the problem is not the metric but the goal).

This is the point in the blog post when I am supposed to furnish an easy answer for how to measure social media success; unfortunately, I cannot. The ways to measure success are as diverse as brands, audiences and corporate objectives. If you want to better educate your customers on your products, measure that. If you need to raise awareness, measure that. If increasing inbound traffic to your site is desired, measure it. If your brand is challenged to improve a particular perception attribute, then that is what you should measure. Start with your corporate goals and challenges; pick the metrics that align to those; determine the social media strategies that best deliver on those metrics; and execute!

As our investments in social media increase, so must the science and insightfulness of our metrics. Too many brands are merely counting things--fans, retweets, comments and likes--while ignoring the deeper and more meaningful measures of brand awareness, recall, consideration, association, preference and advocacy.  Smart social media professionals do not settle for ineffective metrics but work to educate peers and leaders on the social media metrics that matter for their brands.

STEP THREE: Be Honest

"Of all feats of skill, the most difficult is that of being honest."
- Comtesse Diane

Honesty sounds easy, but complete honesty can be surprisingly tricky. Honesty is not merely the absence of falsehoods; telling no lies in your social networks is only the starting point. Thorough honesty requires something more--more self-reflection, more care and more vigilance. It requires integrity and sometimes even courage.

Honesty requires a tenacious commitment to complete transparency. If you encourage people to tweet a photo of your product in return for a chance to win a prize, complete transparency demands those tweets be accompanied with a disclosure. It is one thing for consumers to choose to tweet their brand love with no expectation of reward (even if the brand solicits those recommendations), but if your brand creates the conditions where someone is motivated to promote your brand in order to win something, you must ensure transparency. It is deceptive to look the other way and allow consumers to be exposed to sponsored advertising communications without disclosure.

Honesty necessitates assertive vigilance to ensure that your employees, vendors and agencies are doing the right thing. It is not sufficient to assume your employees and partners know how to act with integrity, nor is satisfactory to set expectations and assume adherence. Honesty requires a commitment to education and engagement around ethics, and it demands that your brand supervises and monitors activities to ensure policies and regulations are followed.

Honesty demands sincerity in the intent of your communications. In paid media, brands communicate to persuade and sell, but in social media consumers expect something different from brands--it is a medium where consumers can choose to follow, comment and share, or they can choose to unfollow, block and ignore. Engagement should be earned with content that actually engages, not with tricks. For example, if you care to take a poll on Facebook, use Facebook's "Ask question" tool to do so; do not mislead your customers with fake surveys that request they "like" if they believe one thing or "share" if they believe another. Your intent with this sort of deceptive status update is not to engage consumers or learn from their answers but to manipulate Facebook's EdgeRank system. Honest relationships cannot be built with dishonest communications.

Honesty requires that you enter conversations to authentically join the conversation, not to co-opt the conversation. A new trend in social media is so-called "real-time marketing" (or RTM), where brands attempt to engage in the conversations consumers are having about sports, entertainment or world events as they occur. While it is possible for brands to post just the right thing at just the right time in a way that consumers will welcome, much of the recent RTM has been brazenly self interested and thus unsuccessful. The problem is that brands have dishonestly attempted to inject advertising messaging into consumer conversations rather than trying to authentically express themselves or add value to those conversations. If your brand can bring value to the conversation, do so honestly, but if you just want to interrupt consumers' conversations with brand advertising, then stay silent honestly (or honestly pay for media).

Honesty demands that you walk the talk. Consumers are so jaded about the way brands try to obfuscate their actions behind dishonest communications that an entire new lexicon has developed, including terms like greenwashing, astroturfing, sugging and flogs. Social media allows brands to chart a different course, not simply talking about how much they care but highlighting their care through real actions. At a time when some brands will hold their charitable donations hostage in return for likes, shares and replies, New Balance donated $1 million to the One Boston fund and did so without asking for a single "like." The actions of the Chicago Tribune went viral this week after the news organization sent pizzas to the Boston Globe newsroom along with a note that said news colleagues "across the country stand in awe of your tenacious coverage. You made us all proud to be journalists." The honest actions of New Balance and The Trib speak louder than any words could, and they are resonating honestly throughout social media. (How does Ford's branded expression of gratitude fare in comparison?)

Social media may feel quite mature, given that virtually every brand and the vast majority of people in the US have adopted social behaviors, but the medium is still very young. Social media professionals may understand today's best practices, but these continue to evolve as brands gain experience, laws and regulations change and the medium matures. In periods of rapid evolution, it can be difficult to discern the ethical from the unethical, but it starts with you. Ethical social media starts with ethical social media professionals--ones who consider the impact of their strategies, constantly challenge their own beliefs and are willing to stand up for what is right and not merely what is easy.

