FTC To Investigate 'Viral Marketing' Practices

mcflaherty writes "The Federal Trade Commission has stated that it is going to investigate the use of 'Viral Marketing' by corporations. This is the type of advertising that seeks to start a word of mouth campaign for the product via consumers themselves. Previously, consumers themselves set the buzz. But lately advertisement firms are stepping up to the plate themselves, seeding the market with buzz that looks independent of the company, but is in fact funded by them. The crew at Penny Arcade contend that corporate generated buzz is not Viral Marketing, and perhaps Guerrilla Marketing would be a more apt term. Either way, it appears to be a profitable advertising model."

Comments

How low can they go?

[Rosco P. Coltrane]

Either way, it appears to be a profitable advertising model.

Of course it is, it exploits people's inherent trust for their friends' judgement: "if X says this and X is a nice guy, then X must be true". Only if X is paid by a corporation to spew out nice stuff about some product, it basically wrecks that basic principle of human communication.

Re:How low can they go?

[IgLou]

Free speech should be for people, anything that is "said" by a business should be regulated. Consider this, disclosure prevents leaking information out about anything that could affect your stock price ahead of your official financial statements. That's regulated for a reason. If a corporation is trying to generate hype and calling it "viral marketing" is a lie in my books. The corporation is advertising through viral marketing and I as a consumer deserve to know when I'm looking at a fictionalized account for the purpose of advertising or if I'm looking at the real deal. I deserve to know if a company is trying to sell me something but disguising it as something else.

Fitting story

[wile_e_wonka]

IS slashdot trying to redeam itself after being conned into an instance of viral marketing?!

See particularly this portion of the comments/story...

Re:Astroturfing

[Rosco P. Coltrane]

Speaking of that sorry psp astroturfing site, did you see the last entry?


Busted. Nailed. Snagged. As many of you have figured out (maybe our speech was a little too funky fresh???), Peter isn't a real hip-hop maven and this site was actually developed by Sony. Guess we were trying to be just a little too clever. From this point forward, we will just stick to making cool products, and use this site to give you nothing but the facts on the PSP.

Sony Computer Entertainment America


Well, I must say, as much as I despite Sony these days, it takes balls to come clean and coldly admit to trying to con people, instead of simply pulling the plug on the site. Hats off Sony, for once you did the right thing.

When did it become illegal?

[Intron]

Why are they investigating? Is it illegal, or is the FTC overfunded?

If they want to investigate deceptive advertising that has cost Americans billions of dollars, then I would prefer that they investigate the Iraq war.

Re:Astroturfing

[thePowerOfGrayskull]

It was no accident that site was 'discovered' as fake. How easy would it be for someone to use a privacy service on their registration? Personally, I think it worked very well - that site got more traffic than it ever would have if it had been legit.

Don't they have anything better to do?

[needacoolnickname]

Whoopee! The advertisers found out what the kids like and decided to use that to try and get more eye balls.

How about just dealing with it when the compaines lie and that whole false advertising thing?

Do people really think places like youtube and myspace were created for the community to use? No, they were created so they could get bought out by the big corporations and those corporations could put advertisments up.

Oh, and having a link in your signature to something you are trying to hock and replying to this article that this should have been looked into a long time ago... yeah, kinda hypocritcal.

Wii

[Laz10]

I think that in the future the way we (slashdot/digg/bloggers) marketed the Wii will be a textbook sample of how viral marketing is done.

De Beers, Viral Marketing Since 1888

[Ranger]

I'm shocked, shocked I tell you to find that deceptive advertising is going on. I mean it's not like they, as in the ubiquitious they, think people are malleable, easily led astray, brainwashed, etc, etc.

De Beers has the longest running viral marketing campaign in history. It started in the 1880's and is still going strong today.

Re:Astroturfing

[EzraSj]

In advertising, any press is good press. It's about name recognition -- at least that's what friends in the business have told me.

Sony already has name recognition. Name recognition is not what they're trying to get here, what they're trying to get is positive association - and they've gotten the exact opposite.

Re:Astroturfing

[cptgrudge]

I'd be willing to bet that most people in the demographic they were aiming this for know what a PSP is already. I was halfway thinking of getting a PS3, but all these little things continue to turn me off to it. The chances of me purchasing a PS3 are closing in on the chances of me buying a PSP - that is to say, No Chance.

In the end, this isn't just some "bad press" I'm hearing about; I've been insulted. Sony seems to think that the demographic of people that will buy their PSP product, of which I'm a part, is both illiterate and unable to spell properly. Granted, Sony hasn't insulted me personally, but doing this has nonetheless lowered my view of them even further.

They have sacrificed their target demographic's goodwill for gaining a token amount of mindshare outside of the demographic. And the thoughts associated with that mindshare may be: "Golly, those gamers sure are pissed at Sony. Maybe I'll get little Timmy a DS instead of a PSP."

Not necessarily...

[KingSkippus]

The alternative to advertising is paying more for things.

My devil's advocate reaction to this is, "not necessarily." If company X didn't have to spend a billion dollars to counteract company Y's $900 million advertising budget, they could use that money to help save consumers dollars. Or they could put it into R&D and engineering to actually make a better product instead of just telling us it's a better product.

