To help generate buzz for the WOMMA Summit taking place in DC this week, the Federal Trade Commission issued an opinion suggesting that "companies engaging in word-of-mouth marketing, in which people are compensated to promote products to their peers, must disclose those relationships." (as reported in the Washington Post.)

My first question is whether it was the Post or the FTC that got the comma wrong. There is lots of WOM in which people are not compensated, and one would assume that won't be subject to disclosure rules.

TechDirt frames this part of the discussion by saying that "True word of mouth efforts don't come about as the result of any specific campaign". I disagree with that statement but it does highlight the fact that WOM is intended to encourage and facilitate discussion and compensation – either as direct monetary payments or in the form of rewards, discounts, or prizes - is an optional component.

Determining the levels of grey is going to be the fun in all of this. Paid WOM, which is basically another name for affiliate marketing, should be disclosed and I (like WOMMA) applaud the FTC for their position.

But what about refer-a-friend programs where the original customer gets a discount when they get others to sign up? Sirius Satellite Radio currently has a holiday promotion whereby a current subscriber who gives another person the ‘gift of Sirius’ is rewarded with a Howard Stern keychain – does this mean there will be 5-point legal disclaimer type on the bottom of Christmas cards this year?

NOTE: Ad Age spins the story differently pointing out that the FTC rejected a request for a full-scale 'probe' into word of mouth practices. They suggest this will lead to increased WOM activity.

PS: I've shared some more thoughts on the implications for affiliates over at ReveNews.