The idea that ethics comes from within rather than externally is not new. For support, I turn to a philosopher who died 2400 years ago and an animated insect. Aristotle believed self-knowledge was the key to individual ethics, and he wrote, “Knowing yourself is the beginning of all wisdom.” Jiminy Cricket, Pinocchio's sidekick, echoed Aristotle's advice, reinforcing that ethics starts from self-knowledge: "Always let your conscience be your guide."

Before you click "submit" to your next social media post, do not simply ask if it will achieve its goal, fits best practices and suits the brand. Ask yourself if it is honest, transparent and ethical. That is a much higher standard, but higher standards are what consumers want and what brands increasingly wish to deliver, aren't they?

Last week's Facebook Marketing Conference (fMC) brought a slew of big changes to the platform. Facebook has yet to fully deploy all of the new features, and we will not be able to gauge the true impact for quite some time. The outcomes depend not on what Facebook does next but how users, brands and regulators react.

Here is what Facebook hopes will occur: Users continue to adopt Facebook into their lives, giving advertisers more reasons to purchase new forms of social advertising on the platform. Users win with access to the most powerful, free communications tool in human history; advertisers win with access to consumers where they spend more online time than any other site; and Facebook wins by earning more marketing dollars they need to justify their post-IPO share price.

If the outcomes of Facebook's latest changes are less positive, it would not be the first time an organization suffered from unforeseen reactions. Digg, for example, famously altered its functionality and lost users after a "Quit Digg Day" revolt. I expect Facebook will do just fine as marketers and users adjust to the new fMC changes, but there are some potential unintended outcomes that could develop:

• FTC pushes for much more obvious disclosure of sponsored ads in users' newsfeeds: Allowing marketers to turn their posts into ads within the newsfeed is not new--Twitter is already doing the same thing with Promoted Tweets--but is the fact these are paid ads obvious enough to users? The Federal Trade Commission (FTC) has a longstanding standard that people must recognize ads as such and cannot be duped into thinking advertising is content. The danger was framed well (inadvertently) by Forbes when it said, "The more Facebook 'ads' look just like the posts people and brands are already making on Facebook, the less they are likely to be seen as intrusive." True, and the more likely they are to run afoul of regulators.
  
  

  The Premium on Facebook ad for the Web contains a small "sponsored" tag while the mobile ad features no disclosure.

  In the fMC presentation, Facebook displayed two versions of Premium on Facebook advertising. The one shown on a desktop browser has a tiny "sponsored" at the end, while the sample mobile ad contained no such disclosure. This may have been an oversight by a graphic designer assembling the fMC presentation, but even the desktop version of these ads could call into question whether consumers can really, in clear and conspicuous fashion, identify advertising from content.
  
  Search engines struggled with this same problem in the early days of the Web, when some search engines allowed brands to buy their way into the results or to purchase ads that were almost indistinguishable from organic results. A decade ago, Google recognized this was a problem and set itself apart, promising, "Every ad on Google is clearly marked as a 'Sponsored Link' and is set apart from the actual search results." The FTC also recognized the problem and issued a "landmark recommendation to the search engine industry that it should improve disclosure of paid content within search results." It would not surprise me, given the reach of Facebook, if the FTC jumps into this very same issue again.
   
• Users revolt and leave Facebook: Facebook is so deeply integrated into users' habits and into web sites that it is hard to imagine Facebook could face an exodus, although some folks seem to predict this with every change Facebook makes to the user interface. Back in 2009, the New York Times ran an article entitled "Facebook Exodus," noting "Things fall apart; the center cannot hold. Facebook, the online social grid, could not command loyalty forever." While the obituary was wildly premature, the article closes on a cautionary note as relevant today as three years ago, asking, "Is Facebook doomed to someday become an online ghost town, run by zombie users who never update their pages and packs of marketers picking at the corpses of social circles they once hoped to exploit?"
  
  

  MySpace and Facebook took divergent paths years ago.

  I do not foresee Facebook losing users, but if people revolt due to increased advertiser presence, it would not be the first time a social network lost for this reason. According to Alice Marwick, a researcher with Microsoft Research, "MySpace felt a lot of pressure to monetize quickly after it was sold to News Corp. And I think as result, they added advertising, they added things we might consider to be spammy, things users found intrusive." If users find Facebook spammy, I am sure Google would be more than happy to welcome new and returning users to its sagging Google+ social network. (The discouraging news on G+ keeps coming; just this week, Chitika Insights is reporting an overall 32% decline in activity when comparing current Google+ traffic levels to four months ago.)
   