Also, I (and a lot of other people) are more than willing to pay a premium for ad-less products. Does anyone remember the days way back when most cable channels didn't have ads? Now you have to pay the cable company for channels with ads, and the channels that don't have ads are very expensive. (Yet notice how they still have a lot of subscribers for that premium.)

I myself don't watch ads on television at all. Every show I want to watch, I either get via iTunes download for $2 a pop (or a season subscription), or by less scrupulous means that I don't want to go into if it's not available by any other means (wink, wink). I have a few small web sites I run for personal reasons, and I buy the hosting space at a reasonable non-free price so that I don't have to subject my visitors to a barrage of ads. I run Firefox with AdBlock so that I can avoid as many ads as possible while browsing the Internet.

I still run across ads now and then, as they're unavoidable in society. The point, though, is that I still spend plenty my share of disposable income, companies still make plenty of money off of me, but they have to do it by actually having products of decent quality that I want or need, not by yelling in both my ears constantly.

In other words, there is another way.

Personally, I think the best advertising any company can have is virtually free. It's from friends who have products and tell me about them. It's from reputable website reviews that describe up-and-coming technology and products. It's from companies' own websites that provide as much real information about products I'm interested in as I need to make an informed decision. All of these things are dirt cheap compared to the billions that companies spend on radio, television and web ads that I never see or hear. Go figure.

A better solution would be to teach children how to think critically

Amen.

Protect Me, Oh Federal Government

[ml10422]

I'm a grown-up. I don't need the Federal government to protect me from viral advertising.

For my entire life, I've been exposed to celebrity endorsements, and the only effect has been to fine tune my bullshit filter.

Please refund the portion of my taxes that is going to paying these guys salaries.

Re:Question . . .

[HappySqurriel]

A simple question in response to your question ...

Why is important to tell people who paid for a political comercial when it was played on TV?

The reason is simple, because it is reasonably simple to mislead people about the source and content of an advertizement. Consider the harm to a political campaign if people started making fake comercials for their opponents in order to make their supporters look stupid ("My name's Dan, and I think all these 'feminists' need is a good ing. I support John Smith because he believes a woman's place is in the kitchen.").

As comercials move away from being in comercial breaks and billboards to product placement and blogs it is important to tell people that they're being advertized to and who is doing the advertizement.

Consider the damage that would be done to the XBox had Sony created a fake blog on how to pick up 12 year old boys on XBox Live (and made sure that this got noticed on major news sites). If Sony got away with it, XBox Live could be killed by people's outrage.

Re:Astroturfing

[spun]

You know, I say the same thing about my industry, the baby torturing industry. Sure, there may be some evil people in the baby torturing industry but most of us are decent hard working Americans just like you.

Seriously, advertising as an industry has no redeeming qualities. It consumes resources and produces nothing of value. It convinces people to do or buy things they wouldn't have if they thought about it rationally, and it does this through deceit and making people feel insecure. It's not quite as bad as baby torturing, but it certainly isn't something any decent, moral human being would ever want to do.

Let me guess, you're in advertising? If so, why don't you take some advice from comedian Bill Hicks?

"By the way if anyone here is in advertising or marketing... kill yourself. No, no, no it's just a little thought. I'm just trying to plant seeds. Maybe one day, they'll take root - I don't know. You try, you do what you can. Kill yourself. Seriously though, if you are, do. Aaah, no really, there's no rationalisation for what you do and you are Satan's little helpers, Okay - kill yourself - seriously. You are the ruiner of all things good, seriously.

No this is not a joke, you're going, "there's going to be a joke coming," there's no fucking joke coming. You are Satan's spawn filling the world with bile and garbage. You are fucked and you are fucking us. Kill yourself. It's the only way to save your fucking soul, kill yourself. Planting seeds. I know all the marketing people are going, "he's doing a joke"... there's no joke here whatsoever. Suck a tail-pipe, fucking hang yourself, borrow a gun from a friend - I don't care how you do it. Rid the world of your evil fucking machinations. I know what all the marketing people are thinking right now too, "Oh, you know what Bill's doing, he's going for that anti-marketing dollar. That's a good market, he's very smart." Oh man, I am not doing that. You fucking evil scumbags! "Ooh, you know what Bill's doing now, he's going for the righteous indignation dollar. That's a big dollar. A lot of people are feeling that indignation. We've done research - huge market. He's doing a good thing." Godammit, I'm not doing that, you scum-bags! Quit putting a godamm dollar sign on every fucking thing on this planet!

"Ooh, the anger dollar. Huge. Huge in times of recession. Giant market, Bill's very bright to do that." God, I'm just caught in a fucking web! "Ooh the trapped dollar, big dollar, huge dollar. Good market - look at our research. We see that many people feel trapped. If we play to that and then separate them into the trapped dollar..." How do you live like that? And I bet you sleep like fucking babies at night, don't you?"

And to that let me add: anyone in the business of mind control, I hope you get some horrible disease and die a painful death. As Bill said, there is no excuse for what you do.