Today's digital landscape is such that the more critical and prevalent eyeballs of the general consumer create the need for the highest standards in ethical marketing and create new challenges surrounding disclosure and authenticity.
The Federal Trade Commission (FTC) updated endorsement guidelines in late 2009 to address digital disclosure by bloggers and digital marketers. The commission has largely been referred to as a watchdog for the ad industry, but lately has been more involved in monitoring PR practices, especially in the digital space, explains Mary Engle, associate director for ad practices at the FTC.
"We wanted to update endorsement guides to reflect current marketing techniques, which involve social media today," she explains.
The organization sought to address a closer alignment between law and ethical communication, adds Engle, since it bases violations on that which is "deceptive to consumers" and "what they understand."
"There's a long history of potential agency liability under the Federal Trade Commission Act. PR firms were not in that space so much on the earned media side, and that's changing," she says. "Bloggers told me they're still getting free products from PR firms and they're not told to disclose that they got them, so it's a matter of getting the word out to the PR side of the business."
Though Engle says the industry and online space are "too big to monitor," the FTC can count on the self-regulating Web that, in one of the first public gaffes violating the new FTC guidelines, publicized an Ann Taylor Loft pay-for-play initiative. Gossip blog Jezebel attended an event at which the retailer offered gift cards in exchange for posts about its new fashion collection. The media outlet listed a few bloggers that took the bait, sparking controversy and debate about ethical tactics for earned placement.
As this kind of activity becomes more apparent - one recent example is corporations paying bloggers to represent their brands at major consumer events such as South by Southwest - a number of PR pros realize they have to go the extra mile in terms of encouraging and enacting disclosure measures. Many admit to learning from mistakes.Higher demand for disclosure
Bonin Bough, global director of digital and social media at PepsiCo, says, "We're constantly pushing for there to be more and more clarity around where our messages are coming from and who's responsible for sponsorships. As content creators and micro-influencers started emerging as potential partners for organizations to work with, more and more consumers are looking for disclosure."
Last year, the company worked with the ScienceBlogs network to develop a blog called Food Frontiers, which would be populated by Pepsi scientists. The company took steps to make its sponsorship more conspicuous when critics claimed that not labeling it as an advertising program was deceptive. Critics, many of whom wrote for ScienceBlogs outlets, slammed the sponsorship as one that diminished the credibility of the entire editorial platform. Soon after the launch, ScienceBlogs severed the partnership, though Food Frontiers still exists as a PepsiCo blog.
"It speaks to the fervency of these communities to want to make sure they're not being duped," Bough says. "It's a new frontier we'll look at as we begin to have conversations. It's going to be a continual learning experience."
He adds that, following the negative reception, many of the comments on the blog were positive, with readers showing their surprise at the company's willingness to reveal information about its science.
The industry has become more ethical in many respects, Bough notes, and its challenges exist in defining ethical norms, maintaining cultural relevancy, and ensuring transparency in the global space.
"We spent a long time seeking a seat at the table, at least the 15 years or so that I've been in the industry," he says. "Now we have the chance to write the rules. Part of this is a core notion of transparency."
Questions related to online marketing practices have stirred not only the skeptical consumer and watchdog groups, but also activists such as Wendell Potter and coalitions relatively new to the online space and opposed to transparency around their sponsorships or backers.
Potter retired as VP of corporate communications at Cigna in 2008 after working there for 15 years. He released Deadly Spin in 2010, a book reflecting his opposition to PR's role in shaping healthcare reform legislation to benefit the health insurance industry and his issue with "using others to carry your messaging without disclosing them."
"I wrote the book to focus attention on it and maybe make a difference in the profession, so people doing these kinds of activities will realize they are unethical and contributing to that negative image," Potter says.
According to Potter, now serving as a senior analyst at the Center for Public Integrity, "You find yourself engaged in these activities and you get to a point of not questioning them because others didn't."
He agrees that digital interaction enhances the visibility of this kind of activity, noting that PR people should promote transparency and consumer education online and offline via disclosing an agency-client relationship during a crisis or listing clients on an agency website.
Edelman CEO Richard Edelman, who Potter calls out in his book for his firm's engaging in the kind of activity he denounces, agrees with Potter on his points about healthcare's position against reform. However, he says Potter damns the entire profession and "the role that PR plays in society" without enough support.
In 2006, in an effort to improve client Walmart's reputation amid outcries over its worker benefits, Edelman created a blog called walmartingacrossamerica.com, chronicling the story of a couple traveling across the US in an RV while stopping at Walmart parking lots. The firm hadn't disclosed its role in populating the blog, under the guise of a pro-Walmart organization called Working Families for Walmart. At the time, Edelman apologized and told PRWeek that the necessity of disclosure was "implicit in everything we do," and that employees had simply failed to do it in this case.
