The UK Comes Gunning for Twitter — This Time Over Ads

Twitter promoted tweetsThe U.S. isn’t the only government knocking on Twitter’s door right now, as it turns out. Officials on the other side of the Atlantic are also casting their eyes over the site — if for very different reasons.

The UK’s Office of Fair Trading — the British equivalent of the Federal Trade Commission — has launched a crackdown on deceptive Twitter endorsements in an attempt to bring some rules to the Wild West of social media.

The push comes off the back of a 6-month investigation into a Twitter-based ad campaign by British blogging network Handpicked Media that concluded last month. The OFT found that there were serious problems with the amount of disclosure (or, more accurately, non-disclosure) taking place online, and that consumers were, in particular, misled by a series of tweets that suddenly appeared to be grassroots promotion for a fashion sale but were, in fact, paid for. The latest action is that decision writ large, taking the lessons learned from Handpicked and applying them across the entire industry.

The OFT’s suggestions are fairly straightforward: that consumers need to understand when there is payment (of any kind) being made for coverage; and if anyone is promoting a company or brand associated with their work, then it “needs to be obvious” that they have a financial connection. The bottom line is fairly clear: being paid to tweet isn’t wrong — as long as that fact is made clear.

It’s more than a little reminiscent of the heated arguments that the U.S. went through in 2009 when the FTC proposed disclosure rules for bloggers who get paid to post. At the time, the FTC rules generated something of a storm: High-profile bloggers like Jeff Jarvis argued that the rules amounted to an unfair restriction on free speech, calling it “a monument to unintended consequence.” Others, like Google’s (s goog) anti-spam chief Matt Cutts, argued it would make the web more useful and more trustworthy.

Whether such regulations have actually worked remains murky. Major celebrities reportedly receive tens of thousands of dollars from advertisers keen to get them to endorse products, and only a handful seem keen to disclose their relationships. The rules might prove a little more effective in regulating those celebrities and brands who fall under UK law, however, since advertising regulations in the country are relatively strict.

The real question for those of us watching Twitter’s fortunes are what it means for the service itself. Is this going to be a thorn in the company’s side as it tries to make money? While it probably seems like an irritation, I suspect the answer is that it’s actually good news for Twitter in a number of ways. For starters, becoming subject to regulation — while onerous from a legal standpoint — is recognition that you’re important enough to matter. That matters to Twitter, which still suffers from a perception problem among large portions of the population that it’s just people sharing what they had for lunch.

Secondly, it goes a little way to cracking a big problem of social media: that speed and transparency don’t always go hand in hand. For every great news event that’s broken on Twitter, there has also been damage from cases where falsehoods and deception have spread incredibly quickly — most recently the erroneous news that Congresswoman Gabrielle Giffords had died after being shot this past weekend.

But there’s also a third, and perhaps more important, reason why Twitter itself might be interested in more, rather than less regulation. It could actually be an effective — if inadvertent — way of boosting Twitter’s so-far unimpressive advertising platform.

Promoted Tweets haven’t exactly set the world on fire, but if governments are suddenly sending out a strong message to professional marketers, advertisers and the dreaded “social media gurus” who make a living pimping products and services on Twitter, then that could have the added effect of making Twitter’s Promoted Tweets more enticing. The company won’t regain every slice taken out of the gray market of unscrupulous paid-for messaging, but it should get some — improving the bottom line and driving more legitimate advertising to Twitter.

It probably doesn’t feel great right now as the company stares down the barrel of a Department of Justice subpoena and this OFT mandate, but sometimes — just sometimes — a little push from the government turns out to be just what businesses need.

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