IAB speaks out against new ad rules in US

19 October 2009

NEW YORK: The IAB, the trade association for the US online marketing industry, has formally stated its opposition to new advertising regulations issued by the Federal Trade Commission, which it argues unfairly penalise the internet.

As previously reported, the FTC published its Guidelines Concerning the Use of Endorsements and Testimonials in Advertising earlier this month.

Provisions contained in this document stated that web users recommending products in blogs or on social media would be required to reveal any monetary or other reward they had received from brand owners encouraging them to do so.

These rules, which are due to come into force at the start of December, would also apply to celebrities endorsing goods, be it on talk shows or via web services such as Twitter.

However, Randall Rothenberg, chief executive of the IAB, said in a letter to the government body that this would effectively create a two-tier system between online and other communications channels.

"The practices have long been afforded strong First Amendment protections in traditional media outlets, but the Commission is saying that the same speech deserves fewer Constitutional protections online," he said.

"What concerns us the most in these revisions is that the internet – the cheapest, most widely accessible communications medium ever invented – would have less freedom than other media."

"These revisions are punitive to the online world and unfairly distinguish between the same speech, based on the medium in which it is delivered."

Since issuing its restrictions, the FTC has gone on to emphasise that bloggers are highly unlikely to receive fines, but could face legal action if they persist in errand behaviour.

Mary Engle, the FTC's associate director for advertising practices, said that "we will be focusing any enforcements on advertisers, not on individual endorsers. We are not planning on investigating individual bloggers."

However, Rothenberg argued "the Guides do allow you to pursue bloggers. They do hold individuals more liable than larger corporations."

"They do explicitly say online social media have less protection than offline corporate media. They do obstruct online companies' opportunities to drive cultural conversation more than offline companies."

According to the Word of Mouth Marketing Association, expenditure on this form of activity will climb to $3.7 billion (€2.5bn; £2.3bn) in 2011, compared with $1.35bn in 2007.

Data sourced from Financial Times, Wall Street Journal; additional content by Warc staff