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Interpreting FTC's New Endorsement Guidelines

By Alan L. Friel

[Editor's Note: Many celebrities serve as product endorsers in advertisements. But outside these traditional endorsement settings, some celebrities tout goods during press interviews without disclosing that the product companies are compensating the celebrities for the accolades. In part to address this concern, for the first time since the 1980s the Federal Trade Commission (FTC) recently overhauled its guidelines and liability parameters for product endorsements and testimonials. The new guidelines also address the promotion of products through Internet, social networking and other new media. These updated guidelines, which took effect Dec. 1, also cover the use of consumer endorsements and reviews. Entertainment companies that promote products ' and celebrities who blog and tweet ' through new media should consider how these guidelines may affect their marketing practices.]

Increasingly, marketing is occurring virally, particularly via the Internet, mobile and other evolving media, through word-of-mouth (WOM), including by means of the use of product sampling and consumer reviews, comments and recommendations. Product sampling involves distributing products to influential new-media users/authors in the hope that they will positively discuss the product with their followers and friends. Such so-called “recommendation marketing,” which may or may not encompass product sampling, is well suited for consumer-driven social media and can take many forms ' ranging from paying or encouraging an influencer to write a blog or post or tweet about a brand.

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