• Users revolt and unfriend large brands: Of course, Facebook users do not need to abandon Facebook and their existing social graphs if they object to seeing ads in their newsfeed--all they need to do is unfriend the advertisers. When using Premium on Facebook advertising, only a brand's fans will see the sponsored story in their home page newsfeeds; someone not connected to the brand will see the story in the right-hand side of their homepage where, as we all know, it is unobtrusive and easy to ignore. The fewer brands you like, the fewer sponsored stories you will see in your newsfeed.
  
  Of course, Facebook would argue--with great merit--that these sponsored ads are really just brand posts that might have organically appeared in fans' newsfeeds in the first place. It is likely Facebook users will not object to seeing sponsored posts from the brands they truly like, provided those posts are relevant and Facebook keeps the mix of brand-to-human posts lean. The onus is on the advertisers to make sure the posts they make and select are interesting to the audiences they target, or else brands could see fan counts shrinking for the first time in Facebook's comparatively brief history.
    
• Brands may not adopt Facebook's new ad media in large numbers: It seems unlikely, but it is possible that marketers are just not prepared for the dynamic new ad model Facebook has unveiled. This is not your father's advertising with long lead times and carefully crafted creative. Instead, brands will need to monitor the effectiveness of their organic content, strike when the iron is hot and create an ad out of a post that is demonstrating great engagement.
  
  Agility is not exactly the strong suit of most large marketing organizations. Says Bryan Wiener, CEO of 360i, “The industry is not set up to support the new world order... Facebook is making it incredibly difficult for these companies.” He predicts Facebook's approach may require big disruptions in the way marketers and their agencies work.
    
• Brands may demand powerful ways to unfriend fans: Many brands accumulated "friends" with little to no relationship with the brand. They offered Farmville items or sweepstakes entries in return for new "likes," which seemed like a good idea when it boosted brands' fan counts. But now Facebook is increasing the importance of paid media relative to earned media, and that means that brands with more fans will pay more. If you are Starbucks and your fans are true fans, Reach Generator may be worth the investment, but if your brand has a million fans who cared more for the freebie they got than for the brand, you're about to find out how expensive a mistake you have made.
  
  

  Augie does not like Gerber.

  I once "liked" the Gerber brand even though I have no children and couldn't care less about Gerber. I did so because I wanted to vote for a friend's child in a photo contest. Now, if Gerber wishes to use the new Facebook Reach Generator, the brand is stuck paying to serve ads to me--a truly and thoroughly disinterested consumer.
  
  What should a brand do if it accumulated many disinterested fans? It is not clear since there are no tools for managing your fan base in meaningful ways. Facebook is not like email--you cannot delete fans who have failed to open or click on your posts, nor can you target your posts based on source codes. Gerber and brands like it that engaged in a race for inauthentic "likes" may soon demand Facebook offer tools to pare fan counts in order to increase their advertising effectiveness.
    
• More investment in owned communities: Some social media professionals have been questioning if owned communities have a role in a world dominated by Facebook. Why invest in your own Lithium or Salesforce.com community, they ask, if you can build a community on the platform already used by almost one billion people?
  
  I have never bought this line of reasoning, because Facebook never really offered brands the opportunity to build true community. With the new timeline design reducing the prominence of fans' posts, it is an even weaker community-development platform today. Done right, Facebook and owned communities are not competitive but collaborative.
  
  Facebook's changes could push more companies to consider the value of building their own communities because brands will see an increase in cost to communicate with customers on the Facebook platform. In a New York times piece, Ben Winkler, chief digital officer of OMD, said it nicely, “The Facebook platform is undeniably incredible, but we must acknowledge that our customer relationships there are not owned — they’re rented.” Facebook may have just made it evident how important it is for brands to own their fans, not merely rent them.
    

The use of consumer ratings and reviews has already been a game-changer online. Ratings and Reviews (R&Rs) were the first true use of social media to support and enhance commerce, predating ads on Facebook, Groupon discounts and viral videos on YouTube. While some of us participated on a BBS or Usenet Board in the early days of the Internet, the first time most people posted anything for strangers to read was not a status update on MySpace but a R&R on Amazon, TripAdvisor or Yelp.

It is the success and maturity of R&Rs that leave me perplexed at how little innovation we have seen in the space and how much more the leaders could accomplish. This was the topic of conversation recently when I chatted with Jeremy Epstein, the new VP of Marketing at Sprinklr, a social media management service provider that Altimeter put on the top of its list of vendors to support large corporations. We both agreed that it is high time for the primary providers of online R&Rs to lead once again with new features that make R&Rs more powerful and reliable.