He says the agency currently has an extensive compliance policy, including a toll-free hotline to anonymously report poor behavior and a disclosure-related training program. However, Edelman acknowledges a frailty in not having an official sanctioning organization beyond a code of ethics from the PRSA and Council of PR Firms.
"We were the firm with that lovely thing for Walmart five years ago," he says, sarcastically. "That was a teachable moment. We didn't blame the individuals; it was a shortcoming of the firm. We didn't intercept this, so we said let's learn from it. We're no longer in the business of just pitching reporters. We're in the business of having a serious conversation."
Despite PR's opportunity to have "serious conversations" and generate business via digital platforms, some companies and coalitions face disclosure challenges as they extend their traditional programs online.
Abbott Laboratories, which makes Similac formula, recently released its more than 50-year-old survey online to gauge new moms' use of infant formula and breastfeeding for marketing purposes. But the company issues it from the National Institute for Infant Nutrition and doesn't disclose that it's an Abbott survey or that it's used to gather marketing data. Abbott told media outlets that the approach is for "an unbiased view of actual feeding and related behavior for infants. It is standard practice in consumer research to either use a third-party supplier or other title where respondents are 'blinded' to the actual research sponsor."A different perspective
It may be standard practice, but following a recent Similac recall the initiative fueled rampant blogger skepticism. And, a few weeks later, the company was again criticized for launching an iPhone app and compensating bloggers for app reviews.
Longstanding coalitions such as the Center for Consumer Freedom look at the industry's ethical responsibility, as well as consumers' expectations, from a different view. The group, devoted to "promoting personal responsibility and protecting consumer choices," takes on controversial issues such as advocating against taxes on products that can be detrimental to personal health or the environment, despite its decision not to work with tobacco companies.
Founded and managed by Richard Berman and his DC-based communications firm Berman & Company as a nonprofit, it is not legally obligated to disclose the individuals or companies that fund its mission. The website notes that its backers include "restaurants, food companies, thousands of individual consumers, businesses, their employees, and their customers."
"By generally letting people know where our support comes from, we're being transparent without making any one individual supporter a target," says Sarah Longwall, communications director for the nonprofit and firm. "Overall, with the new access to technology, people are more skeptical about the sources of information."
From the viewpoint that people care less about the organization funders' intention than the information presented, she explains, "People simply want to know what they're hearing is true, that we're not making things up. Coalitions now speak directly to consumers online and that's a good opportunity to present our position."
But Michael Lasky, a senior partner at the law firm of Davis & Gilbert, where he heads the PR law practice, explains that the real cautionary tale with regard to ethical and legal marketing today is "not so much in false statement, but the non-statement, the nondisclosure of material fact."
He's seen an uptick in PR firms seeking advice from his law firm on disclosure and digital design and says there are perhaps tougher decisions on what needs to be disclosed. And, as evident in the conflicting views between coalitions such as the Center for Consumer Freedom, PR pros, and critical consumers, the ability to define today's ethical parameters is related to how an organization and its onlookers define "material fact."
"Traditionally, when PR was just media relations, PR practitioners believed their work product was not commercial speech governed by the same substantiation rules and they were completely protected by the First Amendment," says Lasky. "The combination of PR becoming a full-blown marketing communications discipline with the arrival of the Internet was a bit of a double whammy."Notable improvement
Though marketers may have to adjust their practices as the rules of ethics and consumer knowledge evolve, PR pros agree that the industry is improving its reputation with regard to ethics, as it leverages digital opportunities.
"The industry is getting a better reputation," says Kathy Cripps, president of the Council of PR Firms. "Clients are putting more value in what PR firms are doing."
The new digital rules or lack thereof don't necessarily taint the industry's image or its communications freedom, adds Lasky.
"Violations will continue to occur, but smart agencies will continue to work on reducing the number of those incidents," he says. "The smart companies and PR firms are also taking this on as an opportunity to really train their people and understand how to make lemonade out of lemons."
Tips for effective ethical guidelines
• Have the firm's CEO set an ethical tone and expectations of ethical practices for all agency work by instituting a zero-tolerance policy concerning the proliferation of unethical practices.
• Use established ethics codes from the PRSA, Word of Mouth Marketing Association, and other resources to study industry-related issues concerning ethical guidelines within an agency setting.
• Ensure buy-in from employees and clients by discussing the decision to adopt an agency ethics code and its value.
• Incorporate ethics within your agency's values and/or mission statement.
• Use ethical missteps as teachable moments for staff.
Provided by Bob Frause, member of the PRSA Board of Directors