FTC To Investigate 'Viral Marketing' Practices

mcflaherty writes "The Federal Trade Commission has stated that it is going to investigate the use of 'Viral Marketing' by corporations. This is the type of advertising that seeks to start a word of mouth campaign for the product via consumers themselves. Previously, consumers themselves set the buzz. But lately advertisement firms are stepping up to the plate themselves, seeding the market with buzz that looks independent of the company, but is in fact funded by them. The crew at Penny Arcade contend that corporate generated buzz is not Viral Marketing, and perhaps Guerrilla Marketing would be a more apt term. Either way, it appears to be a profitable advertising model."

How low can they go?

[Rosco P. Coltrane]

Either way, it appears to be a profitable advertising model.

Of course it is, it exploits people's inherent trust for their friends' judgement: "if X says this and X is a nice guy, then X must be true". Only if X is paid by a corporation to spew out nice stuff about some product, it basically wrecks that basic principle of human communication.

Fitting story

[wile_e_wonka]

IS slashdot trying to redeam itself after being conned into an instance of viral marketing [slashdot.org]?!

See particularly this portion [slashdot.org] of the comments/story...

Re:Astroturfing

[Rosco P. Coltrane]

Speaking of that sorry psp astroturfing site, did you see the last entry?


Busted. Nailed. Snagged. As many of you have figured out (maybe our speech was a little too funky fresh???), Peter isn't a real hip-hop maven and this site was actually developed by Sony. Guess we were trying to be just a little too clever. From this point forward, we will just stick to making cool products, and use this site to give you nothing but the facts on the PSP.

Sony Computer Entertainment America


Well, I must say, as much as I despite Sony these days, it takes balls to come clean and coldly admit to trying to con people, instead of simply pulling the plug on the site. Hats off Sony, for once you did the right thing.

When did it become illegal?

[Intron]

Why are they investigating? Is it illegal, or is the FTC overfunded?

If they want to investigate deceptive advertising that has cost Americans billions of dollars, then I would prefer that they investigate the Iraq war.

Re:Astroturfing

[thePowerOfGrayskull]

It was no accident that site was 'discovered' as fake. How easy would it be for someone to use a privacy service on their registration? Personally, I think it worked very well - that site got more traffic than it ever would have if it had been legit.

Don't they have anything better to do?

[needacoolnickname]

Whoopee! The advertisers found out what the kids like and decided to use that to try and get more eye balls.

How about just dealing with it when the compaines lie and that whole false advertising thing?

Do people really think places like youtube and myspace were created for the community to use? No, they were created so they could get bought out by the big corporations and those corporations could put advertisments up.

Oh, and having a link in your signature to something you are trying to hock and replying to this article that this should have been looked into a long time ago... yeah, kinda hypocritcal.

Wii

[Laz10]

I think that in the future the way we (slashdot/digg/bloggers) marketed the Wii will be a textbook sample of how viral marketing is done.

Re:How low can they go?

[IgLou]

Free speech should be for people, anything that is "said" by a business should be regulated. Consider this, disclosure prevents leaking information out about anything that could affect your stock price ahead of your official financial statements. That's regulated for a reason. If a corporation is trying to generate hype and calling it "viral marketing" is a lie in my books. The corporation is advertising through viral marketing and I as a consumer deserve to know when I'm looking at a fictionalized account for the purpose of advertising or if I'm looking at the real deal. I deserve to know if a company is trying to sell me something but disguising it as something else.

Santa says "what about ethical? ho ho ho!"

[Toby The Economist]

> Either way, it appears to be a profitable advertising model.

So is putting crack cocaine in your cola drink.

Which brings us neatly onto cigarette sales.

Were all Slashdotters born yesterday?

[xxxJonBoyxxx]

Were all Slashdotters born yesterday, or just the original poster?

Previously, consumers themselves set the buzz. But lately advertisement firms are stepping up to the plate themselves, seeding the market with buzz that looks independent of the company, but is in fact funded by them.

For Christ's sake, this has been the way the world has worked for thousands of years. (Remember the story about John the Baptist starting the buzz about the "one who comes after"?)

"Consumers" have NEVER "set the buzz." If you think otherwise, I'd like to meet you, because there's a good chance you'll be buying whatever I'm pitching in 3-6 months. (And you'll think it was your idea too.)

