Story from The Wall Street Journal, April 23, 2009

By MIGUEL BUSTILLO and ANN ZIMMERMAN

Before heading to a store or retail Web site, many shoppers love to check out the growing flurry of product reviews posted online. But figuring out whom to trust in the blogosphere has gotten trickier as more and more bloggers get paid to promote products on their sites.

Companies see the freebies and payments to bloggers as a cheap way to boost brand buzz during the recession. But site visitors often don’t realize they’re reading a promotional pitch. Not all bloggers make clear that they are being compensated to talk up products, if they disclose it at all.

The Internet is becoming so rife with paid blogging that the Federal Trade Commission, which guards against false advertisements, is examining whether it should police bloggers. As it updates nearly 30-year-old advertising guidelines, the FTC is proposing that bloggers, and online marketers and companies that compensate them, be held liable for misleading claims. A decision from the commission is expected this summer. If it approves the guidelines, violations could spur investigations that in turn force bloggers to discontinue deceptive practices. If the deceptions don’t stop, the FTC may require companies to repay customers.

Meanwhile, many in the blogosphere are worrying about their reputations. A growing number of bloggers are speaking out about the need to be more up front with readers about arrangements with corporate America. Advocates of more disclosure argue that the credibility of their collective writings will suffer if readers cannot discern company shills from honest voices.

Salwa Mbarouk, a 22-year-old London designer and digital artist, recently had that problem. After reading a glowing blog review, Ms. Mbarouk bought an e-book about Internet search engines. Later, she realized that the review had mischaracterized the book. Convinced the blogger never read it, she revisited the site and noticed a subtle mention that it was a “sponsored post.” She felt snookered. “We all fall for these traps, whether you are a newbie or experienced Internet user,” she says.

Ms. Mbarouk cautions that “the reader must be aware of smelling a rat” when perusing blogs, and should carefully scan for evidence that a blogger is shilling for a corporation — not just formal disclosures, but language that sounds suspiciously like a press release.

Rita Arens, an author and mom blogger, recently proposed that reputable blogs display a disclosure badge, akin to the Good Housekeeping Seal, that alerts readers to whether the writer is expressing unbiased opinions. “I’m not saying bloggers are Oprah, but some personalities can be huge opinion leaders,” Ms. Arens says. “Unfortunately the rules have not been defined, and this is the shaky period where some people are getting away with murder.”

Many bloggers are embracing corporate relationships as they seek to turn their Web hobbies into businesses. Mom bloggers have been especially courted because marketers believe they are regarded as more authentic.

Jessica Smith, a 32-year-old mother of a 3-year-old boy and author of JessicaKnows.com, has pitched for Wal-Mart Stores Inc., Ford Motor Co. and videogame maker Electronic Arts Inc.

After a favorable review, Ford gave Ms. Smith a Flex crossover vehicle for a year and a gas card. “It was love at first sight,” Ms. Smith wrote in her blog, after test-driving the car. “The Flex also proved to make me feel safe and secure while bringing out the exciting and rebellious side of me at the same time…it’s high tech surprises that seemed to never end make me swoon.”

Ms. Smith is one of a dozen bloggers recently flown to Santa Barbara by Electronic Arts to work out with Oprah Winfrey’s personal trainer. The bloggers, who were put up at the Four Seasons hotel, are receiving makeovers as they write about taking a 30-day challenge on an upcoming fitness video program for the Nintendo Wii.

“We think virtual fitness will be something adopted by digital moms like Jessica Smith,” says Jen Riley, a public-relations manager for Electronic Arts, who refers to bloggers as “evangelists.”

In a disclosure at the bottom of her Web page, Ms. Smith notifies readers that she accepts compensation for blog posts, but says, “We always give our honest opinions.” Still, in an interview, Ms. Smith said she never writes anything negative about products she is asked to review because, “I choose not to be critical.”

Other mothers who initially welcomed merchandise and the occasional $20 gift card in exchange for product mentions say they were dismayed by the messages some companies expect them to deliver, disguised as their own words. Their experiences made them question what they were reading elsewhere, sandwiched between cute tot photos and advice on curing hiccups.

“To say mommy bloggers should be independent like Consumer Reports is crazy. We are not professionals,” says Shannon Johnson, who blogs about her life raising three children in Utah. “But bloggers should be honest about what they are getting. How can you possibly not be biased if you are receiving a gift card?”

Allison Monyei, who co-wrote a letter to the FTC supporting expanded guidelines, said she looks to blogs when trying to learn the pros and cons of a new product or service. That credibility is why companies are so eager to plant product mentions on sites, and why disclosure is so important, says Ms. Monyei, a 24-year-old law student at Mercer University in Macon, Ga.

“You always wonder, is the opinion I am getting bought and paid for? Is a housewife who writes that she prefers Woolite over Tide telling you what she really thinks? Consumers need to know that some of these bloggers are receiving benefits.”

To be sure, many traditional media publications accept free products from corporations, but most reputable ones have policies limiting what writers can keep. In the blogosphere, ethical standards remain a work in progress. In a survey of 250 senior marketers last summer, public-relations firm Manning Selvage & Lee and PRWeek magazine found that 20% had purchased advertising space online in exchange for coverage last year, while 8% had provided gifts. Asked whether they believed their colleagues were following established media ethical practices online, 53% answered no.

Internet entrepreneur Ted Murphy is building a business around selling blog posts for money. In a bid for credibility, Mr. Murphy requires the bloggers he hires to insert a silver icon next to the promos that state “Sponsored Post. 100% Real Opinion.” Readers can find a more specific disclosure statement by clicking on a tiny question mark symbol on the icon.

“Ultimately, the great equalizer is the reader,” Mr. Murphy says. “If you are not open and transparent about being compensated and not sharing your real world opinion, you’re not telling the whole story and you will lose your readers.”

In one of Mr. Murphy’s recent campaigns, Sears Holdings Corp. offered bloggers $11 to briefly spotlight an apparel sale as a fabulous bargain. Mr. Murphy also has hired bloggers for other recent Sears offers.

Blogger Jessica Gottlieb of Los Angeles accepted $250 to steer her readers to a recent Sears promotion: “For all you Moms like me who are having a mini (or maxi) meltdown due to the economy, let me give you the best tip ever,” she wrote. In the post, she is pictured wearing a $39 Sears dress.

Ms. Gottlieb recently posted a notice on her blog warning marketers that she would only write about their products in return for cash, reasoning such straightforward payments were more honest than the murky world of freebies. She later said in an email that she remains conflicted about the ethics of blogging for compensation.

“Bloggers still have a tiny bit of the Wild West in them,” she wrote.