• by Ted Murphy , Op-Ed Contributor, August 13, 2012

According to this summer’s State of Social Media Sponsorship report, only 38.5 percent of marketers acknowledged reading and understanding the FTC guidelines regarding paid social media. More than 20 percent had never even heard of them.

While more and more brands rely on sponsored content to engage consumers in conversations and drive awareness, we still need more clarification about what is considered ‘compensation’ and how marketers should manage disclosure.

History of disclosure

First, let’s talk about what social media sponsorship is. Often called SMS, it’s when a social media publisher is compensated in exchange for a mention, promotion or review through that publisher’s social media channels. “Compensation” is anything from cash to free products or services or experiences, discounts and coupons.

When paid blogging was first introduced to the market six years ago, the backlash was swift and loud. Even as the platform grew at triple-digit rates, the issue was clear: putting disclosure at the center of every campaign was necessary to align with social media’s promise of authenticity.

On December 1, 2009, the FTC officially began enforcing their new “Guides Concerning the Use of Endorsements and Testimonials in Advertising,” which specifically address social media. Under the new guidelines, marketers and social media content creators are responsible for disclosure of material relationships and the accuracy of content created as part of social media marketing campaigns.

What it means for marketers

In a nutshell, the FTC guidelines state that marketers are responsible for:

• Education: Obligated to educate and inform people participating in social media marketing programs of their responsibilities surrounding disclosure and claims.
• Monitoring: Responsible for actively monitoring each piece of content created by campaign participants to ensure compliance with the guidelines.
• Enforcement: Must halt any program or individual involved in deceptive representation upon discovery. Marketers should make reasonable efforts to correct any misinformation and discontinue utilizing individuals who fail to comply with the guidelines.

Staying out of trouble

Social Media Sponsorship is a rapidly growing category for brands. Nearly 56 percent of marketers who responded to the State of SMS survey said they have compensated a social media publisher with cash, trips, gift cards, free products, coupons, discounts or other type of incentives, with the expectation that there would be some mention through their social stream. This is an increase of 4% compared to 2011.

Our estimation, however, is that more marketers than were reported in the survey are engaging in social media sponsorship. For example, when a company hosts a group of bloggers at company headquarters, that’s a form of sponsorship, but may not be considered as such by the respondent.

There is a gray area, related particularly to product giveaways. If the giveaway is open to anyone who follows the brand and is promoted by the company, the recipient is not required to disclose it as compensation. Less clear is when a product is given only to key influencers, regardless of the expressed (or not expressed) expectation that it will be talked about. If a brand is not sure, err on the side of caution. It can be as easy as placing a note with the product that requests the use of a disclosure hashtag or other identification.

The full story

Download the complete FTC disclosure guidelines here: http://izea.com/advertisers/ethics/.