Editor's Notes : Is That You, John Mackey?

June 2009 By Hallie Mummert

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Two summers ago, Whole Foods CEO John Mackey was exposed for using a pseudonym to post negative comments about rival organic grocer Wild Oats on Yahoo Finance. At the same time, he was gushing about both his business leadership skills and his company’s value. What some chalked up to a bizarre display of self-aggrandizement, others pegged as unethical and possibly illegal behavior given that Whole Foods went on to purchase Wild Oats. The most important of those “others” is the Federal Trade Commission, which now is reviewing its advertising guidelines that relate to endorsements and testimonials.

The rapid swell of social media marketing, and particularly the payment or influencing of bloggers, has drawn the agency’s scrutiny. At issue is the transparency of the relationship between a writer and the product or service being reviewed. If a marketer either paid the writer or provided its product/service free of charge in return for a review, the FTC wants those ties disclosed and the claims monitored by the marketer just as they must be for TV commercials, etc.

Considering that 92 percent of consumers report being influenced by user-generated product reviews and 65 percent say social media helps guide their purchasing decisions, according to a 2009 ForeSee Results study, the FTC is not crazy to expect a rise in Mackey-like subterfuge. With some guidelines in place, the distinction between unbiased editorial and cloaked advertising will be clear for bloggers and marketers, and thus consumers.

If developed properly, this regulation will be good for everyone—consumers, marketers, bloggers and online marketing services firms. It protects the value shoppers find in expert blogs, social media communities, product reviews and other online shopping tools. The last thing we want is for people to grow distrustful of these new mechanisms that add ease to the online shopping process.

For an example of a marketer with a strong user-generated product review feature, check out the depth of information presented by Amazon.com. Not only can you see how many people commented on a product, but also how those rankings stack up by percentage; the “most helpful” favorable and critical reviews as rated by shoppers; the dates of reviews; whether the poster used his or her real name; and many more details that give you confidence in the comments’ authenticity.

While this level of customer interaction and product review functionality requires a significant commitment, consumers are growing ever more reliant on user-generated content. And just as specifics make print testimonials come alive, they also turn random postings on a Web site into something shoppers can believe in. Start where you can with user-generated content, but make sure you build in the checks and balances that allow customers to trust you with their support.

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