The U.S. Federal Trade Commission directed "companies engaging in word-of-mouth marketing, in which people are compensated to promote products to their peers," to "disclose those relationships." Otherwise, it could be deceptive marketing, as people are more likely to trust product endorsers "based on their assumed independence from the marketer," according to the FTC. While the FTC will examine potentially deceptive word-of-mouth marketing on a case-by-case basis, the agency rejected a request from the watchdog group Commercial Alert to review industry practices. The head of the Word of Mouth Marketing Association (WOMMA) called the FTC's decision "an endorsement of the industry's efforts to police itself." Advertising Age reports that the FTC ruling "could lead to increased spending" on word-of-mouth marketing. O'Dwyer's PR Daily calls the ruling a victory for WOMMA, which had "urged the FTC to note the difference between buzz marketing, which it supports and promotes, and stealth marketing, which it opposes."
By Diane Farsetta on December 12, 2006