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The ethics of Pay-per-tweet, Twitter contests, and word-of-mouth marketing

BostonTweet & @Sayagle are giving away 2 dozen Sweet Cupcakes (2 $36 gift cards)! RT to enter - drawing on 6/4 http://bit.ly/ibCHl

--BostonTweet

Seeing more and more sweepstakes offers on Facebook and MySpace lately, and almost all of these sweepstakes comes with the same "cost": Get a chance at a prize X if, and only if, you log yourself as a loyal follower, friend, or fan, virally spreading on the contest to your RealLife™ friends.

There's nothing wrong with these contests per se, unless you factor in how obnoxious and sort of slimy it is for your friends to try and capitalize on your friendship by begging you to sign up for offer X. I recently started receiving Facebook messages with just such a request, and couldn't help but feeling like I was being cornered by an Amway agent. Like I said, not that there's anything wrong with that.

But how are these sorts of semi-paid endorsements different than pay-per-post blog reviews or pay-per-tweet schemes, both of which have come under fire, particularly on non-disclosure grounds? Are 30 of your friends really fans of Coca-Cola, or did they enter to win a trip to Malibu? Particularly since Facebook's rate cards seem intent on promoting just these sorts of pages as a major revenue driver.

Even before many of these social networking paid recommendations really took off, the FTC was concerned. As the Washington Post reported, the FTC moved in 2006 to strengthen word-of-mouth marketing disclosure rules:

"The petition to us did raise a question about compliance with the FTC act," said Mary K. Engle, FTC associate director for advertising practices. "We wanted to make clear . . . if you're being paid, you should disclose that."
...
Peter Blackshaw, chief marketing officer for Nielsen BuzzMetrics, which tracks the effectiveness of word-of-mouth marketing, said brands have more than a moral incentive to be upfront with consumers. "There's a high turn-off factor if consumers learn that the person making a recommendation is actually on contract," with an incentive to push a product, he said.

A 2005 survey of 800 consumers by market research firm Intelliseek found that 29 percent of participants age 20 to 34 and 41 percent of those age 35 to 49 said they would be unlikely to trust a recommendation again from a friend whom they later learned was compensated for making the suggestion.

While these endorsers are typically not being paid directly, they are being compensated in exchange for entry into a contest, which might run even more afoul of the letter of the law if we take into consideration restrictions on gambling.

Now if you'll excuse me, I'm parched and need to go grab a big glass of [your beverage here].

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