First, here is what is right about R&Rs: They remain the most trusted form of communication, lagging only recommendations from families and friends. According to Forrester (subscription required), consumer product R&Rs are trusted by 62% of US adults, compared to 57% who trust "expert ratings and reviews," 30% who trust company web sites and 23% who trust what they see on TV.

Here is what is wrong with R&Rs: That high level of trust may be about to evaporate. While I have no data, I sense more people having doubts as to the validity of the R&Rs they read online. These doubts may be well founded; recent articles have raised awareness of dubious or outright deceptive practices such as offering free product in exchange for ratings, people anonymously rating their employers' products, and farms of workers hired to post ratings.

If you are an authentic marketer and really want to get your blood boiling, check out fiverr.com, where people compete to write paid reviews. One person promises "I will leave 3 Amazon reviews from unique accounts that YOU write for $5," and 44 out of 45 reviews are positive. Comments include "I of course do always need more reviews, how many accounts do you have? And can you also do likes?" Obviously reputable brands are not on fiverr.com bidding for fake reviews, but the transparent sleaziness goes a long way to demonstrating the problem with R&Rs.

While those involved are smart enough to avoid saying, "We get paid to do positive ratings," the implication is loud and clear. "I would have done 4 stars instead of 5 without the deal," says one guy who received free product in exchange for his rating. And an employee of one of the R&R-writing services reports, "We were not asked to provide a five-star review, but would be asked to turn down an assignment if we could not give one."

In theory, it is not unethical to give discounts or freebies in exchange for a rating and review, provided a brand does not reward the effusiveness of the rating and--here is the part everyone misses--the consumer discloses the material relationship as required by FTC guidelines. (And just to be clear, it is the brand's responsibility not merely to instruct the consumer to reveal the arrangement but also to monitor that consumers are, in fact, disclosing appropriately.)

While I hope marketers are following the rules, I do not think the purveyors of R&Rs should rely on the willingness of those involved to adhere to rules--the stakes are just too high. For consumers, the temptation is great to earn cash, freebies and discounts in exchange for five minutes of faux exuberance on Yelp or Amazon. The reasons marketers are tempted to engage in dubious R&R practices are also obvious, as one recent study validated what we all intuitively believe about the value of positive ratings--each additional star on Yelp is worth 5% to 9% in incremental revenue.

Perhaps you believe you are a keen observer who can easily separate the fake reviews from the real ones. Turns out researchers have found the average consumer only gets this right around 50% of the time. You can even test yourself with an online quiz on the Marketplace site. (I scored 75% in the simple four-question quiz.) Even if we believe people have the power to spot and discount fake R&Rs, this cannot be the solution--it takes too long to review and assess individual reviews, and given the power of "star ratings" to furnish info at a glance and permit sorting based on score, we clearly need better ways to improve the quality and reliability of R&Rs.

Given the incentives to cheat, why haven't we seen innovations that encourage appropriate reviews and that filter reviews to make them more accurate and believable? A great deal of effort is going into technological advances to suss out fake reviews, but aren't there easier and better ways to accomplish this same goal?

For example, we are each unique, so why do we see the same information on most R&R sites? When I go to the San Antonio Things to Do page on TripAdvisor, the top-rated attraction in the city of the River Walk and Alamo is... a golf course?!? Even if it is accurate that the Palmer Course has the highest arithmetic mean for all of the submitted ratings in San Antonio, why would this matter to me? TripAdvisor knows I am not a golfer--I have made 101 contributions to TripAdvisor, and not one of them is for a golf course or shop.

One way sites like Yelp and TripAdvisor combat this problem is by showing me what my friends have rated. This is good, but I have friends who love golf. What I really want to know are the ratings of other people like me--it would be more informative to see the ratings of other museum-going, water-park-hating, jazz-loving non-golfing strangers who are similar to me. One of the benefits of furnishing ratings based on similar tastes is that it helps to filter out disingenuous raters. (Perhaps those who are paid or get discounts for the ratings they produce would like to see and rely on each other's ratings, but I rather doubt it.)

Another idea Jeremy and I discussed is discounting ratings from raters who only offer positive ratings. If a given user on Yelp or eBay only posts five-star ratings, wouldn't that call into question the authenticity of those ratings? Some may argue that people tend to write reviews when they feel strongly, but if this were true, we would see more ratings at both the top and bottom of the scale rather than the rating inflation exhibited on most sites. eBay data from 2007 demonstrated the median rating for "Item as Described" was 4.8 out of a possible 5; 67% of the ratings on Yelp are four or five stars; and virtually everyone who rates a video on YouTube gives it five stars.

