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The Power of the Referral May Be Losing Its AV...Will the FTC Recall Your Client Testimonials?

The Power of the Referral May Be Losing Its AV ...Will the FTC Recall Your Client Testimonials?

Background and Thoughts on New FTC Rules

This post was inspired by "Will New FTC Rules Affect Agent Testimonials on Trulia Blog", General Twitter Buzz on the FTC Guides and my own direct experience in using testimonials to sell and market real estate services and products to the real estate industry.

There has been much talk in the blogosphere as to how the FTC's new regulations has put more restrictions on bloggers, advertisers, marketers and businesses. After reading several sources, including the FTC's announcement it is possible that the very testimonials Real Estate Brokers and Agents use to advertise their services could come under scrutiny and be in violation with the FTC's new rulings,

"...advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect."

Hmmm.....I can only imagine what the disclosures of real estate companies, real estate agents, and real estate vendors might have to say. Who can say what is average or customary? These disclosures could be the makings of very wishy-washy ineffective testimonials making the power of the referral online lose its appraised value.

Think about testimonials on websites, blog posts....what about Recommendations on Linked In?

Real Estate Vendors Live for Client Testimonials

Even more susceptible to these guidelines are the real estate vendors who use testimonials. Joseph Ferrara cites Zillow and Trulia in his blog post, but I can say from experience that many referral companies, lead generation/management companies, website vendors, and Internet advertising companies have their sales force use testimonials almost exclusively to sell their services and products.

I would go so far as to say this would encompass every existing and established real estate vendor selling and marketing to real estate professionals today.

If you sell a product to real estate agents or real estate companies you are 7/10 asked these questions:

What real estate agents/brokers use your service/product near my area?
How many real estate agents/brokers near my area use your service/product?
What real estate agents/brokers may I talk to who use your product/service?

Many real estate professionals purchase products based almost exclusively on these testimonials and the inherent promises that their words promise. FOR REAL.

I imagine these sometimes false expectations are part of what the FTC is trying to avoid, but it is hard to police human nature. If consumers do their research and try to cure their impulse shopping habits, whether they are B2B or B2C therein lies the better and bigger picture. This makes common sense....right?

Do not disregard the new FTC guidelines because of what you assume is common sense for consumers or businesses to know.

Businesses now tell people things common sense takes for granted,

Warning Hot Coffee

To protect us from ourselves,

Warning on Jumping Toy

If you had to add a disclosure to your testimonials what would it need to say? How ridiculous might it look?

The revisions to the guides from the FTC also states,

"The revised Guides also add new examples to illustrate the long standing principle that “material connections” (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers."

I imagine there are many "handshake" agreements in the real estate blogosphere- agreeing to send each other business, promote readership, etc., when they can. Will these agreements now have to be disclosed? Just some food for thought I am throwing on the table.

Keep Informed of the FTC Guidelines

Let's keep informed so that we can remain aware, proactive and empowered bloggers.

Understanding the New FTC Guidelines

View more documents from Word of Mouth Marketing Association.

Additional Resources on the Worldwide Web Regarding the FTC guides for Testimonial Advertisements:

From: FTC Sets Endorsement Rules for Blogs by Cecilia Kang
Source: The Washington Post, 10/6/2009.
Via: HighBeam™ Research
Copyright 2009 The Washington Post

From: Web reviews must disclose payments by Associated Press
Source: The Boston Globe (Boston, MA), 10/6/2009.
Via: HighBeam™ Research
Copyright 2009 The Boston Globe

Have you read the new FTC revisions to the guides regarding testimonial advertisements? What do you think?

Regardless of FTC revisions think about how Customer testimonials influence you as a consumer. Do they make an impact on your purchasing decisions, B2B or B2C?

Please share your thoughts by commenting below.

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Posted by Rebecca Levinson, Real Estate Marketing Consultant on 10/12/2009 12:25 PM

Comments (8)

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Originally posted at: Real Estate Marketing Drips: The Power of the Referral May Be Losing Its AV...Will the FTC Recall Your Client Testimonials?

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8 Comments on The Power of the Referral May Be Losing Its AV...Will the FTC Recall Your Client Testimonials?

OCT

I heard about this last night - its amazing what they choose to regulate and what not..........at Raincamp they talked about how critical word of mouth and testimonies are to our business - people choose more because of what someone said then something that was advertised..........interesting post!

Rebecca --- wow --- a lot of information -- you are right -- disclaimers on our testimonials would be rather ridiculous --This will be interesting to watch.

Mama Liz

There have been a few posts on this lately. I wonder how effective they are going to be in enforcing this. They just don't have the manpower. I would imagine this is targetted at the big guys whomever they may be. However, I don't quite get what it is all about. What major infringements caused this new law. Referrals are subjective anyway. So let someone right "in my opinion", that will take car of one part of the problem. Another part is to disclose that you are being paid for your recommendation. In that case, what kind of a recommendation is that anyway. The whole thing is wacky.

Liz M., Liz L- This is indeed an issue which needs to be followed. Any cash or prize needs to be disclosed. Even here on ActiveRain, when the consumer testimonials was launched, points were awarded. I believe these points would fall under the prize category though I am not an attorney.

Jane- This would be applicable to all bloggers and they are "Now put on notice". This has been worked on for awhile and WOMMA has an ethics division....FTC has listened to WOMMA in this regard. Disclosure for payment is part of the ACT. Key is whether it is a sponsored communication or an advertised communication OR is the communictor acting completely independently.

IS the blogger part of an overall marketing campaign?

Rebecca: Timely post... As one in Title, we're so regulated that we're getting paranoid to do anything. I'm beginning to feel like my first amendment rights are in question. I've already had the order from corporate to remove statistical marketing reports from some of my blogs as they may be 'an inducement to do business'... (which is nonsense) It's really frustrating because they were posted as something to benefit the consumer and anyone on the planet with an internet connection has access to them, not just realtors. Who loses here? I thought I was being a consumer advocate, which is what all the regulation is supposed to be protecting.

Rebecca, Hmm so big brother is eyeing the blogosphere? So what about all those pay sites like Angies List and others where people post there testamonials online about businesses?

Renee- I feel for you. I used to work for a real estate attorney who owned a title company and so I have an idea of the restrictions placed on you to blog. It is that line always that is walked, that grey area and if it is grey, with more and more restrictions placed it is best not to post. And yes in some cases that will be unfortunate because consumers will truly lose.

Larry,

Oh yes we haven't seen the end of big brother. The webinar from WOMMA is a good start for clarification. Now Angie's List, from my understanding, is a pay to use site from consumers but I did not think that consumers are paid for their submissions and testimonials on companies. IF they are there HAS to be clear disclosure.

An example, I think, of sites that would not have to pay are those in which consumers freely give their opinion and are not at all rewarded, not with points, prizes, cash, anything....like question and answer sites- Yahoo Answers is one.

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