Re:How low can they go?

[Nasarius]

You're pretty much correct. So-called commercial speech is just barely above obscenity in terms of categories of protected speech. The First Amendment doesn't give you the right to deceptively advertise your product...or bribe politicians, or buy up all the media outlets in the country, etc. That's what makes the "money is speech" assertion so absurd.

De Beers, Viral Marketing Since 1888

[Ranger]

I'm shocked, shocked I tell you to find that deceptive advertising is going on. I mean it's not like they, as in the ubiquitious they, think people are malleable [jesuscampthemovie.com], easily led astray [hannityisamoron.com], brainwashed [xenu.net], etc [perkel.com], etc [wikipedia.org].

De Beers [theatlantic.com] has the longest running viral marketing campaign in history. It started in the 1880's and is still going strong today.

Re:Astroturfing

[EzraSj]

In advertising, any press is good press. It's about name recognition -- at least that's what friends in the business have told me.

Sony already has name recognition. Name recognition is not what they're trying to get here, what they're trying to get is positive association - and they've gotten the exact opposite.

Re:Question . . .

[morgan_greywolf]

Advertising is commercial speech. Commercial speech is regulated by, among other agencies, the FTC. For example, it's illegal to make false claims about a product or service. Nissan can't make claims that a car they sell can do 0 to 60 under 3 seconds unless the car can actually do 0 to 60 in under 3 seconds. McDonald's can't go around claiming that the Big Mac as it is today is low in fat, unless they come out with a 'Tofu Big Mac' or whatever.

There are all kinds of other laws regulating commercial speech: cigarette advertising must include disclaimers stating that smoking is hazardous, 'bait and switch' advertising tactics are illegal, etc.

One reason why the FTC is investigating 'viral marketing' practices is that they are trying to see if advertisers are using viral marketing practices to try to to do a 'run around' on the various FTC-imposed marketing rules. Another reason is that they are trying to see if the marketing practice is unfair to the consumer, because one of the charters of the FTC is to make sure that marketing practices are fair to the consumer.

My point is that no one should really be surprised by any of this... regulation of commercial speech is one of the things that the FTC does.

Re:Astroturfing

[Anonymous Coward]

Amen, brother. Marketing, while on the face of it appears to be a natural organism of capitalism, is actually an out of control cancer. While capitalism supposes that consumers make informed decisions and have the requisite information to do so, marketing deliberately sows confusion and murkiness. Marketing produces irrational behavior, which clever leeches can game and manipulate to gain revenue they otherwise might not get on their own merits. It is a flat out waste of energy as industries wage wars back and forth for the same share of consumer spending.. which could be noble, if it was producing more accurate valuation and decisionmaking in the long run--but it is not. All it does is agitate consumers and make them run about full title dazed and confused.

Re:Astroturfing

[cptgrudge]

I'd be willing to bet that most people in the demographic they were aiming this for know what a PSP is already. I was halfway thinking of getting a PS3, but all these little things continue to turn me off to it. The chances of me purchasing a PS3 are closing in on the chances of me buying a PSP - that is to say, No Chance.

In the end, this isn't just some "bad press" I'm hearing about; I've been insulted. Sony seems to think that the demographic of people that will buy their PSP product, of which I'm a part, is both illiterate and unable to spell properly. Granted, Sony hasn't insulted me personally, but doing this has nonetheless lowered my view of them even further.

They have sacrificed their target demographic's goodwill for gaining a token amount of mindshare outside of the demographic. And the thoughts associated with that mindshare may be: "Golly, those gamers sure are pissed at Sony. Maybe I'll get little Timmy a DS instead of a PSP."

Re:How low can they go?

[Anonymous Coward]

Good, makes it a bit easier to figure out who your real friends are.

(Really, if you can't tell the difference between real enthusiasm and fake advocacy, then you've got bigger problems than being "victim" to marketing.)

Not necessarily...

[KingSkippus]

The alternative to advertising is paying more for things.

My devil's advocate reaction to this is, "not necessarily." If company X didn't have to spend a billion dollars to counteract company Y's $900 million advertising budget, they could use that money to help save consumers dollars. Or they could put it into R&D and engineering to actually make a better product instead of just telling us it's a better product.