This is when Jeremy offered the idea of using gamification to improve ratings. I am actually not as much of a fan of gamification as most social media pros. Even though I am an avid PC and mobile gamer, I just do not believe most people go through life wishing they could turn their communications, grocery shopping, dining, driving and TV viewing into a competition. In addition, too much gamification is designed to get people being inauthentic, distorting rather reflecting true opinion, influence and engagement. The fact a brand can amass a million followers by giving something away in a Zynga game is not sign of gamification's value to marketers but of its ability to falsify sentiment and destroy the legitimacy of Facebook "likes."

Jeremy's idea was one of the few I have heard that could turn gamification into a force for authenticity: What if reviewers were rewarded for offering R&Rs that most closely match a bell-shaped curve? Wouldn't reviewers' opinions count more to others if they reflected a more statistically accurate normal distribution of opinions? Perhaps discounts should be given not for any review (or positive reviews) but for people who create true value by creating the most believable and accurate content? If most reviewers were motivated to create R&Rs that were unbiased in a statistical sense, it would create greater dispersion of ratings, increasing the spread between the best and the worst products and services, and penalize (or remove the incentive) for paid reviews.

You probably have some of your own ideas for how R&R sites could be improved. The ease with which ideas can start flying as people discuss the problem is an indictment of how little has been done to improve the R&R process. Yelp says its ranking system "already factors in the number of reviews (and) whether they come from experienced Yelpers or first-time reviewers," but they've done little to make this evident.

If today's R&R leaders do not want to end up like Monster and MySpace, lapped by competitors with greater innovation and differentiation, it is time for the early market innovators to put as much effort into improving the usefulness and validity of R&Rs as they do into new marketing and advertising products. As Jeremy noted, "Trust is going to be the primary currency of the linked economy. If you lose it (and eventually you will get exposed), you're going to have a long road back."

I have long felt Facebook made a huge error with their "Like" button; or perhaps it is more accurate to say that Facebook's mistake was in failing to provide other options for following brands and pages other than the "Like" button. In furnishing no other ways for users to follow or subscribe to brand fan pages, Facebook has taken something that could have been truly valuable and made it insignificant or, worse yet, disingenuous.

Take, for example, my recent "Like" of the Gerber brand. If you know me, you know that I do not have children, so why am I fan of Gerber? Well, I'm not; or rather, I am a "fan" on Facebook but not a fan in any other sense of the word. A friend's child is in The Gerber Generation Photo Search and I wanted to vote for her, but in order for my vote to count, I was required to "friend" the brand.

Had Facebook provided a means for people to follow a brand without clicking the "like" button, the meaning of a "like" would be indisputable--a true signal of a person's affinity for the brand.  But there are no other ways to follow a brand on Facebook, so users click the "like" button for all sorts of reasons. According to an excellent ExactTarget study from last year, the top reason people "like" a brand is to receive discounts or promotions.  While the number two reason was to show support of the company to others, this was closely followed by getting a freebie, staying informed about company activities, getting updates on future products and sales and for entertainment. There can be no doubt that a Facebook "like" is not a true "like" by any non-Facebook definition of the word.

What's the harm if someone doesn't really like a brand when they click the "like" button?  The problem is that Facebook attempts to define users' "Likes" as something more than they really are. Facebook promotes a "like" as a relevant signal of affinity; their Sponsored Stories ad product turns users' "Likes" into ad impressions. When I see these ads, I am supposed to believe that my friends possess deep, warm feelings for the brands they like and, as a result, I should consider the brands for myself. But should I really care that my friend clicked "like" on a brand page simply because they wanted some Farmville trinket or a discount?

The fact a Facebook "Like" is meaningless at best (or misleading at worst) upsets me for several reasons:

• As a consumer, it could be truly helpful to know what products and services my friends like sufficiently to recommend, but that isn't at all what Facebook "likes" offer.
• As an employee responsible for a brand's Facebook page, I'd like for my company to collect true recommendations from customers and then use those to raise awareness of the brand; however, since a Facebook "like" has been rendered useless, I must find other, more meaningful ways to identify brand advocates and reflect true brand affinity.
• And as a marketing and communications professional, it upsets me that brands would encourage people to share "likes" with friends when those "likes" are not authentic brand recommendations. A very exacting read of the FTC Guidelines on Endorsements might suggest that my "like" of the Gerber brand be accompanied by a clear and conspicuous disclosure that I received something of value--a vote in a contest--in return for my endorsement of the brand. 

