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Legal Pitfalls of Social Network Marketing



The Lure of Social Media
Social networking is all the rage amongst cutting edge marketing gurus.  Rather than force your message down the throats of random unreceptive consumers, social networking provides a platform whereby your best customers proselytize your message for you.

Not only is having customers doing the heavy lifting cheaper and easier, it is much more effective. Who is a potential customer more likely to believe, an infomercial or a friend? Assuming a certain savvy in friend selection, the answer is clearly the friend. When multiple friends join in evangelical rapture around a product, the drive to purchase soon becomes irresistible.

Off the Charts ROI
The low cost and high value of advertising via social networks is not lost on savvy companies. Hiring a handful of hipsters to tout your product’s virtues online is relatively inexpensive.  Moreover, the results can be quite impressive. Not only will an effective social networking campaign result in a significant increase in sales, but it will increase brand loyalty and perceived brand value as well. 

The Necessity of Disclosure

One problem often overlooked by marketing agencies, however, is the necessity of full disclosure. While anyone is free to profess the wonders of Screaming Monkey Slingshots, if I were receiving compensation for such a promotion, I would have to ensure this relationship is clear to the you, the potential Screaming Monkey Slingshot purchasing consumer. 

The Law
In 2006, the Federal Trade Commission made it clear that if a paid endorsement "might materially affect the weight or credibility of the endorsement . . ., such endorsement must be fully disclosed. More recently, the United Kingdom has adopted similar provisions into it’s lengthy new Consumer Protection from Unfair Trading Regulations. These prohibitions extend beyond merely paying stealth marketers to exploit social networking channels. The prohibitions extend to enlisting employees or other paid personnel to post anonymous comments, to advising fans to deceive others as to their involvement in a campaign and to posting fake product reviews.

The Ethics

So, what constitutes "full disclosure?" Unfortunately, there are few hard and fast rules. Obviously, regardless as to the extent of your disclosure or lack thereof, you never want to deny a paid relationship or deceive a consumer as to its existence. Beyond that, the message, the medium, the product and the promoter, all play a role in what constitutes acceptable minimum disclosure (AMD).

Blacklisted for Life
To assist companies in this regard, the Word of Mouth Marketing Association’s Ethics 20 Questions provides a self-assessment to determine whether you might be in danger of violating not only government prohibitions on word of mouth advertising, but also your own customers’ trust. Of particular note is question number 19, regarding "Hiring an Agency."

The question asks whether the advertising agency you are considering has "previously engaged in unethical practices." This should frighten a lot of marketers considering launching a social networking campaign. In addition to placing your agency at odds with the federal government, an ill-conceived social networking campaign may black-list your agency for life.

Brett Trout

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