Are Inconsistent FTC Guidelines Unfair To Affiliate Marketers?
Imagine you’re in a nice hotel in a city you’re unfamiliar with, and you’re looking for some help making dinner reservations at a popular restaurant. What would most people do in this situation? They’d ask the concierge for recommendations.
Now, imagine that after asking the concierge for a recommendation, he responds, “Before I recommend this restaurant, I have to tell you about every time I’ve eaten there in the past 12 months, and I also have to tell you everything the restaurant has given me for free.”
The best word to adequately describe this interaction is awkward.
A similar scenario happens when you’re presented with a disclosure statement at the top of a blog post from anyone participating in affiliate marketing — which the Federal Trade Commission now requires.
Breakdown of FTC Guidelines
After updating its online advertising guidelines in 2013, the FTC has started cracking down on disclosure guidelines for affiliates. The problem isn’t that the FTC is enforcing its regulations; it’s that enforcement isn’t consistent for all online channels. It’s also worth wondering whether it’s fair that equivalent offline behaviors aren’t subject to the same practices.
The old guidelines required a disclosure to be posted somewhere on the site when a product was being endorsed or reviewed. Now bloggers, regardless of whether a post is endorsing a product or just discussing its merits, must include a “conspicuous” disclosure explaining that the author was compensated for featuring the product on his blog or is part of a company’s affiliate program.
The disclosure requirement isn’t the problem so much as the lack of clear guidelines for merchants with affiliate programs and inconsistent enforcement across other online and offline channels.
Different Treatment for Offline Equivalents
To understand how the new guidelines impact blogging, imagine these offline equivalents where it’s perfectly acceptable not to disclose the full nature of the business relationship:
- Travel agents offer their services for a nominal fee and receive commissions from vendors when customers book stays at certain hotels or tours with partner companies.
- Pharmaceutical representatives don’t disclose to prospects what their commission percentages are because there’s a common understanding that free samples are tools for facilitating a relationship with a physician that will eventually turn into a sale — and a hefty commission.
- When you’re closing on a house, it’s standard practice for a lawyer to suggest title insurance, and it’s well-known that title insurance companies pay lawyers hefty commissions. But can you imagine the awkwardness if the lawyer had to disclose his commission in the same sentence as suggesting title insurance — before the suggestion even happened?
Problems Caused by Lack of Etiquette Online
You don’t really need to worry about how uncomfortable the above interactions would be because social etiquette ensures they won’t happen. But as we all know from email and text message communications, etiquette doesn’t transfer as easily to written communications. Several problems plague bloggers and online marketers as a result:
1. Damage to a Blog’s Editorial Integrity
Readers follow blogs because of their editorial integrity and quality content. A paragraph-long disclosure at the beginning of a post is disruptive, detracts the focus from the writing, and could cost a blogger her credibility and ability to make money.
2. Inconsistency Across Marketing Channels
Is there any difference between paying for a banner ad and paying a blogger a percentage of the sale of a featured product? If you agree that there’s not, then you’d also agree that it seems like the new guidelines unfairly target the affiliate business model.
Furthermore, why don’t the guidelines apply to display or programmatic ads that are keyed off the site’s content? FTC policy is becoming nuanced in terms of what is and isn’t O.K., which could have repercussions in other types of online marketing (e.g. native advertising).
3. Unclear Compliance Guidelines
The guidelines originally targeted bloggers who were endorsing a product. While a disclosure for an endorsement is understandable, the new guidelines require the inclusion of an FTC disclaimer if a blogger has so much as an affiliate relationship. The language a blogger should use when disclosing that relationship is also unclear. The new guidelines state that the language must be “understandable,” but there are no specific instructions on what type of verbiage should be used.
4. Discrediting the Reader
The guidelines undermine a reader’s capacity for common sense. My basic understanding of business tells me that no one works for free. A lawyer most likely isn’t offering title insurance entirely out of the goodness of her heart, nor is the travel agent booking exotic vacations for other people just for fun.
A responsible reader already operates under the assumption that bloggers probably aren’t endorsing a product for free. But if there are going to be guidelines, they should be consistent across any channel needing consumer protection. Unfairly targeting a particular business model not only affects the relationship between affiliates and merchants, but it could also drive faithful readers away from blogs they’ve followed for years.