Category Archives: womma

When Marketers Collude, Bloggers Lose

As an active investor in social media, I’ve followed the Word of Mouth Marketing Association (WOMMA) since it’s founding by a handful of marketers back in 2004. The growth of marketers in the organization is a testament to the power unlocked by consumer generated content. The core of that power rests with the content creators such as bloggers, podcasters, vloggers and even to the granularity of social network participants. I think WOMMA understands that, but I fear they’ve been led astray by a minority of marketers who want to dictate payment terms when engaging bloggers. Sure, they want the exposure bloggers can deliver, but they only want to pay bloggers in free markers, coffee mugs, products, trips and passes.

Normally the market would sort that out, rewarding marketers who recognize the value of bloggers and weeding out those looking for free product reviews. Unless, of course, the largest marketers band together to declare that barter (non-cash) is the only allowed means of transaction. That’s what recent WOMMA Code changes are attempting to do: declare that cash is not allowed, whereas non-cash is fine — even with the exact same level of authenticity and disclosure for each transaction.

As you’ll see in the comments below, I disagree with that stance from many perspectives. I feel that cash and non-cash transactions carry equal levels of conflict, but with authenticity and disclosure they can both deliver win-win-win for bloggers, marketers and readers. WOMMA is currently accepting comments on the topic and I’ve provided my comments below. Agree, disagree? Do you think it’s appropriate for marketers to dictate terms to bloggers in this way? Speak now or don’t complain when future sponsors say “I’d love to compensate you for your published feedback, time and effort, but my industry association won’t let me…how about a branded coozie?”
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  1. June 3rd, 2009 at 12:48 | #3

    As a marketer, blogger, and WOMMA stakeholder (via IZEA investment) I’ve lived this topic firsthand from many perspectives. To share those experiences as clearly as possible (and to enabled threaded dialogue), I’m providing separate comments from each view. From all perspectives, I believe the WOMM market and its participants are best served by allowing and requiring the same standards for cash and non-cash compensation in WOMM campaigns.

    To start, as a marketer, I believe even your topic “Paid Blogging: Ethical or Not” misses the point. WOMMA’s code already allows “paid blogging”, so long as payment is done indirectly via products, gifts, passes, trips etc. Therefore the real question is whether advertisers who do it directly via cash should be held to a different standard than those who shroud their compensation in non-cash forms. So long as both advertisers follow WOMMA’s Honesty ROI, I see no reason for such a distinction other than to protect the “old guard” who have built their agency businesses on shrouded influence and compensation. Let’s embrace and encourage transparency of all forms of compensation.

    Likewise, I believe a cash vs. non-cash distinction creates an inappropriate “caste system” between advertisers with large-ticket items and those with small-ticket items. For example, the recent “Bloggers at Sea” boondoggle arranged for a group of large and small bloggers such as Kawasaki, Scoble, and Sernovitz to visit the USS Nimitz is a free trip worth thousands of dollars and probably an experience of a lifetime. There is no way one can argue posts about the trip are not paid blogging — typically without disclosure of free airfare etc.. However, the owner of a free content website has nothing of that value to exchange for similar blogger coverage. Why should the former be allowed “paid blogging” when the latter is not? Those agencies wielding free gifts to provide such as cars, electronics, consumer goods etc. may not like it, but cash gives everyone a shot at social media coverage — something WOMMA should support.

    Finally, cash and systems based upon cash rather than manpower can be more efficient, delivering ROI in a social media world that still struggles with unlocking marketing ROI. I’m sure there are some who might claim non-cash compensation delivers better ROI, but who’s right in a specific case study doesn’t really matter. The question is whether WOMMA should foreclose an approach, assuming Honesty ROI is followed, while the industry is still so young and in need of creative solutions. Like cash-based sponsored content today, cash-based sponsored search ruffled the status quo when Overture/Yahoo and Google leveraged it to deliver better ROI. Sponsored search is arguably the most successful online business model ever, powering all of the innovation at Google, Yahoo and much of the online ecosystem. Imagine if the largest trade association of the time had disallowed it before the world realized its potential? As a beneficiary of those innovations, I believe such a move would have been short-sighted and, frankly, tragic to the future of the medium.

