MCM ILLAN B INCH MENDELSOHN

Advertising & Marketing Bulletin
August 2006

STEALTH MARKETING: TO DISCLOSE OR NOT TO DISCLOSE - THAT IS THE (LEGAL) QUESTION
Stealth marketing, a subset of word-of-mouth marketing ("WOMM") strategies, is marketing that promotes a product without disclosing any direct connection between the advertiser and the message. With the stealth marketing industry valued at between US$100-150 million and growing at 100% year, stealth marketing is fast becoming the darling of marketers around the world. However, some industry insiders are concerned about the legal issues related to the lack of disclosure of the direct marketing connection. An executive editor of Advertising Age stated that "this is a practice that may be illegal … it's probably only a matter of time before someone jumps on it" to stop it.1 Commercial Alert, a U.S. based consumer protection organization, has tried to do exactly that. On October 18, 2005, it requested that the U.S. Federal Trade Commission (FTC) undertake an investigation of companies that conduct stealth marketing. Commercial Alert argued that by failing to disclose that they have been enlisted to promote products/services, stealth marketers are fundamentally fraudulent and misleading.

What exactly is stealth marketing?
Stealth marketing involves a marketer engaging with customers without disclosing that they are in fact paid by the business for which they are marketing a product or service. For example, a business might hire an actor or charismatic person to use a certain product visibly and convincingly in locations where target consumers of such product are located. While using the product in the location, the actor will also discuss the product with people he or she meets in that location and possibly hand out samples. The actor will often be able to sell consumers on their product without those consumers even realizing it.

Stealth Marketing: Some Legal Issues
False or Misleading Advertising Under