Hello Ray,
I read this interesting post you made, and I think there are a couple of corrections that need to be made. Now, correct me if I am wrong, but...

doesn't the new FTC regs cover affiliate marketing in general, and not just bloggers?

and...

I believe the new regulations state that you have to disclose ANY compensation for promoting a product or service, not just the financial ones.

Personally, I have just started to get the hang of affiliate marketing, and I am an honest affiliate marketer. I do not promote anything that I don't use myself or anything that I don't truly see a benefit of the product or service to the demographic that I am marketing to, and so I think the new FTC regulations.

Marketing honestly and ethically is hard enough, as it is far easier to generate a bigger income if morales, scruples and legalities don't stand in your way, and the last thing I, as an honest marketer needs, is some government organization penalizing the honest business individuals more than anybody else.

Yes, I do think that this will have a huge negative impact for the honest affiliate marketers, and most of it has to do with human physcology. Affiliate marketers may not want to hear this, but people in general, can't stand the thought of anybody making money, and saying "I will get a commission if you buy such and such" is almost a sure fire way of losing a sale.

To a lot of marketers, this probably doesn't make much sense, but like I said, it's human physchology, and physchology often doesn't make sense, but that doesn't mean that it doesn't happen.

Only time will tell, but I predict a very steep plummet in conversion rates for affiliate marketers.

This is pretty weird regarding the fact that this FTC rules for bloggers just appeared from nowhere.I guess FTC and affiliate programs just have to get along because everybody have something to win from this and if they don't get along there will be losses, big time.


_______________________________________________
Clickbooth affiliate network

"Where it gets murkier is what the FTC’s rule will mean for those who run affiliate programs – are they now going to be held responsible for what their affiliates do?"

You hit the bigger problem for affiliates. This could kill a lot of programs on the sponsor level.

As to the rules for testimonials and endorsements, will any affiliate product's sales page survive?

I don't believe that FTC "kills affiliate marketing" by introducing the Guides. This is just another step towards a more transparent online shopping environment, and, as a consumer, I fully support this. It won't hurt the affiliates that have nothing to hide (that are running honest businesses, not ones based fake, made up reviews).

BTW, that $11000 fine is not true - http://www.amnavigator.com/blog/2009/10/07/ftc-says-the-11000-fine-is-not-true/

Well, I personally wont get too worried until I start reading newspaper articles on how they are enforcing it, which blogs are targeted, and whether or not an actual affiliate company like clickbank is targeted. Chances are the FTC will likely target BIG players and not mess with the smaller blogger making $100 a year.

I mean, the article does mention "bloggers" not companies or review sites. Laws are meant to be interpreted literally. However, as Ray says... playing it safe is always the safest strategy :-)

Something else has occured to me. What will the rules put forth by the FTC do to Google adsense? Since they are so prevalent on websites all over the web and we aren't talking about the just the average marketer. A large amount of the huge corporate websites have adsense ads on them as well as offers and ads. The fallout on this ruling is going to be bigger than anyone thinks once it starts to get enforced.

Thanks for a great discussion, Ray. I believe this ruling was brought about due to the practice of bloggers being paid to write reviews rather than affiliate marketers using blogs to write reviews. But I expect it will apply to affiliate marketing. I think the most serious change for people like you and I that write copy is that we'll no longer be able to use results-based testimonials as we have in the past. Where 'results aren't typical, your mileage may vary' was good enough before, now (as I understand it) the testimonial will actually have to include what the results are for the average user. So, ultimately, we'll probably have to drop testimonials or stick to the 'I love this product' testimonials.

It is mostly a case of being blownup about the ruling. For me I added the following to my blogs:
"Any links, ads or offers on this blog are affilliate links and I will be compensated for any sales made."
The discloure is my method of complying. I am not an attorney and this should not be considered legal advice. I think the result will be for copy to be more important than ever before along with the understanding of the human nature involved in the sales process.
I would also say this is not just about disclosing income from affiliate programs but will require a change in the websites of a lot of marketers who are using testimonials heavily in their sales page. Probably the change will result in less hypey language being used to promote products. The safe harbor phrase "results not typical" will no longer apply and is mentioned directly in the ruling. So the screenshots of income, leads etc will be under scrytiny in my opinion.

Good comments-I appreciate your contribution.

It's the "cases by case" aspect that has me worried. The noose may tighten bit by bit until all blogs must be contained in a Johnson box with the word "advertisement" at the top. But for now I think a simple statement below the opt in box should suffice. This should be short, with a link to an amplification. We already have links to our privacy statements and other legal requirements.

