State-of-the-Art Ads Are Increasingly One-to-One Word-of-mouth advertising, also called "buzz marketing" and "viral advertising," is all the rage. Companies are spending millions on this one-to-one marketing trend; critics say it's intrusive, raises legal and ethical questions, and needs regulating.

State-of-the-Art Ads Are Increasingly One-to-One

State-of-the-Art Ads Are Increasingly One-to-One

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Georgetown University students flash postcards handed out by a Microsoft "brand ambassador" who promotes instant-messaging software on campus. hide caption

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If a stranger in a drugstore aisle recommends a particular brand of toothpaste to you, or if you happen to see it mentioned on a blog, don't be surprised. Word-of-mouth promotion, also called viral advertising, has become a multimillion-dollar industry in the past few years. Like any other major shift in business practices, this marketing trend has created new questions about the ethics — and even the legality — of the tactics involved.

A case study: When two Georgetown University undergrads run across a friend at the library one recent day, it quickly becomes apparent that the two young women aren't there to study. Kathryn Freeman, a 19-year-old freshman, spends up to 10 hours a week pitching a Microsoft instant messenger by talking to fellow students at the library and going door to door in dorms. On this afternoon, she's introducing students to Microsoft's "I'm Making a Difference" initiative, which aims to attract instant-messenger users by making tiny donations to selected nonprofits each time someone initiates a chat using Microsoft's program.

It's not uncommon nowadays for college kids to act as so-called "brand ambassadors" in order to earn a little extra money. In a fragmented, over-saturated media market, the idea of ordinary people playing pitchmen as part of their daily lives makes sense to advertisers, says Peter Kim, who analyzes the advertising industry for Forrester Research.

"When we think about traditional advertising, the outlook is pretty grim," Kim says. Only 13 percent of consumers make purchases because of ads, he reports. Only 6 percent perceive ads as truthful.

"But what consumers do trust are their own experiences and the words of others," Kim says. "About 56 percent say they trust the words and recommendations of friends and family in thinking about products."

And that's how a Georgetown University newspaper came to publish a glowing story about Microsoft's instant-messenger campaign. A student reporter was assigned to cover it after Freeman worked her campus connections.

"I actually know the assistant editor for this paper, so it was kind of easy to get it in there," Freeman says. "And I just hounded them a little bit, sent them over a press release and a fact sheet. It's only been a couple weeks, and it was published."

The article earned money for Freeman, who could get up to $5,000 if enough Georgetown students download Microsoft's instant messenger. The more buzz she generates, the more money she makes.

The company Freeman worked for, RepNation, targets 14- to 25-year-olds. Marketing director Brandon Evans says clients include MTV, JetBlue, Victoria's Secret and Neutrogena, which commissioned a recent campus campaign called "Undercover Hotties." The campaign sent brand ambassadors to college campuses nationwide, encouraging friends and strangers alike to go online to nominate and vote for guys who'd be the best-looking on campus — if they'd only shave.

"And then from that, we took the top 30 vote-getters, and the ambassadors planned a shave clinic on their campus where these guys would be shaved in public, in front of everyone," Evans explains. "They handed out samples at that, and obviously there's a lot to talk about after an event like that happens on someone's campus."

The biggest player in the word-of-mouth marketing industry is Procter & Gamble. The company has 225,000 teenagers involved in a program called Tremor; another program, Vocalpoint, has enlisted over 500,000 moms. Procter & Gamble executive Steve Knox says the idea is to incorporate specific brands into conversation. Vocalpoint mothers were given a new kind of dishwashing soap from Dawn, for example, and encouraged to casually work its name into chats with friends by talking about how hard it is to get kids to help with the dinner dishes.

"Every mom wants her children to do more chores around the house," Knox says. "Every child wants to do less. That's a natural conversation that takes place ... mom to mom. We simply linked in the Dawn brand to that very natural conversation."

The campaign worked, Knox says: "In that particular place, we nearly doubled Dawn's business — all through word of mouth."

They may be effective, but these tactics have drawn controversy. Vocalpoint moms and Tremor teens are not obliged to disclose that they're marketing when they talk about products. That drew the ire of a watchdog group that asked the Federal Trade Commission to investigate word-of-mouth marketing and establish clear guidelines.

Instead, the FTC issued what's called a staff opinion. In it, Mary K. Engle, the commission's associate director of marketing practices, said there's nothing illegal about consumers expressing satisfaction.

"If you can get people who have used your product and who love it to talk about it, that's going to be a really effective way of marketing," Engle says. "And at the FTC we have no problem with that. ... A satisfied customer is probably your best advocate."

What's problematic, Engle said, is when people disguise their relationship with advertisers while making money from them.

Rani Schlenoff says she always discloses, and she never makes money. What she gets instead is products, from a company called BzzAgent. Schlenoff, 35, is a suburban stay-at-home mom with three kids. BzzAgent recently sent her a Sonicare brand electric toothbrush that retails for around $60.

"There are lots of times that I have talked about it that I haven't mentioned BzzAgent, because I'm doing it just because I enjoy the product," Schlenoff says. "The Sonicare thing is months and months over, but I'm still talking about it."

Schlenoff volunteers as a teacher at the Jewish Family Center in Olney, Md., where she says she enjoys recommending products she genuinely likes. When she got a book from BzzAgent called The Power of Nice, for instance, she took it to one of her classes.

"We talked about how being nice helps you as people, and I showed them the book," Schlenoff says.

Schlenoff draws no ethical distinction between telling her teenage students about BzzAgent promotions and telling them about things she runs across on her own.

"I don't view it as any different [than] me saying, 'Oh, my friend gave me a great book,'" she says.

Even the Word of Mouth Marketing Association, which purports to regulate this segment of the industry, does not account for such power differentials as teachers marketing to students or bosses to employees. Forrester analyst Peter Kim says the close relationships that buzz marketing depends on makes enforcement virtually impossible.

"How likely is it that your mother is going to phone up one of these companies and say, 'Hey, I know that Peter is a BzzAgent, but he didn't tell me that he was, so I'm going to make a citizen's arrest?'" Kim asks.

These ethical dilemmas have been around since at least the days of P.T. Barnum, who famously seeded the crowds outside his shows with people marveling noisily about them. Communications professor Walter Carl says the public may be more ad-savvy than in Barnum's day, but in other ways, we've become more susceptible. Tape-recorded conversations collected at the University of Texas in the 1970s, Carl says, show very few references to specific brands.

"Now, some of my research indicates that 15 or 20 percent of our conversation includes a reference to a brand product or service," he says.

These days, Carl explains, people don't think twice about associating themselves with a brand. For example, you might describe yourself to a stranger as an NPR listener. NPR is a brand.

It's when brands are artificially inserted into private conversations for personal gain that people should worry, activists say.

"It's part of the creep of advertising into every nook and cranny of our lives and culture," says Gary Ruskin, whose group Commercial Alert is the organization that asked the FTC to regulate word-of-mouth advertising. Ruskin says it's time for Congress to get involved.

"This type of marketing is very intrusive," Ruskin says. "It's like telemarketing, but right in your face." Ruskin believes that what's at stake is the undermining of our social fabric.

That sounds like a bit much to Georgetown University sophomore Zack Kerber, who says buzz marketing has clarified his feelings, at least, about those Microsoft brand ambassadors.

"If anything, whenever I see those girls around, I can be like, 'Oh, so what are you selling to me now?'" Kerber says.

Kerber says consumers his age are already jaded about word-of-mouth advertising, and that may be their best defense against it.