Buzz marketing's potential for deception

The FTC’s staff opinion letter on buzz marketing is here. Commercial Alert, whose request for investigation prompted the letter, has a moderately negative reaction here, calling it a giant Christmas present for word of mouth advertisers and Procter & Gamble in particular. As CA says, it does seem like P&G is ripe for an investigation on the FTC’s own announced standards – that failure to disclose can be deceptive if listeners are more likely to credit a source perceived as unconnected to the advertiser – because P&G’s network of what it says are approximately 250,000 teenagers are not required to disclose their promotional relationship with P&G as part of their brand-ambassadorial activities. Given the teenage market, which is profoundly affected by peer pressure, the potential for material deception seems quite high. This Washington Post story reports on a 2005 study reporting that “29 percent of participants age 20 to 34 and 41 percent of those age 35 to 49 said they would be unlikely to trust a recommendation again from a friend whom they later learned was compensated for making the suggestion.” I’m depressed that the percentage is that low, but it’s more than enough for materiality.