This amplification can provide some virtual real estate for us, albeit a small parcel. One page can contain links to all our affiliate offers. This promotes our other products while also eliminating the need for multiple disclaimers.

More problematic, I think, than the disclosure of affiliation is the stronger requirement for describing "typical results" announced in the same document. This has to mean rewriting of thousands of sales pieces.

Could the FTC be an affiliate of Google, or vice versa? hmm.... Could some business be paying someone at the FTC?

You're the first I've heard ask THAT question - but I suspect you won't be the last.

Hi Ray,

My husband mentioned this yesterday and I was horrified, (well I'm horrified by everything the U.S. government is doing these days). The entire industry is going to be effected by this. Google, (who's always been in bed with the U.S. govm't), and every advertising company will have to change their rules. Well, at least we'll be able to tell everyone who comes to your site, "Hey click on all the ads so I can make money" now, (like it used to be before it was forbidden).

But from what I've heard this ruling also effects your endorsement for a product. If you promote a product you better know it's good or you're in trouble--whether you're an affiliate or not. Rather than give everyone a sample of your product before they can promote it, which is really the only way for a person to legally promote it--unless they buy it first--a company will need to stop using affiliate marketers.

This is not just going to effect people in the U.S., but people and throughout the world. The rules for IM is now changed. So all those people around the world who are laughing at us for now having a dictatorship type government and all those people who didn't care what's going on in the U.S., must now take notice.

In any event, more and a lot of discussion on this is necessary and our IM/legal comrads need to be at the helm and advise us accordingly.

I would urge you to NOT WAIT for your IM comrades to figure this out and tell you what to do. The fact is most of them will never do any original research, and thus any advice you get is going to be suspect at best. That's why I'm NOT giving anyone any advice other than BE HONEST IN YOUR DEALINGS.

That said, my advice to myself is: always check with your attorney for a qualified legal opinion.

How nervous should we get?

With the MILLIONS of blogs out there and the tens of thousands more added each day, the size of the blogging police squad would far exceed the financial value of themselves.

The FTC has to operate on a reasonable budget also, just like the other departments. If the cost of implementing such a program VASTLY exceeds the returns possible (through fines collected) then the program will be scrubbed.

Contrary to what some may believe, all departments do have budgets and cannot implement such a negative program to their budgets, especially at this time.

Taking into consideration the expense of litigation in remote areas around the country (if it's a fed law the feds must show up for prosecution) the fines would have to be far in excess of $11,000.

Not to mention that for as little as $500.00 my attorney will show up a couple times and fight this simple case for me (he's on retainer so he better!), in front of a jury of my peers (trust me this is a small town, more likely a jury of my relatives!). This will be the case all across rural America. Actual conviction rates will be low.

What about a website hosted in another country or a website owned by someone in another country, will they be exempt?

Food for thought!
Brian Ankner

Having never dealt with the FTC I don't know if your assessment is correct or not. Interesting, though.

It's like anything else - the responsible players will adapt (and put a tiny disclaimer at the bottom of their blog posts in full confidence that nobody will ever read it anyway), and the cowboys will move on to something easier, or just flout the law and wait to see whether there is actually any enforcement of it anyway.

As always, there is no protection like self-protection, and everyone reading anything (including the maintream press) should always bear in mind that there are vested interests at play. Always.

Nobody gets out of bed every morning and produces page after page of commentary, how tos, best-of lists, and so on, unless they stand to gain from it somehow.

Well-said Jenny. I would only add that there is nothing wrong with producing "page of commentary, how tos, best-of lists, and so on" with the EXPRESSED INTENT of gaining from it, as long as it's HONEST gain.

Our government, I am not sure which agencies they will use, intends to shut down the internet as we know it and reform it. Ray and ALL YOU MARKETERS, this is just one step in that process.

Wouldn't it be nice if ALL INTERNET MARKETERS were to wake up to the total fascist take over of our government and come to grips with what those people who are behind the scenes manipulating our elected officials (read buying them and owning them)...and for those same MARKETERS to put the word out to the millions of trusted readers of their blogs and emails.

Tune into Alex Jones at http://PrisonPlanet.TV and http://InfoWars.net to get the big picture.

Truly these folk intend to kill and enslave as many of us as possible...how many? In their writings they say 80-95% of the world's population. One step at a time, like frogs in a pan of water being slowly heated, they intend to cook us to death. They must be stopped. You folk have the ability to reach a lot of people. So if this sounds strange to you, or you are not aware of the fascist take over...then DO YOUR OWN RESEARCH! Check into it and reach out to your readers!

