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David Husnian
David Husnian
The "honest marketer", an oxymoron? Not in this case :-) I believe marketing, truth and integrity can all be used in the same sentence. Doing just that I have taken my monthly income and turned into my weekly income... (daily is next!)
 
Posted in Business / Entrepreneur / Marketing

Are the New FTC Rules the Death of Internet Marketing?

Oct. 7, 2009 5:59 pm
Categories: Other Stuff

A couple of months ago I wrote a couple of blogs post about the FTC investigations that could have implications on Internet Marketers; see You May Be at Risk, Don’t Let the FTC Shut You Down, Part 1 and You May Also Be at Risk for This, Don’t Let the FTC Shut You Down, Part 2.

I promised to follow up when there was more information.

On October 5, 2009, the U.S. Federal Trade Commission (FTC) approved finals revisions to some guidelines that will have an impact on Internet, and other, marketers; guidelines that haven’t changed since 1980 – almost 30 years ago!

The changes can have a SERIOUS affect on marketers who use testimonials; at least those who use specific types of testimonials, a well as those who get/do reviews and endorsements; with hefty fines involved.

The World As We Knew It

So many people use testimonials from customers that say they got good, specific results from one of your products. Maybe it was:

  • I earned $13,284 in just 4 weeks using …
  • I lost 53 in 10 weeks following …
  • My son raised his grade point average 1.6 points after getting …
  • I got 38,912 new Twitter followers just by …
  • etc.

Sounds familiar?

I know you’ve seen them and, if you’ve been marketing for any time at all you’ve used them because they attract people and they improve your conversion rates.

Under the old guidelines just including a “results not typical” statement was enough to protect you; it was something that was called the “safe harbor”.

Well, my friends, there is no more safe harbor.

A Brave New World

The new FTC guidelines now say that a safe harbor does not protect you.

They say, “advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect.”

Before you say that you never say those are typical let me tell you that first, you’re halfway fooling yourself (truthfully, don’t you want the prospect to think that the results are typical and you only use the “results not typical” because you had to not because you wanted to).

Second, the FTC doesn’t care.

If you use any specific information from a “consumer”, it will be presumed to be conveyed as typical; guilty without presumption of innocence.

What you need to say is what typical results might be, for example:

  • I earned $13,284 in just 4 weeks using … Of course, the average person doesn’t even look at the product and just wastes their $997.
  • I lost 53 in 10 weeks following … Paula’s results were the best we ever heard of and most people actually gain 10 pounds as they sit around eating high fat, high calorie foods while skimming through our products
  • My son raised his grade point average 1.6 points after getting … Bobby is so rare that we don’t even believe it and anyway, that was just for one quarter and now his GPA is below what it was.
  • I got 38,912 new Twitter followers in 1 month just by … Great job Shelly, too bad you got banned. Fortunately, most people don’t get banned getting their 6 new followers in a month.

While it’s obvious I’m being facetious in those examples the truth of the matter is that you’ll need to specifically say what a typical consumer can expect.

This means 2 things:

  1. You actually need to know that information
  2. You need to be honest and brave enough to show the real results

Otherwise, you’re going to be paying a 5-figure fine per violation.

What Can You Do?

There are several things you can do, each with advantages and disadvantages.

Say “Let ‘em Find Me”

Just keep using the testimonials and let the FTC find your ads and then find you.

Advantages are that you’ll continue to reap the benefits and it actually may be hard to find and prosecute you.

Disadvantages are that, well… they’ll find and prosecute you and shut down your business and strip you of all your worldly possessions.

Not the option I’d choose.

Keep Using the Testimonials and Comply

If you can show consistently good “typical” results this is a great option.

It can still be a powerful conversion technique to be able to say something like “John earned that $13,284 in 4 weeks but, to be honest, most people don’t do that well. The average person earns $2,533.79 in 4 weeks but imagine how you’d feel doing that (and, who knows, maybe you’ll be the next John!)”

Advantages are that you still have a great tool in your sales tool box and the honesty may actually get you more sales.

Disadvantages seem to me to be that you may lose sales and that, over time, the FTC may require you to keep that “typical results” updated; I really don’t know if they will but it makes sense they would or the guidelines don’t really have much meaning and would be easy to get around.

Definitely an option I’ll use where applicable,

Stop Using Those Testimonials

You can stop using those types of testimonials.