Also, I (and a lot of other people) are more than willing to pay a premium for ad-less products. Does anyone remember the days way back when most cable channels didn't have ads? Now you have to pay the cable company for channels with ads, and the channels that don't have ads are very expensive. (Yet notice how they still have a lot of subscribers for that premium.)

I myself don't watch ads on television at all. Every show I want to watch, I either get via iTunes download for $2 a pop (or a season subscription), or by less scrupulous means that I don't want to go into if it's not available by any other means (wink, wink). I have a few small web sites I run for personal reasons, and I buy the hosting space at a reasonable non-free price so that I don't have to subject my visitors to a barrage of ads. I run Firefox with AdBlock so that I can avoid as many ads as possible while browsing the Internet.

I still run across ads now and then, as they're unavoidable in society. The point, though, is that I still spend plenty my share of disposable income, companies still make plenty of money off of me, but they have to do it by actually having products of decent quality that I want or need, not by yelling in both my ears constantly.

In other words, there is another way.

Personally, I think the best advertising any company can have is virtually free. It's from friends who have products and tell me about them. It's from reputable website reviews that describe up-and-coming technology and products. It's from companies' own websites that provide as much real information about products I'm interested in as I need to make an informed decision. All of these things are dirt cheap compared to the billions that companies spend on radio, television and web ads that I never see or hear. Go figure.

A better solution would be to teach children how to think critically

Amen.

Protect Me, Oh Federal Government

[ml10422]

I'm a grown-up. I don't need the Federal government to protect me from viral advertising.

For my entire life, I've been exposed to celebrity endorsements, and the only effect has been to fine tune my bullshit filter.

Please refund the portion of my taxes that is going to paying these guys salaries.

Re:Question . . .

[HappySqurriel]

A simple question in response to your question ...

Why is important to tell people who paid for a political comercial when it was played on TV?

The reason is simple, because it is reasonably simple to mislead people about the source and content of an advertizement. Consider the harm to a political campaign if people started making fake comercials for their opponents in order to make their supporters look stupid ("My name's Dan, and I think all these 'feminists' need is a good ing. I support John Smith because he believes a woman's place is in the kitchen.").

As comercials move away from being in comercial breaks and billboards to product placement and blogs it is important to tell people that they're being advertized to and who is doing the advertizement.

Consider the damage that would be done to the XBox had Sony created a fake blog on how to pick up 12 year old boys on XBox Live (and made sure that this got noticed on major news sites). If Sony got away with it, XBox Live could be killed by people's outrage.

Re:Astroturfing

[spun]

You know, I say the same thing about my industry, the baby torturing industry. Sure, there may be some evil people in the baby torturing industry but most of us are decent hard working Americans just like you.

Seriously, advertising as an industry has no redeeming qualities. It consumes resources and produces nothing of value. It convinces people to do or buy things they wouldn't have if they thought about it rationally, and it does this through deceit and making people feel insecure. It's not quite as bad as baby torturing, but it certainly isn't something any decent, moral human being would ever want to do.

Let me guess, you're in advertising? If so, why don't you take some advice from comedian Bill Hicks?

"By the way if anyone here is in advertising or marketing... kill yourself. No, no, no it's just a little thought. I'm just trying to plant seeds. Maybe one day, they'll take root - I don't know. You try, you do what you can. Kill yourself. Seriously though, if you are, do. Aaah, no really, there's no rationalisation for what you do and you are Satan's little helpers, Okay - kill yourself - seriously. You are the ruiner of all things good, seriously.

No this is not a joke, you're going, "there's going to be a joke coming," there's no fucking joke coming. You are Satan's spawn filling the world with bile and garbage. You are fucked and you are fucking us. Kill yourself. It's the only way to save your fucking soul, kill yourself. Planting seeds. I know all the marketing people are going, "he's doing a joke"... there's no joke here whatsoever. Suck a tail-pipe, fucking hang yourself, borrow a gun from a friend - I don't care how you do it. Rid the world of your evil fucking machinations. I know what all the marketing people are thinking right now too, "Oh, you know what Bill's doing, he's going for that anti-marketing dollar. That's a good market, he's very smart." Oh man, I am not doing that. You fucking evil scumbags! "Ooh, you know what Bill's doing now, he's going for the righteous indignation dollar. That's a big dollar. A lot of people are feeling that indignation. We've done research - huge market. He's doing a good thing." Godammit, I'm not doing that, you scum-bags! Quit putting a godamm dollar sign on every fucking thing on this planet!