PLEASE! Thanks,
Michael

Oh my goodness... you may have led to me a replacement for my beloved Art Bell show...

Is there a difference between ENDORSING a product and ADVERTISING a product?
This sounds like the same rule re "compensated actors" in commercials - as opposed to just sticking the same item on a shelf.
Jessica Simpson has to disclose that she is compensated to endorse that acne product - but Walmart doesn't have to disclose compensation for stocking it.
This doesn't kill affiliate marketing - it only kills affiliate marketers who do the "greatest thing since sliced bread! I give it my whole-hearted endorsement!" without revelaing that they are getting paid to say that (whichh could cause the visitor to take the endorsement with a grain of salt, which is what the FTC wants).

(and kudos to Ray for giving us all a fine example of an attention-grabbing must-read headline. Learn from the masters, people!)

Rick, I appreciate the compliment on the headline. ;-)

Ray,

Great post. As a bit of an affiliate expert, I think the hysteria about this is a bit overblown. One, I believe it's only targeting bloggers, not the entire affiliate community. So, will it kill the affiliate industry, hardly. I believe it's a fine move. Don't you want to know if that blog preaching the benefits of product X actually cares about the product?

I've seen this before, done internally within the blogging community, and it's easy to designate compensated information against non compensated info.

Thanks!

If that does the trick, nobody would be happier than me.

Personally I think the FTC is wacky...

And that said, no need to panic - as you say, let's just SAY SO.

~~Mary K

P.S. note to FTC: by leaving this comment on this blog I may develop or deepen my relationship with someone who some time, somewhere, may purchase or recommend something I may be earning money from... I'm just sayin....

Mary - LOL.

So does every review site qualify as a blog? This is stupid. Nanny gubmint to save the day once again.

From the way I read it that is one possible interpretation.

No way that this is the end for affiliate marketing. As Ray in his post and others in the comments suggest I believe that ethical businesses can adapt rather easily.

One caveat though, government and lawyers are not always precise with their wording which leaves room for interpretation on both sides. That's the scary part. The tip: Better more disclosure then too little.

Regarding responsibility: Affiliate or Product Owner? Well, let's assume the FTC goes after who is the better catch.

I'm not a lawyer; this is not legal advice. Only my opinion.

Yours
John

My favorite line from your comment: "Better more disclosure then too little."

Ray - I think it simply forces affiliates to be more transparent, but you bring up a good point. For product creators to protect their interests, there will likely have to be some additional disclaimers affiliates must agree to in order to be approved in a given program.

Keep it up here on the blog, nice work!

Thanks Travis... I think what may happen is: a few sacrificial lambs are going to clarify this for the rest of us. Should be an interesting couple of years.

Nothing's changed. The new rules are, as they state, a reflection of current, established case law. And the burden of proof is on the FTC. You still have to be proven guilty.

In my interactions with the FTC, I've found them decent folks who want to protect people from being ripped off by charalatans. And paid endorsers -- especially celebrities -- are always problemmatic.

If you run an honest business and are familiar with (and follow) the rules, you have little to worry about.

If a customer gives you an endorsement based on *actual experience*, that's still legal. If you "cherry pick" only the best and represent them as typical, you may be on thin ice, depending on what you do.

I've seen some internet marketers -- some very well known -- that I dislike. One offered a product which I bought. But I suddenly was on a half-dozen or more of his mailing lists and getting up do a dozen emails daily from his operations. I asked for a refund and it got screwed up, but they fixed it. When I told them I wanted off of the mailing lists, they told me I had to do that myself.

It matters not what the FTC says or does, it's unlikely I'll do business with that person or his company again. Others whose names are legendary I'll continue to do business with because they run a shop that gives true value and they're consistently a "class act".

The easy answer: If you were your customer, how would you want to be treated. Do that.

And don't load your "offer" for a $300 product with "bonuses" worth $6000 total! That demolishes
your credibility. Or to put it another way: Some folks have a grossly exaggerated opinion of what
their stuff is worth, but don't care as long as they can find enough suckers to buy it and provide them
with a comfy living.

Now go do the right thing...

Good points, but what concerns me is the FTC's new stance seems vague in some crucial areas that could allow them to "interpret" a lot of honest businesses as being in some sort of "violation" of the regulations.

