The FTC's recent staff opinion might cast the legality of paid blogging programs in the U.S. in a questionable light. Underscore Marketing's president discusses what this opinion means for marketers.

Over the past few months, several companies have entered into the business of making it easy for marketers to incentivize bloggers to write about their products and services. The most popular of these companies is PayPerPost, but others have also entered the space, including LoudLaunch (which hasn't yet formally launched) and ReviewMe.

Back in October, a watchdog group known as Commercial Alert filed a petition with the Federal Trade Commission, requesting an investigation of companies involved in "buzz marketing," defining the term as "a technique by which corporations seek to influence buying decisions, often by stealth." Earlier this month, the FTC responded with a formal staff opinion, and while it declined to issue guidelines concerning the practice at the time, it did indicate it will "determine on a case-by-case basis whether law enforcement is appropriate." So, while there won't likely be a sweeping investigation of numerous companies at this time, the staff opinion left the door open for individual cases to be investigated.

If you're a marketer paying people to write favorable blog posts about your company or its products, now might be the time to start sweating bullets.

Disclosure is the hot button
Commercial Alert's petition centers on two aspects of what it calls "buzz marketing"-- disclosure and marketing to children. Putting aside the issue of the kiddies for a minute, Commercial Alert asserts that the practice of employing agents who promote products but fail to disclose a relationship between themselves and a marketer runs afoul of "federal prohibitions against unfair or deceptive acts and practices affecting commerce."

The FTC doesn't disagree. In its response to Commercial Alert, the FTC referred to its Endorsement Guides: "When there exists a connection between the endorser and the seller of the advertised product which might materially affect the weight or credibility of the endorsement… such connection must be fully disclosed."

So, which companies comply?
This, of course, begs the question: Do the companies that pay bloggers to write posts about products on behalf of advertisers pass muster? The FAQ on ReviewMe's website says bloggers enrolled in its program must disclose that their posts are sponsored. LoudLaunch hasn't launched its service yet. PayPerPost hadn't required disclosure in the past, but, according to TechCrunch, PayPerPost earlier this week made changes to its terms of service to require full disclosure.

While ReviewMe and PayPerPost are moving toward transparency, it's not certain whether or not requiring disclosure from participants in their programs will get them off the hook. We live in a non-linear media world these days, and it's certainly possible for blog readers to miss a disclosure.

By way of example, what happens if a search engine picks up a paid-for review on someone's blog, but displays an excerpt within the search result that omits the disclosure? Furthermore, a blog reader might miss a disclosure if he surfs the content on his favorite blogs with an RSS reader, and many RSS feeds publish excerpts of posts only.

Some bloggers have pointed out that loosey-goosey disclosure policies might not put these companies in the clear. If disclosure is required, but not necessarily required on the sponsored post itself, readers are likely to miss it since bloggers could place the disclosure somewhere on their homepage (or elsewhere) where search engines, RSS readers, or deep linking might not pick it up. For these reasons and others quite a few questions remain with regard to the legality of paid endorsements in the blogosphere.

The search question
Speaking of search engines, a number of bloggers have suggested that paid posts should be required to carry tags that flag a paid post for search engines. Part of the justification for this request is the belief that paid links ought not to influence search rankings. Another part is the reason I cited above: search engines may post excerpts of a positive review that don't include the required disclosure.

PayPerPost in particular has not reacted well to the notion of its endorsements carrying nofollow tags. Its current terms of service state that they do not accept any blogs that contain nofollow or noindex tags. It remains to be seen whether this aspect of their program will change over time.

Risk vs. reward
Transparency is one of the principles that gave rise to citizen publishing in the first place, and marketers willing to make their paid relationships with bloggers more opaque are working against that principle, and thus might find themselves in jeopardy of falling out of favor with a lot of bloggers and the readers they influence. 

For many, this is reason enough to avoid paying incentives to bloggers in exchange for reviews. This latest controversy is another. If you're paying bloggers to review your products, and they're not disclosing their relationship with you, then you could be violating the law.

Tom Hespos is the president of Underscore Marketing and blogs at Hespos.com. Read full bio.