New FTC Guide Concerning the Use of
Endorsements and Testimonials in Advertising

Why the new guidelines are good news for your business!

Today, more than ever, the most profitable relationships with your clients are long-term relationships. Why? Well, in short, selling to an existing client is much faster and easier than trying to win a new client. But you're not going to do repeat business with a customer if they don't trust you. And what does trust require: an open and honest relationship. And that is at the heart of what new FTC guidelines on Endorsements and Testimonials will help achieve.

In its recent global consumer survey, Nielsen found that while 30% of visitors don't trust what they read from a business on their web site - while 90% they believe what they read from other customers, i.e. testimonials. Unfortunately with increasingly deceptive testimonials and endorsements, that trust was being eroded. And an incredibly effective sales tool was being lost.

The new FTC guidelines will reinforce consumer trust in testimonials by ensuring that results shown are typical and the expected outcomes explicitly stated. This is along with other endorsement requirements including that claims are not misleading or unsubstantiated.

Together, these measures will help bolster the trust that consumers have typically placed in testimonials and make them an even more effective way of communicating the benefits of an offering to prospective customers.
With the publication of the FTC Guides on endorsements and testimonials, it is even more critical that businesses take advantage of their satisfied customers as a key tool to communicate the benefits of their offerings to prospects. Testimonials continue to be the most trusted source of information and the new FTC Guides will ensure that this continues to be so in the future.

What You Need to Know...
Specific Issues to Consider with the FTC Guides:

Remember that, ultimately, the FTC considers the overall impression of an advertisement when deciding whether or not it is deceptive. Having said that, the FTC guide provide specific guidance with respect to testimonials and endorsements in determining if they are deceptive:

• Results in testimonials and endorsements must reflect the actual results and opinions of the endorser. Results must be provided with a substantiated statement of expected outcomes - in other words, no more Results Not Typical. A good rule of thumb to remember is: if it can't be directly, it can't be said in a testimonial or endorsement.
• In general, issues that impact the credibility of endorsements - such as a sponsorship relationship - must be disclosed. Even in word-of-mouth media (ex. blogs), if there is some form of compensation made (ex. payment or giving a product to the reviewer for free), then it is considered an endorsement. An exception is celebrity endorsements used in conventional advertising where such a relationship is assumed.
• If you use an expert endorser, then that expert's field of expertise must be relevant to the statements being made. Endorser statement must not be misleading or unsubstantiated.
• While the FTC has indicated it is not targeting individual bloggers, both advertisers and endorsers are liable for the statements being made and both can be the target of FTC action.

Additional Resources

• Full text of the FTC Guide
• Download a copy of this whitepaper

What do to next?

Like any other compliance issue, it is always advisable to ensure that processes are in place in your business to protect you. Here is a simple way to make sure you're not at risk:

• Perform an audit of the testimonials and endorsements you are marketing directly to prospects. Ensure all are compliant.
• Perform an audit of all advertising / marketing relationships to ensure that their activities are compliant. Going forward, to avoid liability, it advisable to ensure compliance is built into advertising/marketing agreements.
• Consolidate testimonials and endorsements into a centrally managed repository to ensure the ability to monitor compliance going forward.

That's just what Testimonial Director was designed to do! Provide a single, central repository for managing all your testimonials. Ensure you are compliant - learn more about Testimonial Directors!