The Federal Trade Commission Aims to Sharpen a Blurry Line in New Media

It is not just non-traditional media's growth that is attracting the attention of advertisers, says Wharton marketing professor Patricia Williams. These advertisers also recognize that those social networks, citizen journalists and bloggers "are seen by consumers as being outside the norms of traditional media [and therefore] lacking an underlying profit motive."

Consequently, consumers tend to drop their usual "persuasion filters" for information they get via the Internet from sources who appear to be regular people, offering what they know just to express their views to an audience with similar interests. "Whether it's bloggers posting positive reviews of products they got for free or nominal friends on Facebook or MySpace spreading positive buzz [about a product], we tend not to process that information the way we would traditional forms of advertising," says Williams.

That's why she supports the Federal Trade Commission's new rules requiring bloggers to disclose any connection they have with the makers of the products they endorse. The new rules also take aim at celebrities, who will have to make similar disclosures about products they promote on a talk show or on Twitter.

Williams notes that such endorsement practices are common on the web, but adds that traditional media have resorted to similar tricks. Magazine reviews of travel destinations and all sorts of printed "Top 10" lists, for example, are frequently written by people who received free trips, products or even cash.

Not surprisingly, there are those who oppose the new rules, which take effect December 1. Linda Goldstein, a partner a law firm that represents three marketing groups, told The New York Times that the rule represents "a seismic shift” in the blogging community. “We would have preferred the FTC to work closer with the industry to learn how viral marketing works.” And in its Cato@Liberty blog, the libertarian Cato Institute said "the FTC is putting itself in the business of guaranteeing the veracity of speech and the honesty and straightforwardness of bloggers. 'No' [in the Constitution's first amendment] means no law abridging the freedom of speech or of the press."

Williams' view — that the new media universe, in which the borders between content and advertising can be difficult to discern, requires additional regulatory oversight – is shared by Jonathan Zittrain, a professor at the Harvard Law School and co-founder of the Berkman Center for Internet and Society. He told The Times: "The rules are looking ahead to a quite possible future when there is a market to buy ‘authentic’ public endorsements.”