Regulation concerning word-of-mouth marketing both online and offline is becoming increasingly important. The current Federal Trade Commission regulation does relate to word-of-mouth marketing but industry self-regulation has already begun with the Word of Mouth Marketing Association and the Viral and Buzz Marketing Association releasing draft ethics codes.
Contents |
The Federal Trade Commission (FTC) attempts to protect consumers against unfair, deceptive or fraudulent practices and ensures national markets function competitively (FTC, 2004). The FTC enforces guidelines concerning marketing and advertising, and the following three guidelines, while not specifically refering to word-of-mouth marketing, are the most relevant to this activity. The guidelines specify that:
While the Federal Trade Commission does provide general guidelines for word-of-mouth marketing, the regulation does not strictly refer to this new form of ‘advertising’. To reduce the possibility of government intervention with more stringent regulation, the word-of-mouth industry is introducing self-regulatory ethics codes (Parker, 2005).
There are two main self-regulatory associations in the US providing ethical guidelines and standards for the word-of-mouth industry, the Word of Mouth Marketing Association (WOMMA) and Viral and Buzz Marketing Association (VBMA). WOMMA is the leading organisation with around 200 member organisations (WOMMA: WOMMA Members, 2005).
The WOMMA Word of Mouth Marketing Code of Ethics (2005) encourages ‘advocates’ (i.e. the individual paid by the marketer to talk about a product or service) to:
The Code also suggests that children under 13 years of age should not be included in any word-of-mouth marketing program, and that marketing programs should be structured using the highest privacy, opt-in and permission standards. The Code of Ethics is currently released as a draft version while the organisation gathers feedback from industry.
The VBMA manifesto asks marketers to "strive" to:
The manifesto also assumes that people are educated and would detect when they are being deceived (Viral and Buzz Marketing Association, 2005).
The main ethical concern with word-of-mouth advertising is disclosure of relationship. To disclose the relationship that an ‘advocate’ has with a marketer, or to inform consumers that the endorsement has been paid for, would be likely to reduce the effectiveness or persuasiveness of any message. Douglas Wood (quoted by Creamer, 2005, p.6), chairman of advertising and marketing law, at Reed Smith commented that because the motivation of an ‘advocate’ is to profit from their endorsement, this fact needs to be disclosed with customers. He adds that since disclosure undermines the value of the endorsement, marketers are in a Catch-22.
However BzzAgent, a company which implements word-of-mouth programs, has found that when workers revealed who they worked for, the campaigns were more effective (Creamer, 2005, p.6). Founder and President of BzzAgent, Dave Balter (quoted by Creamer, 2005, p.6), added that disclosing the relationship with marketers doesn’t hurt the process.
The National Institute on Media and the Family has repeatedly called on the WOMMA to change the Word of Mouth Marketing Code of Ethics to require parental notification or consent when engaging with children aged 13 to 16 in word-of-mouth campaigns (National Institute on Media and the Family, 2005). Dr. David Walsh, president and founder of NIMF, has said that the company knows of word-of-mouth campaigns involving children, where children have been exposed to inappropriate images and language and may be sharing their personal information with strangers (National Institute on Media and the Family, 2005).
PLEASE NOTE: (Due to the recent development of this form of marketing, debate has centred around the US regulation and ethics codes. Therefore in this report, only US regulation and ethics codes have been discussed.)
Brenton Doyle 19:19, 27 Oct 2005 (EST)
Back to Viral Marketing