"Ooh, the anger dollar. Huge. Huge in times of recession. Giant market, Bill's very bright to do that." God, I'm just caught in a fucking web! "Ooh the trapped dollar, big dollar, huge dollar. Good market - look at our research. We see that many people feel trapped. If we play to that and then separate them into the trapped dollar..." How do you live like that? And I bet you sleep like fucking babies at night, don't you?"

And to that let me add: anyone in the business of mind control, I hope you get some horrible disease and die a painful death. As Bill said, there is no excuse for what you do.

Re:Astroturfing

[ScentCone]

Advertising is evil, and shouldn't be permitted.

Whew.

OK, so now that we're all back to having to tell each other what building downtown contains what businesses (since, I presume, you wouldn't even want the Yellow Pages to exist)...

How does your local farmer communicate the fact that, this week, he's got some really nice radishes? Let's see... he can't put up a sign (eeeek! advertising!). He can't stand on the corner and fill you in on his inventory for the week (gaaah! advertising!)... no, he has to wait for everyone to call HIM and ask what he's got, right? What if he suddenly has to pony up for a new tractor transmission (um, assuming that he's actually aware of where to shop for one at a good price, since no one in that line of work is allowed to advertise, right?), so he's interested in quickly generating customers for a bunch of his produce at a better than usual price. Of course, you wouldn't want him to be able to actually tell anyone that they're able to save some money, this week, by doing business with him, would you?

No point bothering with more of this. I'm sorry that you're so unable to exercise critical thinking in the marketplace. I'm sorry that you think it's better to outlaw communication about goods and services than it is to expect parents to teach their kids how to prioritize a little bit, or critically evaluate something that's being said to them. Those skills will also help them when evaluating other pitches. Say, from politicians that are trying to sell them on the notion that, if elected, they'll save them from their own inability not to buy things, by outlawing advertising. Sweet, sweet irony. Nice to hear from you, though, here on advertising-supported slashdot.

A few problems with that...

[dslauson]

In the literal sense, corporations do not speak. People who work for them do.

Let's say I work for a studio that is producing a new movie. If I go out on a movie forum and say "Have you heard about this movie that's coming up? It's going to be pretty cool!!!", that could be considered viral marketing.

So, what if it's true, and I really believe it? Even if it's not, you can't prove that it's false or misleading. An opinion, by definition, is subjective.

Also, where do you draw the line? I'm a software engineer. Am I not allowed to say good things about my company's products when I'm making the rounds at Christmas parties? Do I have to preface it every time with, "FYI: I'm an employee of X company, and my opinions my be influenced by that."

And, if it was mandatory to identify yourself, that's very difficult to enforce. Online, it's easy to be relatively anonymous. And, if I'm talking about my product and I don't properly identify myself, what are you going to do, throw me in jail? Fine me? What is a fitting punishment for the crime of stating an opinion in the improper way?

I can see your point that it can be misleading and untruthful. However, regulating it is impractical and unfeasible, not to mention clearly contrary to the first amendment (I don't think your comparison to insider trading laws really holds water).

It is each of our jobs as an internet citizen to determine what information on the web is good, and what is total crap. That's the way it's always been, and I genuinely hope it remains that way so that we don't start down the slippery slope toward internet censorship.

Re:A few problems with that...

[Sj0]

You're not getting paid to be at the party and talk about how great your product is; you're not an actor, and that's the distinction here, at least for me. Walking down the street hearing conversations, having a beer with your buddies and overhearing some guy having a conversation -- are these people real, or are they just actors trying to get you to hear about their product?

As far as I'm concerned, no company should be allowed to engage in a mindfuck that severe.

Re:Astroturfing

[Sj0]

As opposed to advertising companies who think that exposing you to their work every second from the moment you wake up in the morning to the moment you go to sleep at night isn't enough, so they've got to lie their way into conversations and websites?

Neither government nor corporations are the ultimate power, neither should be given free reign at the expense of the other. What we need is some fucking sanity, and a good start would be getting rid of this practice. Fake testimonials need to be told about in print and on the radio and on TV, why are they acceptable in real life?