Killing the Viral Marketing Buzz
For the first time, the Federal Trade Commission has tackled the issue of word-of-mouth marketing. On Monday, the agency pulled off the feat of giving critics and marketers something to be happy about by choosing not to regulate the practice more strictly while making it clear that companies that engage in the practice must be up front about what they're doing.
What is word-of-mouth marketing, you ask?
Well, you probably know it better as "buzz," "stealth," "viral" or "guerilla" marketing, which are promotional techniques that can take all sorts of forms from a Ricky Bobby MySpace page to teenagers hyping a new CD to 20 of their closest friends at the behest of a record label.
Commercial Alert, a marketing watchdog group in Portland, Ore., asked the FTC last year to look into word-of-mouth marketing practices as a form of deceptive advertising and issue some guidelines.
The agency staff responded saying new guidelines weren't needed because current guidelines on commercial endorsements applied just fine, thank you.
The commercial endorsement guidelines say if there's a relationship between the seller and the endorser of a product that might affect the credibility of the endorsement, that relationship has to be disclosed. For instance, someone hawking diet pills using a testimonial by a happy customer has to tell you if that happy customer happens to be one of his distributors.
Commercial Alert's Gary Ruskin was not too happy that the FTC staff turned down his request to probe what companies are doing with word-of-mouth marketing or that they declined to issue guidelines, but he was glad to see the agency applying the commercial endorsement rules to this new domain.
The Word of Mouth Marketing Association, which was created to make sure word-of-mouth marketers stay on the up and up, was happy because it saw the FTC decision as an endorsement of its attempts at self-regulation.
As far as WOMMA is concerned, companies only hurt themselves if they're perceived as trying to dupe consumers.
Surveys have shown that most adults are turned off when they find out that someone they know who recently recommended a product to them was shilling for a company. Kids, however, seem to be more forgiving, according to Bob Ahuja, a researcher at Xavier University in Cincinnati who has done focus groups with kids about buzz marketing.
Ahuja found that kids don't mind so much if a friend pushes products to them without telling them they're doing so at the behest of a company, as long as the products are things the kids want. Underlying that laissez-faire attitude about word-of-mouth marketing was general cynicism about advertising, best summed up as "there's a sucker born every minute."
Ahuja found the latter especially disturbing.
In fact, what makes word-of-mouth marketing sinister to its critics is its potential to undermine genuine human relationships and to turn us into a nation of sell-outs. The question remains, however, how effective it really is.
What struck me most about word-of-mouth marketing is how mundane and uncool some of the products are that it is used to promote. Procter & Gamble marketing arm Tremor has employed WOMM to push things such as Dawn dishwashing liquid and milk. The Tremor site for teens offers tips on "how you can reinvent yourself for next school year by drinking Milk."
I mean no wonder the buzz marketers were called in.
What do you think the FTC should do about word-of-mouth marketing?
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