It is probably too late for Facebook to solve this problem, but adding a "subscribe" feature for fan pages would be a great step towards differentiating those who want to follow a brand from the real brand advocates. Facebook may believe it is redefining what it means to "like" a brand in the social era, but all they've really done is devalue the term "like."

You can see this for yourself--visit your Facebook profile and under "Activities and Interests," click the "Show Other Pages" link (and then, if present, click the last link in the series, which says something like, "And XXX more.")  Do you really like all of these brands?  Would you recommend them all to your friends?  No, but Facebook and many advertisers assume you would, and therein lies the true lost opportunity of the Facebook "like."

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The long-awaited new guidelines from the Federal Trade Commission (FTC) were published today, and they aren't much of a surprise. While addressing blogs, message boards, and other forms of new media, the FTC didn't stray from its traditional commitment to ensure that consumers know when they are seeing paid advertising.

What does today's FTC update mean to Social Marketers and bloggers? You may find it interesting what the FTC did--and didn't--say:


1. Sponsorship = Advertising:

Given marketers' and bloggers' use of the term "Sponsored Conversations" to refer to paid blog posts, it is probably no coincidence that the FTC uses the term "sponsorship" in the following statement: “The fundamental question is whether, viewed objectively, the relationship between the advertiser and the speaker is such that the speaker’s statement can be considered ‘sponsored’ by the advertiser and therefore an ‘advertising message.’”

A blogger who posts a product-based statement independently and without commercial arrangements with the brand is not making an endorsement by the FTC's definition and thus needs not be concerned about the rules governing advertising. But as we'll see, a blogger's post that is sponsored can become an advertising endorsement and may trigger legal requirements with respect to factual information and disclosure of commercial arrangements, under certain conditions.


2. The FTC is furnishing guidelines, not rules:

The FTC has the power of Federal law to enforce legal advertising standards, but today's document defines guidelines and not rules. The Commission recognizes that the marketing and communications world is changing and is too complex for hard and fast rules. The FTC notes that it will have to “consider each use of these new media on a case-by-case basis for purposes of law enforcement, as it does with all advertising.”

So, what factors will the FTC weigh in determining if a given relationship between brand and blogger meets the standard for an "endorsement"? Today's FTC document lists the following:

• Whether the speaker is compensated by the advertiser or its agent;
• Whether the product or service in question was provided for free by the advertiser;
• The terms of any agreement;
• The length of the relationship;
• The previous receipt of products or services from the same or similar advertisers, or the likelihood of future receipt of such products or services; and
• The value of the items or services received.

In other words, the FTC is not tightly defining the legal standards for bloggers and brands, but it is telling us enough to advise caution with respect to paid blog posts, endorsements, and disclosure.


3. Independent consumers are still free to share their praise of brands:

Some more histrionic observers felt the FTC's guidelines would limit consumers' ability to compliment and recommend products via ratings, on blogs, and in Social Networks. This is nowhere near the case; the FTC notes that “a consumer who purchases a product with his or her own money and praises it on a personal blog or on an electronic message board will not be deemed to be providing an endorsement.”


4. It is not necessarily an exchange of value between brand and blogger that triggers an endorsement but the existence of a material relationship.

The FTC furnishes three similar examples of a blogger writing about a brand to draw distinctions between what is and is not an endorsement.

The first example is a simple and obvious one--the consumer buys the product and then praises it; this is clearly a legitimate, unsponsored communication.

The second example involves a blogger who posts praise after receiving free product. The key in this example is that the blogger who praises the brand is not targeted by that brand but instead receives a coupon for free product generated by a store computer based upon the consumer's past purchase patterns. In this case, the FTC notes "given the absence of a relationship between the speaker and the manufacturer or other factors supporting the conclusion that she is acting on behalf of the manufacturer (i.e., that her statement is 'sponsored'), her review would not be deemed to be an endorsement."

The last example should be considered carefully by marketers who have established networks of consumers to whom product is regularly distributed. The example involves a consumer who joins "a network marketing program under which she periodically receives various products about which she can write reviews if she wants to do so." Says the FTC, "If she receives a free bag of the new dog food through this program, her positive review would be considered an endorsement." As we'll explore later, the Commission suggests that endorsements made via blog posts require disclosure and adherence to the legal requirements of paid advertising.