    Thanks,
    Dan (Marketer)

  2. June 3rd, 2009 at 12:49 | #4

    As a blogger, I also believe the distinction between cash and non-cash paid blogging is inappropriate. So long as I blog with disclosure and authenticity (including follow all FTC guidelines), I don’t believe it’s appropriate for marketers to collude on the terms I’m allowed to charge for my time, effort and publication. If I’ve built an online media business that is worth $1,000 in goods/freebies/trips, it’s equally worth $1,000 in cash. Coordinating marketers to disallow the latter payment terms is tantamount to price-fixing.

    Given discussions I’ve had with other bloggers, it’s obvious to me that cash/non-cash distinctions in WOMMA weren’t driven by bloggers. Depending on the product or service in question, bloggers will decide what’s appropriate for their blog/audience, but they almost universally agree that cash (with transparency) should be one of many valid options.

    I believe the closest analogy for the majority of bloggers is talk-radio hosts – even more obvious as bloggers do podcasts & videos. Like most bloggers, talk-radio hosts are more discussion-starters and entertainers than journalists. They grow their audience by topic, geography and/or talent. Some are small-town voices that wouldn’t be recognized elsewhere and some are national celebrities. However, they almost universally accept cash and non-cash payment from sponsors — mostly cash — to speak in their own voice about the sponsor. The FTC allows this radio model, even without disclosure, so why in the world would we handicap radio’s online counterparts with an arbitrary distinction between cash and non-cash sponsorship even when Honesty ROI is followed?

    Thanks,
    Dan (Blogger)

  3. June 3rd, 2009 at 12:56 | #5

    As a WOMMA and industry stakeholder, I believe dictating non-cash terms is inappropriate, unnecessarily risking the industry, the association and it’s members in one fell swoop.

    I’ll start with the most dangerous risk: trade association antitrust. In the interest of brevity, this DOJ speech (and multiple related guides) provides a decent summary of Trade Association Antitrust risks: http://www.usdoj.gov/atr/public/speeches/0106.htm One example in that speech is US vs. Association of Retail Travel Agents, whereby the association attempted to dictate pricing terms and transaction structure. Similar to current WOMMA “stand against” language, members of the association boycotted doing business with any providers who didn’t meet their pricing structure/terms. The DOJ’s view was as follows: “This is the kind of trade association activity that is of serious competitive concern. ARTA developed a position for its travel agent members on the prices and terms upon which they should be compensated, and then invited and encouraged members not to deal with travel providers that did not follow its prescription. This amounted, in effect, to an invitation to engage in price-fixing.”

    The penalties for such trade association activities can be severe (up to treble damages) and can extend to collaborating members. As such, setting all other arguments aside, I believe disallowing US legal tender in a social media marketing transaction puts the association and members in unnecessary legal jeopardy. I believe WOMMA probably understood this at it’s founding because it’s own 2004 antitrust guidelines specifically state: “Since both the Sherman and Federal Trade Commission Acts prohibit combinations in restraint of trade and since an association by its very nature is a combination of competitors, one element of a possible violation is already present. Only the action to restrain trade must occur for there to be a violation.” It may be understandable that WOMMA accidentally wandered into antitrust territory by competitive members, but now that multiple members have raised the question, the association won’t be able to claim ignorance. Therefore, I believe WOMMA should immediately remove any pricing structure/terms distinctions in the code.

    Although I’ve already covered the industry risk for disallowing a young, promising marketing model; as a WOMMA stakeholder, I believe there is another industry risk at play: wasted association energy/resources. The WOMM industry will be better served helping everyone understand compensation and conflict exists whether payment is cash or shrouded in non-cash forms. The FTC makes no distinction between the two and, in fact, recent FTC Guide updates added specific examples for social media non-cash transactions to make their concerns clear — all compensation and conflicts must be disclosed. There are multi-billion dollar industries, such as social media affiliate marketing, that will not abandon cash payments, but could be encouraged by WOMMA involvement/cooperation to increase transparency. Focusing WOMMA’s resources on driving Honesty ROI across all social media marketing will serve the industry far greater than drawing arbitrary lines on an unsettled topic that, by your own words, “is driving strong points of view on all sides.” Find common ground within your membership and focus WOMMA’s scarce time and dollars where we can agree…

    Thanks,
    Dan (WOMMA Stakeholder)

    Sponsored Conversations

    sponsored conversationsCongrats are in order this week for a couple visionaries, Sean Corcoran of Forrester Research and Ted Murphy of IZEA.  Sean published a break-through research report on the value of sponsored conversations, continuing Forrester’s track record in leading-edge Interactive Marketing Research.  The report, entitled “Add Sponsored Conversations to Your Toolbox: Why You Should Pay Bloggers to Talk About Your Brand” discussed pros and cons of sponsoring bloggers, and shared some key components of successful campaigns: 1) Disclosure, 2) Authenticity, 3) Relevance, & 4) Relationship.