As an integrity and ethics expert I believe we all have an ethical responsibility to do full disclosure to potential purchasers when we make a profit from their purchase, whenever this is not explicitly clear to the consumer to begin with. I view our society as suffering from a devastatingly damaging formula for decades: lack of self-responsibility on the parts of consumers + lack of social responsibility on the parts of business people. This fatal combination creates an engraved invitation for government to intervene. Historically, government has by and large been persuaded to introduce these kinds of business regulations only after too many consumers have been treated in unethical or misleading ways by too many businesses. As someone who is not a fan of government intervention, I view government regulation as a last resort when this is the only way to get people to engage in ethical business practices. My question is therefore this: did the government introduce this regulation before the affiliate marketing industry proved unable to police itself voluntarily, or did the government start regulating before such attempts proved insufficiently successful? BTW, this issue has been rumbling around since 2006, and this regulation will not take effect until December 1, 2009 (unless uproar forces it to be delayed).

That's great insight, Dan - thank you for taking time to craft such a thoughtful comment. It really adds some substance to this discussion.

I don't know if the industry proved "unable" - but I do know many INDIVIDUALS proved to be UNWILLING to govern themselves. I don't have an objection to the government dealing with those individuals. What does concern me is draconian regulation of everyone based on the bad behavior of a few.

Hi Ray,

I'm glad you found my post useful. I agree with you that some people are unwilling to govern themselves. I also know that most people don't have a practical framework for how to think about ethics issues and social responsibility. In my experience, many of those who might appear to be unwilling are simply under-informed.

As for those who remain unwilling to govern themselves, I agree with you that they must be held accountable for their unwillingness. I too see draconian regulation based on the bad behavior of a few as a real problem. When necessary, I favor common-sense regulation so that those who behave well need not be concerned while those who don't behave well can be held accountable.

In this case, I would have preferred that an affiliate marketers association was created in order to set appropriate ethical standards for the field because this might have made it less necessary for the government to step in instead. As I said, in my experience when it comes to ethics and integrity a little training tends to go a long way...

All the best,
David Gruder
http://www.TheNewIQ.com

David,

I appreciate your comments. Well-reasoned and well-stated. I wonder if we will now see an affiliate marketing association - and if, as is so often the case, it will be tool little too late.

I think recent corporate debacles have proven that even the most regulated (and supposedly "legitimate") businesses and industries seem vulnerable to greed and corruption (almost always in that order).

Ray,

Good question about whether an affiliate marketing association, with a solid, common-sense code of ethics will now be formed. I don't think it's ever too late for those in any field who value integrity to set themselves apart from the rest of the pack by letting the public know they are members of their field's most integrity-centered professional association. I hope someone reading this has the passion to create such an organization for this field. If so, I would be glad to advise them, having been the founding president of a nonprofit professional organization of helping professionals that has perhaps the field's most practical and respected code of ethics.

As to the recent corporate debacles, from my vantage point as an integrity specialist, the businesses and industries that have been guilty of the greatest amounts of greed and corruption consistently chose to sacrifice social responsibility for short-term profit. To me this is a perversion of capitalism, not true capitalism. It's true that some of these industries were highly regulated, as you point out. But, in my opinion those regulations did not even remotely begin to address the core ethical principles of self-responsibility, social responsibility and constitutional integrity. In other words regulations are not always about integrity, and this is why highly regulated industries often fall prey to greed and corruption despite being regulated.

Even more importantly, our culture's prevailing that profitability requires sacrificing integrity is the real culprit behind this debacle. We, especially in the United States, have for decades been pursuing a life fulfillment formula that is actually an unsustainable lie, as our current meltdown is demonstrating to those who can see. At the risk of sounding self-serving, I unmask that lie and provide a solution to it that anyone can implement, in my five-award-winning book, "The New IQ: How Integrity Intelligence Serves You, Your Relationships and Our World."

Keep up the great work Ray,
David Gruder,
http://www.TheNewIQ.com

Well, that's intriguing - what happens to blogs that just have affiliate links, but which don't actually do or say anything to promote the product in question?

Presumably the way round all of this is a small-print boilerplate at the bottom of each posting along the lines of "Yes, I do have a financial interest here" like Dan suggests.

And what about bloggers based outside FTC jurisdiction?

I don't believe the little disclaimers are going to cut it. Read the actual FTC site about this and you'll see what I mean.

