[guardian] The Office of Fair Trading has fired a shot across the bows of marketing companies that buy blogposts and tweets for sponsored promotions without disclosing the fact, after finding that a London-based company broke its code on disclosure.
But it declined to say whether it will be going after other companies in the next few months, despite the insistence of Handpicked Media, an 18-month-old startup based in Carnaby Street which the OFT censured on Monday, that the practice is widespread.
The OFT would not say either whether it will apply the rulings demanding full disclosure of sponsored postings to newspaper or magazine articles that appear online, such as travel or equipment reviews, but it has set a precedent that will strengthen the hand of the Advertising Standards Authority, which will gain regulatory powers over UK internet advertising from March.
Handpicked Media, founded and run by Krista Madden, provides text and content for sponsored posts for about 200 blogs. Madden said she was "quite happy" with the OFT ruling and insisted it had grown from a single tweet earlier this year which had failed to indicate that it was sponsored.
In a press release, the OFT said: "The OFT has received undertakings from Handpicked Media, an operator of a commercial blogging network, requiring them to clearly identify when promotional comments have been paid for.
"In taking this enforcement action the OFT has confirmed its view that online advertising and marketing practices that do not disclose they include paid-for promotions are deceptive under fair trading laws. This includes comments about services and products on website blogs and microblogs such as Twitter."
But Madden insisted that she has pushed clients to disclose when they are paid to blog or tweet. "I started this company because I wanted absolute disclosure because I knew that other people weren't doing it," she told the Guardian. "There's a lot of blogging going on which doesn't have full disclosure, a lot of places."
She said she had suggested to the OFT that there were other organisations which would fall foul of its rules by not being transparent about payment.
Robert MacDougall of the OFT declined to say whether the organisation will act on any of Madden's suggestions.
"We take each case on a case-by-case basis," he said, while insisting that the finding – which was determined by the OFT without reference to a judge – was part of a strategic aim of the organisation.
OFT fires a warning shot over sponsored Twitter promotions