    Congrats are also in order for Ted and the whole IZEA crew, because IZEA was a core piece of Sean’s report.  In fact, IZEA’s Kmart campaign success appears to have been the driver for the research effort (Kmart casestudy below) — following up on some twitter-driven research by social media guru Jeremiah Owyang.  Ted predicted this time would come, the very first day I met him back in 2006.  At that time, the idea of sponsored bloggers was blasphemy and Ted was one of those proverbial “pioneers” taking some arrows in the back.  Since that time, his pioneering ways have created an industry and unlocked a marketing approach that could save the social media graveyard that’s being filled daily by banner/CPM-starvation and display advertising that just doesn’t work.

    SocialSpark Launches: Do You Smell What the Spark is Cooking?

    So, today’s the day Sparky is let out of his private alpha chains…

    IZEA’s latest innovation is being unleashed today at Ad:Tech, San Francisco, and the stars of advertising and blogging are already lining up to meet Sparky and the world’s first Social Marketing Network: SocialSpark.

    I gave you a hint of what to expect when the site was being designed back in November, and as you can see, my tone has shifted from Ricky Bobby to The Rock. This is a seriously powerful platform for bloggers and advertisers, the likes of which hasn’t been seen before. In fact, before I even describe it, go signup and come back, I’ll wait…

    OK, now that you’ve signed up and, possibly, reviewed the video above, what more can I share. There’s so much in SocialSpark, I’ll just focus on a few innovations that get me excited:

    • 1st advertiser/brand/agency social network with direct publisher friending, blogrolls, street teams and a dashboard to manage diverse social media marketing efforts. Imagine: advertisers proactively identifying relevant bloggers and organizing vertical advertising networks for their brands.
    • 1st face-based analytics: GOOG analytics plus MyBlogLog (faces for visitors, not just recent readers) plus visitor demographics in one end-to-end analytics, ranking, marketing and blog monetization platform. Imagine: understanding your visitors as people with faces and demographics, rather than pagevisits per unique, bounce-rates or IP addresses.
    • 1st 100% automated, in-post human disclosure, including audit tools to help publishers and advertisers verify compliance with key corporate or industry guidelines such as WOMMA’s Code of Ethics. Imagine: a marketplace that provides the tools to maximize visibility for readers and 100% Code of Ethics compliance.
    • 1st 100% automated, in-post machine disclosure via “nofollow”, including audit tools to help publishers and advertisers verify compliance with key search engine policies such as Google’s quality guidelines. Imagine: advertise and blog in the open with SocialSpark, without fear of GOOG penalties from SponsoredReviews, PayU2Blog, TLA or other paid-link companies that violate Google Quality Guidelines. Align yourself with SocialSpark sooner than later, I believe a fresh round of pagerank penalties are in process for those smaller networks and DIY link sellers.
    • 1st one-click blog sponsorship ad unit requiring no blog design/template editing to position the ad unit and provides 100% publisher approval to match brands to readers. Imagine: brands you trust ask to sponsor you and it’s done with one-click. Personally, I’m not a big fan of the Blog Welcome, but I believe that is being decoupled from the easy/valuable bottom sponsorship banner.
    • 1st clearinghouse for blog writer’s-block remedies called Sparks, providing organic post ideas such as inspiring charities, hot topics, etc. Imagine: more posts = more traffic, but without backstage passes and exclusive press releases like the elites get, how do you ramp your organic post inspirations? Sparks. I particularly like the potential for spreading your favorite posts or charities via free Sparks.

    What else?

    Well, I can share that advertiser appetite from the private alpha is already gobbling up sponsorship of the best tech, mommy and daddy blogs. If you are a tech blogger, a mommy blogger or a daddy blogger — the sooner you signup, the more likely you are to be added to relevant advertiser street teams. As the marketplace grows, competition will be tougher and getting noticed by your favorite brands could take more effort.

    I’ve shared plenty here, but I probably also prompted some questions — let me have ’em…

    Oh, and given my post title, I’ll leave you with a video montage of Method Man’s tribute to The Rock — “Do you Smell What the Rock is Cooking?” He reminds me of Ted Murphy, but with muscles, good looks and personality 😉

    Sponsored by SocialSpark