I believe that if you have a disclosure in your terms and conditions and or privacy policy about items you comment or blog about you should say that if you are reviewing and or promoting particulars products on your site you may recieve payments or commissions for doing so. Some of the hype about the death of affilliate marketing is intended to create a new disclosure type product that the same hypers can sell. Or am I just overthinking it?

From what I gather, the "disclosure at the bottom of the page" approach is not going to work anymore. I'm not a lawyer, and so you should check with your attorney. In fact...

That leads to my current opinion on this matter. This is my PERSONAL opinion, and not advice.

1. Be radically honest. Go overboard.
2. Instead of buying a lawyer's info-product or "disclosure template" - hire a good LAWYER. Take her advice on what to do to stay MORE than minimally compliant.

Yep, the disclosure at the bottom of the page will not work... I checked too :-)
Directly called their office to find out.

Many small bloggers using affiliate links don't even earn $100 a year. An attorney? Come on. The FTC should just be more clear about what disclosure is necessary when using an affiliate link. They've been talking about blog reviews, but what about links in a blog sidebar? They're not reviewed, but they are being promoted by the blogger. What disclosure is necessary then? Seems a bottom of the page disclosure is about the only thing that will work. Looking just from a layout standpoint, you don't want the entire page to be covered in disclosures.

I can't agree with you more Rob. In my opinion, having that statement in the terms and conditions and or privacy policy is the best way to do it. Otherwise, you'd have to keep track of every affiliate promotion on your blog to make sure your reader knows that you are going to make a commission when they buy from your link. It is fine, but sometimes you forget or it is kinda obvious... and you don't want to break the flow of your blog post. However, I'm not saying that the bloggers should not be transparent.

It's always like this. A small crowd of knuckle heads does something to profit quick and ruins everything for those who are in it for the long haul and doing things right.

I agree that the best policy is to be upfront about whether you are getting a cut of the sale. Ray, you have set a good example here by often providing two links: one with your affiliate link and one without.

That strategy works well when one has a relationship with the list. For "one shot" type affiliate marketing, such as for Windows registry cleaners, such a practice would likely have a chilling effect on clickthroughs and conversions.

How all of this will affect your typical affiliate marketer is going to depend on how rigorously the FTC applies this rule... beyond the ridiculous weight loss "flogs".

At least two scenarios would then be likely:

1. Existing product owners would begin to abandon the affiliate model and focus on driving traffic directly via PPC, article marketing, and so on.

2. Affiliate networks like Clickbank would begin screening and monitoring affiliates, perhaps "certifying" those that comply. This would raise the cost of running the affiliate program but may give both affiliates and product owners some peace of mind that they are not at risk. (Yeah, right.)

Should be an interesting couple of years to see how this plays out.

Good thoughts Darrel. I'm quite interested to see how Clickbank in particular is going to deal with this.

Another attack on freedom and free speech?

The solution may actually be at the core with Continetal Congress 2009,

www.cc2009.us
GiveMeLiberty.org

Delegate voting ends on October 10th.

I think this post kind of skirts the line between "comment" and "commercial advertisement"... but I let it through because I do believe some people will have their honest opinions silenced because of fear. I don't endorse the opinions of the person who posted the above comment. I haven't even read their website in any detail. Just FYI.

Hey Ray,
thanks for that post.
That is alarming for many marketers who want to hide their affiliate links.
But then again, I am already telling my people when I promote something that I get a commission for it.
I even give them bonuses to buy through my link and my link only, because I otherwise don't get my commission. And no commission for me means no bonuses for them :)

I guess some people won't buy because they don't condone this but most will still be fine.

Jack
www.JackBosch.com

Good points, Jack. I think a lot of how your list interprets your recommendations depends on the relationship you have with the list.

I don't know what companies with affiliate programs are going to do in reaction to this. Amazon pulls out of states that add sales tax, and that seems small in comparison to this. IANAL, but all I can see affiliates needing to do is to add a disclosure statement to their site.

I'll admit that's the first time I've seen IANAL - but I did figure our what it means.

And IANAL, either.

Probably should have just written it out. I fly through leaving comments, so I often fall back into using thinks like IANAL and IMHO from my chat-heavy days.

It may seem a small thing that Amazon and a few others pulled out of states like NC due to recent tax laws but it was a huge thing to me. It killed about 25% of my current income and I am in the process of getting rid of all affiliate marketing I do.

I didn't say what Amazon did was a small thing except in comparison to the new FTC rulings. I'm sorry to hear you've taken such a hit to your income. However, affiliate marketing is still viable. This game is one of constant change. Good luck to you.