5. Giving product to bloggers for the purpose of posting reviews may or may not make the bloggers' recommendations an "endorsement" (but it probably does):

The FTC takes great pains to try to address the issue of brands that disseminate free product for the purpose of garnering positive product reviews in Social Media. The Commission states that a blogger who "receive(s) merchandise from a marketer with a request to review it, but with no compensation paid other than the value of the product itself" may be considered "endorsed" by the brand depending upon "among other things, the value of that product, and on whether the blogger routinely receives such requests."

The FTC clarifies that last portion of their statement in this way: "If that blogger frequently receives products from manufacturers because he or she is known to have wide readership within a particular demographic group that is the manufacturers’ target market, the blogger’s statements are likely to be deemed to be 'endorsements.'" In the view of the FTC, "Although the monetary value of any particular product might not be exorbitant, knowledge of the blogger’s receipt of a stream of free merchandise could affect the weight or credibility of his or her endorsement."

In other words, someone who maintains a review blog and regularly receives free product for the purpose of authoring and posting reviews is more likely to be considered an "endorser" than a blogger who only occasionally receives products to review. Some find this curious, because it seems contrary to established practices in traditional media. There are, of course, journalists--such as movie reviewers or food critics--who frequently receive free product, but their articles in newspapers and magazines are not considered "endorsements" per the FTC.

To those who want to make the case that bloggers are being treated differently than journalists in traditional media, the FTC has a response: "The Commission acknowledges that bloggers may be subject to different disclosure requirements than reviewers in traditional media." In other words, get over it!

Regardless of whether you find this guidance puzzling or not, this much is clear: The FTC is putting brands on notice. Giving free products to popular bloggers or recruiting networks of consumers into "word of mouth marketing programs" for the purpose of distributing free products for review will likely be considered and regulated as paid media.


6. The fact that compensated bloggers are free to say whatever they want does not prevent their posts from being considered legal endorsements:

It doesn't matter that a brand pays a blogger and then permits him or her to express anything s/he wants, without editorial control or rules. And it also doesn't matter that bloggers compensated by a brand feel they are expressing their true and honest opinions, unbiased by the commercial arrangement. The FTC notes that “an advertiser’s lack of control over the specific statement made via these new forms of consumer-generated media would not automatically disqualify that statement from being deemed an ‘endorsement’ within the meaning of the Guides.’”


7. The fact that compensated bloggers are free to say whatever they want does not protect the brand from the legal responsibilities that come with paid advertising:

The FTC understands that marketers may not have control over what bloggers say, but "if the advertiser initiated the process that led to endorsements being made – e.g., by providing products to well-known bloggers or to endorsers enrolled in word of mouth marketing programs – it potentially is liable for misleading statements made by those consumers."

The risks to brands also include the risk that a compensated blogger fails to disclose the material relationship. Notes the FTC, "In employing this means of marketing, the advertiser has assumed the risk that an endorser may fail to disclose a material connection or misrepresent a product, and the potential liability that accompanies that risk." The Commission promises, should legal action result from a blogger's failure to disclose, that it will "exercise its prosecutorial discretion" and "consider the advertiser’s efforts to advise these endorsers of their responsibilities and to monitor their online behavior."

In short, marketers must understand they are accepting certain legal risks by entering into Sponsored Conversations. These risks can be mitigated by carefully apprising bloggers of rules for disclosure and accuracy and then monitoring them for compliance, but this does not completely eliminate all risk.


8. Because Social Media is a vehicle for authentic peer-to-peer dialog, the presence of sponsored speech (i.e., advertising) is suggesting a greater need for disclosure than may be required in other media.

The FTC recognizes that the medium matters; consumers are more likely to recognize advertising as advertising in some media more than others. A TV ad is clearly "sponsored" and thus does not require any special disclosure on the part of advertisers or networks. But in Social Media, the distinction between earned and paid media is far less evident to consumers.

The nature of Social Media and the FTC's greater expectation for disclosure is evident in their revised example pertaining to a video game blogger who is sent a free game system by a manufacturer, along with a request that the blogger write about the system. Notes the Commission, "Because his review is disseminated via a form of consumer-generated media in which his relationship to the advertiser is not inherently obvious, readers are unlikely to know that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact likely would materially affect the credibility they attach to his endorsement" (emphasis mine).


9. If your organization doesn't have Social Media guidelines in place, create and communicate them ASAP!

The FTC notes that employers are liable for the actions of their employees in Social Media. For example, if an employee participates in a Facebook forum or bulletin board by praising his or her employer's brands but fails to disclose his or her relationship to the brands, that could trigger prosecution.

