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Endorsements From Regular People Are Powerful, but Mind the FTC's Guidelines

8 May, 2012 By: Leonard L. Gordon, Jeffrey D. Knowles, Venable LLP’s Advertising

A recent AdWeek article highlighted a significant decline in the use of celebrity endorsers in television commercials. The article cited a report by brand research agency Millward Brown that found the use of celebrity endorsers has declined by half during the past eight years. Although it is not exactly clear what led to this decline, a 2011 study by Ace Metrix found that in a sampling of 2,600 TV ads, those ads featuring celebrities had, on average, lower effectiveness scores than non-celebrity ads.

Direct response marketers have long known the power of non-celebrity endorsers in both long- and short-form infomercials. The logic behind the use of “regular” people in commercials is straightforward. People often ask friends for recommendations in choosing all manner of products and services. Television – as well as social media outlets like Twitter, Facebook, Pinterest and blogs – allows consumer endorsements to circulate widely, increasing their power.

The Federal Trade Commission (FTC) also recognizes the power of “regular” people in advertisements. In late 2010, the agency released an updated version of its “Guides Concerning the Use of Endorsements and Testimonials in Advertising.” These guidelines, last updated in 1980, address the use of endorsements and testimonials across all channels, including the Internet and social media.

Marketers planning a campaign, whether online or offline, should keep a few principles in mind to avoid running afoul of the FTC:

• Marketers may be held liable if an endorser makes a false or unsubstantiated claim about the product. To limit potential liability, educate all endorsers about the need to ensure all statements are truthful. Marketers whose company sponsors or incentivizes bloggers should monitor those bloggers’ posts and take steps to halt continued publication of deceptive claims.

• Marketers without proof that an endorser’s experience represents what consumers will achieve by using the product must clearly and conspicuously disclose the generally expected results from the use discussed in the endorsement.

• If a connection exists between the marketer and the endorser that would affect how people evaluate the endorsement, that connection must be disclosed. That connection could include the endorser receiving free products from the marketer in return for blogging about the products, or the endorser being an employee or paid agent of the marketer or its ad agency.

Keeping these rules in mind while planning campaigns that utilize endorsements and/or testimonials should allow marketers to avoid running afoul of the FTC. Although past results are no indicator to future outcomes, it is worth noting that in several enforcement actions related to the FTC’s guidelines, the agency has been more forgiving of marketers that had social media policies in place that explicitly addressed the proper handling of endorsements and testimonials, as well as disclosure of “material connections.” Companies without those policies in place have not fared so well.

Jeffrey D. Knowles is a partner at Venable LLP and chair of the firm’s Advertising, Marketing and New Media Group. Leonard L. Gordon is a partner at Venable LLP and former regional director of the FTC’s Northeast Regional Office. They can be reached at (202) 344-4000, or at and [email protected].

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