As part of my regular morning routine I was reading the latest Penny Arcade webcomic.

It was about Sony and the PSP, in general Sony is always good to take a potshot at. But today’s potshot was based upon lots of ammunition and comes with some weight from the FTC to boot.

The FTC has ruled that companies engaging in Word-of-Mouth marketing that compensates the word-of-mouth participants, that the participants must make the compensation known. This has typically been defined as “shilling”.

Tycho points out the important distinction between Viral Marketing and Guerrilla Marketing. The fact that an ad agency cannot create Viral Marketing is extremely important. Word-Of-Mouth, a form of Viral Marketing is supposed to be organic. An ad agency can help to create a campaign that launches information into the world to help spur Viral Marketing. Take for instance a company that does just that, BzzAgent.

I read their book, “Grapevine: The New Art of Word-Of-Mouth Marketing”.

The book talks a lot about transparency and how it is imperative that the Agents tell people why they are talking about the product. The book even gives an example and talks about shilling. The Agents at BzzAgent are compensated with free product (as to be able to properly try out the product) and points. The points can be exchanged for Bzz swag. This seems like a good way. Keep the cash out of it.

If the product is good then the free product should suffice as compensation. And since the product is good, they are inclined to talk well about it. If the product is bad or has problems, they can report that back to BzzAgent, which turns it over the customer who hired BzzAgent, and ultimately will probably tell people they know to avoid the product.

Whereas shills, are typically paid actors. The Washington post article references a Wall Street Journal article from 2002, where Sony Ericsson (mind you, Sony, again) paid actors to go to tourist locations and show of the new camera phone. I mean it would be completely different if Sony Ericsson had setup a booth or something and gave demos. No harm, everyone will know what the deal is.

The issue is the trickery, the subterfuge that is being perpetrated by companies who pay actors (or real people) to influence others to buy the product, without saying “I am a paid spokesman.” This has been a topic I have been reading more about. Not necessarily on purpose, it is just something that catches my eye more these days and it seems to be popping up in the web world.

Because, the Web 2.0 world is still (heavily) driven by advertising. And a lot of bloggers who get a reader base, get into that world of endorsements. And if they start talking about a product, because they took money, I think they should definitely disclose this. In Business 2.0 mag, there have been a few articles of the last few issues that talk about people trying to build agencies that will blog about your product (in a good way) for cash. The issues that the industry experts the article referenced all centered around disclosure and transparency.

I remember (again Penny Arcade as my original source) some stuff about EA using an agency that was posting on forums to talk favorably about a game, but didn’t disclose that they were being paid to post. The agency had employees that were posting to the same forum under multiple different identities.

I know that when I read the review for hardware on NewEgg, I always sort the review to read the worst review first. Because no one who is paid will talk bad about it. However, anyone who paid money and it breaks, will warn others.

In the end, something that I learned when I was young (and try to practice all the time, comes to mind.
“Prove all things and hold fast to that what you know is true.”

Don’t believe the hype. Do a little research.

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