The FTC notes that legitimate efforts to create and enforce rules that protect consumers from injury "would warrant consideration in its decision as to whether law enforcement action would be appropriate." Moreover, the FTC notes that "although the Commission has brought law enforcement actions against companies whose failure to establish or maintain appropriate internal procedures resulted in consumer injury, it is not aware of any instance in which an enforcement action was brought against a company for the actions of a single 'rogue' employee who violated established company policy."

So, get your Social Media policies in place and actively enforce them. Not only is this a good, common sense practice, it also helps to establish a defense in the event one of your employees strays into a legal minefield.


10. The FTC has outlined when material relationships must be disclosed, but it still hasn't said what constitutes "clear and conspicuous" disclosure on blogs, microblogs, or elsewhere in Social Media.

The FTC's approach to disclosure requirements is based on three primary questions:

• Does a material relationship exist between endorser (i.e., blogger, consumer posting in Social Media, etc.) and brand?
• If so, would the presence of this material relationship affect the weight or credibility given to the endorsement by consumers?
• If so, is the endorsement likely to be recognized as paid advertising by consumers based on the circumstances, communications vehicle, and medium?

The FTC outlines a slew of diverse and subtle examples of when material arrangements relating to endorsements must be disclosed, both in Social and traditional media. For example:

• A film star appears in a commercial endorsing a food product in exchange for a $1M fee or royalties on sales; no disclosure is required because such payments likely are ordinarily expected by viewers.
• A well-known professional tennis player appears on a talk show and raves about the laser vision correction surgery at a clinic that she identifies by name. The athlete does not disclose that she has a contractual relationship to speak publicly about the clinic. Consumers might not realize that a celebrity discussing a medical procedure in a television interview has been paid for doing so, and knowledge of such payments would likely affect the weight or credibility consumers give to the endorsement. Thus, disclosure is legally required.
• The same tennis player under the same contract endorses the clinic via a real-time Social Media site, and the same rules apply; consumers might not realize that she is a paid endorser and knowing this might affect the weight consumers give to her endorsement, so the relationship with the clinic should be disclosed.
• A physician endorses an anti-snoring product. Consumers would expect the physician to be reasonably compensated for his appearance in the ad, so no special disclosure is required to alert consumers the physician was paid.
• But the same physician in the same ad may require disclosure if he receives a percentage of gross product sales or he owns part of the company; either of these facts would likely materially affect the credibility that consumers attach to the endorsement. Accordingly, the advertisement should clearly and conspicuously disclose such a connection between the company and the physician.

So, assuming a brand does have a commercial arrangement with a blogger, the blogger endorses the brand's product, and this relationship requires disclosure in the blog post, what meets the legal definition of "Clear and Conspicuous" disclosure? The FTC doesn't attempt to address this question at all. In other FTC documents, it establishes standards as to how proximal and evident disclosures must be, but the new guidelines do not attempt to address acceptable disclosure in Social Media. It is left to brands to discern if its disclosure policies are sufficient under the laws and guidelines established by the Commission.

Marketers are advised to ensure sponsored bloggers write and construct their blog posts in a way that make the disclosure immediately apparent to even the most casual of readers. This means disclosure in the headline or in the first part of the blog post and not a brief mention at the end!

The FTC guidelines are purposely vague, but their direction is clear. The FTC is taking a conservative approach to whether compensation to bloggers and others in Social Media--be it cash or free product--must be disclosed to consumers. The Commission's guidance suggests that the sorts of arrangements that involve remunerating others to promote products via WOM make their blog posts and other comments in Social Media legal endorsements. Since these endorsements are not expected or recognized by consumers as paid media, the FTC believes that disclosure is most likely required.

Marketers and bloggers who engage in these sorts of commercial arrangements must understand their legal obligations and the risks of failing to adhere to FTC laws pertaining to advertising. Marketers must be prepared to ensure that bloggers disclose material relationships and do not make false or unsubstantiated claims; bloggers who are compensated are also potentially legally liable for their failure to disclose commercial arrangements or for incorrect claims communicated via their blog posts.

As noted, the FTC believes each situation is unique and must be evaluated on a case-by-case basis. As enforcement actions occur in the future, we will be provided with further clarifications to how the Commission and courts interpret the legal issues of sponsorship, endorsement, and disclosure in our new and evolving Social Media channels.

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• Exploring Sponsored Conversations With IZEA's Ted Murphy (socialmediatoday.com)

I've been invited to participate in a webinar about Ethics in Blogging, sponsored by SocialMediaToday.com and The Social Media Group. The event will occur Thursday, September 24th at 1 pm ET/10 am PT. You can register to listen and participate for free, and the event is a steal at that price!

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