When it was reported in 2006 that the FTC would begin forcing word-of-mouth companies — which paid people to hype products to their peers — to disclose their marketing campaigns, Brian Clark predicted at the time that these rules would apply to bloggers as well. Now it looks like his prediction is coming true — and bloggers are taking the news in stride.

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Brian Clark

A former commercial litigation attorney, Clark is the founder of Copyblogger, a site focused on copywriting and effective use of social media to sell products and services. Earlier this year he published a post stating that he made much more money through direct sales of his services and affiliate marketing programs than he ever did with third party advertising.

So when the AP reported recently that the FTC would begin enforcing disclosure rules on bloggers that were paid to review products, received free products or used affiliate links, Clark wasn’t surprised. In fact, one could even say he was delighted. In a post titled How to Turn Affiliate Marketing Disclosure Into a Selling Point, he argued that disclosing your economic incentives to push a product would create more trust with your readers, not less, and in many cases your readers would want you to be compensated for your work.

Rise of Affiliate Marketing

“Affiliate marketing has been going on for 13 years now,” Clark told me in a phone interview. “So I’d say it’s probably been a long time coming … The prominence of the number of people trying to make money through various affiliate marketing and paid reviews has gotten to the point where [the FTC] felt like they had to say something about it. They had to make it clear that the law is what it is, and it applies to you whether you’re a professional marketer or an amateur trying to make a few bucks from your blog.”

I queried the FTC for this story but didn’t hear back from them in time for this posting. Rich Cleland, assistant director in the FTC’s division of ad practices, told the AP:

If you walk into a department store, you know the (sales) clerk is a clerk. Online, if you think that somebody is providing you with independent advice and…they have an economic motive for what they’re saying, that’s information a consumer should know.”

Clark said the new rules possibly meant that something as small as an Amazon affiliate link could land a blogger in hot water if it isn’t disclosed. It is not uncommon for bloggers to receive free products in the mail with the hope they might review them positively; some companies have even gone so far as to pay bloggers to write positive reviews about their products, often leaving it up to the blogger to decide whether to disclose the payment.

When a company called PayPerPost launched in 2006, it received heated criticism for not requiring that bloggers within its network disclose their paid posts. PayPerPost succumbed to pressure and began requiring disclosure. Recently, Blogads CEO Henry Copeland announced that gossip blogger Perez Hilton would begin using his popular Twitter account to send out sponsored tweets.

Regulating paid posts

So is Clark’s thesis correct that disclosure will improve affiliate marketing, or will bloggers find it much harder to make money through paid posts? So far it’s still unclear as to what kind of disclosure would pass muster with the FTC, or even how the FTC would be able to enforce the new regulations.

“Some people think that some kind of site-wide disclosure or disclaimer link at the bottom of your page is enough,” Clark said. “Maybe it is, I don’t know. The piece I wrote argued that you should disclose in the body of the content itself, and try to make it a positive thing instead of something that you’re ashamed of. You can never go wrong with that. Whatever the FTC says you have to do, this method would always be acceptable, because you’re addressing the conflicts of interest directly in the content where you’re making the recommendation or endorsement.”

But unlike other mediums — newspapers, radio, television — there are millions of bloggers so it would be impossible to monitor every single one of them. Many of these bloggers don’t monetize their blogs at all, and most that do are lucky if they can pull in more than a few dollars in an entire year. How could the FTC ever hope to regulate the medium with any effectiveness?

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“I think the Washington Post article on this topic mentioned that the companies that compensate them are liable,” Clark said. “It’s much easier to go to the big affiliate merchants, and say, ‘You’re going to have a liability when your downstream affiliates screw up.’ But here’s what’ll also happen: They’ll find a few high-profile bloggers and make an example out of them and that will scare the hell out of everyone else. So there are two approaches there.”

I asked Clark which blogosphere niches were most likely to engage in the kind of marketing that would be targeted. He said that an entire “make money online” industry has sprouted up over the last few years, a group that is largely monetized through affiliate advertising.

“Affiliate marketing is often pitched as an easy way to make money,” he explained. “I think that’s not necessarily true. I think if you can make a lot of money selling affiliate products you can make a lot of money selling your own products. For example, for our model, we mainly sell our own products, and only occasionally recommend either affiliate products or affiliate marketing programs.”

Bloggers respond

In the discussion about the new FTC guidelines, one group under scrutiny is the “mommy bloggers.” Many advertisers and marketers have deemed these blogs to have heavily influential readerships, so it’s not uncommon for mommy bloggers to receive free products or to be approached for sponsored posts. Jamie Reeves told me that she’s often sent products for review and has even set up a separate blog from her main site, Blonde Mom Blog, to post about them.

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Jamie Reeves

Recently, Reeves was approached by Frigidaire for a product promotion and she attended — along with other mom bloggers — a promotional event put on by Johnson & Johnson. I asked her why her niche has been targeted so much by advertisers, and she pointed to the influence that moms have over household budgets.

“The vast majority of moms are online,” she replied. “They might not have a blog, but they’re on Facebook. Moms are very influential because they make a lot of the household purchasing decisions. There are dad bloggers out there, too, but I think the moms are maybe just a little more vocal and a larger demographic. So companies are going to gravitate toward them.”

Reeves doesn’t write sponsored posts. Like Clark, she said she thinks any conflict of interest — whether from a free product or otherwise — should be disclosed, and that most reputable bloggers were offering disclosures well before the FTC indicated that it would begin to crack down on blogs.

“I think that it makes the blog more professional,” she said. “Hopefully, everyone I have come in contact with through blogging is up front about it, whether they make it an official statement on their blog or whether they say in their post that ‘So and so contacted me, and they sent me a camera, and here’s some pictures I took with it and here’s what I think of it.’”

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Melanie Phung’s All About Content site

Melanie Phung — who runs a few affiliate marketing sites — told me via email the effectiveness of the disclosure will depend on how the affiliate marketing is being done.

“Some should be able to do it pretty seamlessly,” she said. “But for casual affiliates who just use affiliate tracking on links they would have placed on their blogs anyway (say, to Amazon or iTunes)…for those people, having to put an obvious disclosure notice — that they might make a dollar every time someone buys from their link — would definitely be clunky.”

She noted that those currently not disclosing any financial ties are already attempting to float under the radar, so in all likelihood these kind of bloggers wouldn’t change their modus operandi because of new guidelines. For many blogs, which can be run anonymously through Blogger and WordPress accounts, it likely wouldn’t be easy for regulators to even track them down, much less take legal action against them.

“There are sketchy affiliate marketers out there preying on the gullible,” Phung said. “These scammers promise you free government grants for a hefty finders fee, they’re the ones who charge your credit card recurring fees for ‘magic’ diet pills that never get delivered, etc. And if those people ‘disclosed’ that their claims were total BS, yeah, that would hurt their sales. But it’s the fact that they’re making false claims in the first place, not that they’re affiliates, that’s the problem. These people aren’t going to follow the rules anyway.”

Simon Owens is a former newspaper journalist and an associate editor for MediaShift. You can read more of his writing at his blog or contact him at simon.bloggasm@gmail.com.