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