The guidelines don’t have a problem with general testimonials “I’m very happy with mu purchase” or other general comments about your product or you.

They can be powerful, particularly when used strategically and some people don’t think those specific testimonials are that helpful anymore in our more jaded society.

Advantages are you don’t have to worry about these new guidelines.

Disadvantages is that if specific testimonials were a key part of your sales pitch you’ll lost sales or need to rewrite your sales copy (hmm, that may not be a negative).

I’ve always used general testimonials and certainly will continue using them.

Figure Out How to Get Around the Guidelines

I am sure there are loopholes that could be exploited.

You and your lawyers could figure out what they are and use them.

Advantages are you’d still get the benefits, at least until the loopholes are available.

Disadvantages are that you’re wasting time trying to scam the system rather that marketing and you may spend a lot of time and money in court even if you win.

To me this is foolish, like all those people who spend time fighting progress instead of using it to propel them forward.

Use Testimonials as Icing Not Cake

Ultimately, as Gary Halbert said, it is the offer that is the most important thing.

Make sure your offer is so good that you don’t even need testimonials.

Over deliver on the value and while testimonials might help a little the percentage will be small and you won’t need to violate the guidelines.

Advantages are that ultimately you’ll make more money in the long run and build a stronger business.

Disadvantages are that it will take more work on your part to create and maintain a high value offer.

I love this option because it is what I have been doing and preaching.

Quit Marketing

Yeah, this is a weird option but one that some people will take.

Fortunately, most of those people weren’t honest, ethical marketers just people muddying the waters so having them gone will benefit people like you and I who are out to try to screw people around.

Advantages are … umm … hmmm … they don’t have the hassle of picking one of the other options (sorry that was the best I could come up with :-)

Disadvantages include the loss of business and income.

I am NOT quitting but will be taking advantage of this opportunity to improve what I do.

That Isn’t All

The guidelines also made changes to another common method marketers use: the paid or celebrity testimonials.

While a “material connection” between a endorser and an advertiser had to be disclosed, although it wasn’t always, particularly with Internet Marketing, it is now more explicit so that even bloggers who write reviews, or make other endorsements, for some kind of payment (cash or “in-kind” payment) must explicitly say that there was “payment” for the review.

So, if you write a review/endorsement for a friends product and they write a review/endorsement for yours or if you give someone a free product to review or endorse then that must be disclosed.

Don’t disclose and you’re liable.

The FTC also made clear that “celebrity” endorsements must be particularly careful to disclose any “material connection”, even if they just mention your product in a blog post or Squidoo Lens or even a Twitter Post.

Beware if you use this type of connection between colleagues and friends.

Questions, Questions and More Questions

Some questions you might ask yourself are, what if you comply but some (or even one of) your affiliates don’t, are you liable?

What if you are an affiliate? There is an indirect material connection in that you get paid for your, essentially tacit, recommendation but only if a sale results.

Does that apply in this case?

What if the offender is not in the U.S., will you be held liable even though the FTC can “get” the other person?

What if you are not U.S. based, should you comply anyway?

Or, if you are U.S. based, does it put you at a disadvantage to competitors that are not U.S. based since they may be able to continue to use specific testimonials that could lead people astray whereas you can’t?

Will the prospects buy the “made $13,284” instead of the “made $13,284 but…”?

I don’t know any of the answers to these and other questions but you should be thinking about them and finding out your own answers.

Conclusion

The unanimous approval by the FTC on these issues means they’re pretty serious about them and you’d be wise to be sure you comply; particularly if you are a successful direct marketer; you can read the FTC press release here.

Either don’t use specific testimonials or back them up with actual data.

And be careful to disclose any “material connection” when you review a product or explicitly or implicitly endorse one.

The FTC is serious and the fines can quickly add up.

So is it the “death of Internet Marketing?” Despite some of the hype it isn’t, in fact, it should make it easier for honest and ethical marketers.

How does this impact affiliate marketing?

How does this balance the scales between U.S. and non-U.S. based people?

How does this impact you?

What changes will you make?

Did the FTC mess up?

Leave me a comment and let me know.

Talk soon,

DavidThe “Shameless” (but “Ethical”) Marketerhttp://www.Twitter.com/DavidHusnianhttp://www.8-8-8Sale.comhttp://www.MusicForInternetMarketers.comhttp://www.SecretsOfGoogleAdwords.comhttp://www.MadMondaySale.comhttp://www.2ForTuesdaySale.com

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