In a post on gaming webcomic Penny Arcade, an anonymous email was posted regarding the actions of Hype Council, accusing the company of hiring employees to create online personas to drive word-of-mouth marketing online.

As with Nvidia and AEG before, we went straight to Hype Council’s President and Founder Scott Meldrum for clarification. Unlike Nvidia, Mr. Medrum was happy to respond, in public, despite some potentially embarrassing answers.

Consumerist: Has Hype Council ever hired employees or paid contractors to create trusted personas in internet forums and message boards?

Meldrum: Yes. This type of marketing was a small part of our practice until 2003. Employees posted messages in forums, not contactors. We didn’t take the practice as far as creating trusted personas with multiple profiles and posts, but the intent was to blend in. Same difference.

Consumerist: Is the ‘guerilla marketing company’ mentioned in this post [on Penny Arcade] Hype Council? If not, do you know which company is running this program?

Meldrum: The company in question is not HypeCouncil. We are located in Los Angeles (Long Beach). The post references a company in San Francisco. I do not know who this company is, but I would suggest searching WOM and viral agencies in San Francisco for a start.

Consumerist: Obviously you see where I’m going with this. If Hype Council has employees whose only job is to seed message boards with undisclosed advertising messages, we’d like to talk about why you think the program is ethical.

Meldrum: I completely understand the issue. Speaking frankly, we didn’t take a serious look at the ethical question until 2003. The practice of seeding forums was becoming more and more pervasive and the community outcry was loud enough for us to wake up and pull our head out of our ass. Bottom line, it wasn’t good for the online communities, it wasn’t good for us, and it wasn’t good for our clients. Hence, we stopped doing it.

More talk about marketing, word of mouth, and “shoving advertising directly up the customer’s butt” after the jump.

Consumerist: What do you think of WOMMA’s new proposed code of ethics for WOM marketing?

Meldrum: We are members of WOMMA and as such, not only abide by the ethics code, but we embrace the principles behind it. It matters very little. If we were still doing this type of marketing, I would be far more worried about the likes of you and your fellow bloggers than I would be about WOMMMA But seriously, the fact that WOMMA is out there with the message of transparency is a HUGE step in the right direction.

Consumerist: How does Hype Council approach communities these days? What steps do you take to make sure people know they are being marketed to?

Meldrum: We don’t work directly in communities anymore, so if any work is done in a forum, it is done by the forum owner and transparency is rule #1. These initiatives might include:

• Editorial reviews of product (non-biased)
• Text ads outside of threads/posts
• Banner ads outside of threads/posts
• Press release information

Again, these initiatives are 100% serviced by the website owner. THEY decide if and how the marketing is done in their communities. We provide the tools for them to disseminate. And again, transparency is key.

Frankly, the types of websites we are working with don’t have active forums. As a result, these types of placements are rare, certainly in comparison to the millions of interactions generated by standard advertising and PR means.

Consumerist: While we commend your decision to stop these sort of undisclosed forum postings in 2003, we can’t help but wonder what made your company think these would be a net positive for the companies and consumers in the first place.

Meldrum: It wasn’t something that we conspired to do. It just started with one post and led from there. As the process became more and more complicated and the efforts to conceal identities became more and more rigorous, we stepped back and made an honest assessment of our actions and the net results. That’s when we pulled the plug. Still, I think we made a mistake in not looking at this a lot sooner.

Consumerist: Is it difficult when working in marketing to keep the perspective that customers are more than just potential positive numbers? (To, you know, put words in your mouth. But I think you get what we’re asking.)

Meldrum: That’s a stretch, Joel. That’s like asking “Is it difficult to not jam the advertising directly up the consumers butt?”

To answer your question, and not mine, no, it’s not difficult. We are salesmen, and as such, I understand that the perception is that we are out of touch with the true needs of consumers because we are blinded by our own goal of converting the masses. But, Interaction is what this agency is after. The consumer is not an idiot. I think the fact that shill companies exist is a testament to the fact that the consumer is so intelligent that sometimes they need to be tricked into interacting. They are not so easily led is my point.

Trickery is not necessary though. Targeted and vital messaging is what they require. Interactive, NOT interruptive. The truly “hard” part is thinking up ways to engage the consumer without turning them off. