Last week, the FTC issued its first update in 30 years guiding the relationship between advertisers and the people who endorse their products.


It is no fun to side with the regulators, but I'm with the FTC on this one*. As stated in their "Guides" issued last Monday:
"To the extent that consumers' willingness to trust social media depends on the ability of those media to retain their credibility as reliable sources of information, application of the general principles embodied in the Guides presumably would have a beneficial, not detrimental, effect."
Credibility is critical for any industry, and particularly important for social media. Take the famously unregulated nutritional supplement industry. Quick–what words come to mind? Trustworthy is probably not near the top of the list.
I took a spin through the FTC report, and it reads overall as a reasoned, conservative guidance. It was developed over several years, and in consultation with 17 trade organizations ranging from the U.S. Chamber of Commerce to Interactive Advertising Bureau. This is not the work of overzealous regulators.
To me, the FTC's move is a statement of the obvious: social media has arrived. Collectively, blogs, social networks, and online communities exert an enormous influence on commerce. That the FTC is wading in is an acknowlegement of the power of social media, and it is only right to formalize the responsibility that comes along with that power.
If you want further proof that social media is a big industry with major commercial interests, check out the trade industry commentary, summarized in the report. The industry objections fall into the following categories: we'll regulate ourselves, blogger/corporate relations are too complex to regulate, the issue needs more study, and the regulation will have a chilling effect. Isn't this ripped from the playbook of any industry lobbying to stave off new regulation?
To be sure, many influential bloggers are way ahead of the FTC here. Check out the disclosure statements from Chris Brogan or Kara Swisher. They have set a high standard and great example for the rest of us. But a quick search of "bloggers" and "conflicts of interest" reveals plenty of instances where self-regulation isn't good enough. I found mommy bloggers, tech bloggers, and wine bloggers who downplay the influence of gifted products or travel, saying, in essence, "you can trust me, I have no obligation to say nice things about the products." This may be true as far as it goes, but isn't it human nature to look kindly on the companies that send a stream of FedExes to the door? Isn't it possible that these gifts influence opinions?
This perception–that gifts, travel, and other freebies cloud objectivity–is precisely the issue. All industries depend on trust and transparency as a context for business. But in social media, trust and transparency are the business. Social media is increasingly a primary influence on how we perceive products and brands. As marketers, we're figuring out the best way to participate in social conversations and networks–turns out that paying to influence bloggers is not the way to go.
So, to paraphrase that great de-regulator Ronald Reagan, it is high time that the FTC said trust, but verify. Not to mention enforce. I'd love to hear thoughts and comments, either hear or on Twitter at @motoole1.
*The FTC ruling was discussed at length on last Thursday's This Week in Social Media. Here's the link.