A watchdog group’s call for an FTC investigation into “word-of-mouth marketing” was just denied, though the FTC left the door open for future action.

From an Advertising Age Article :

The FTC’s response was to an Oct. 18, 2005, petition from Commercial Alert, which claimed that marketers were “perpetrating large-scale deception” by paying consumers to shill for products but not revealing the financial arrangements. Commercial Alert called word of mouth, or buzz marketing as it’s also known, “fundamentally fraudulent and misleading.”

What is “Word of Mouth” Marketing?

Sometimes called stealth or buzz marketing, it’s an attempt to influence buying decisions through seemingly genuine exchanges of information. For example, on your favorite blog someone posts a glowing review of a new product.

You know they like the product. What you don’t know is whether were paid to like it.

Coming to an Online Community Near You

Online communities are particularly vulnerable, and as the number of “pay-to-post” companies proliferates,

Proponents argue it’s little different from paying a PR firm to influence media coverage of a product. But when people are paid to post positive reviews - and fail to disclose that payment - it’s dishonest. And insidious.

It’s a murky issue on several fronts. In some cases, posters disclose their financial interest. In others (like BzzAgent profiled here), the “agent” isn’t paid at all, simply recruited.

Where is the line drawn? Nowhere clear.

Despite the obvious temptations, engagement marketers should steer clear of stealth/WOM/buzz marketing that feels like an attempt to manipulate.

After all, one of the cardinal Engagement Principles is “be authentic.”

Get caught fabricating, and you’ve lost any hope of engagement.

UPDATE: I’ll create a new post, but the FTC has also issued a “staff opinion” that word of mouth marketers must disclose paid relationships.  

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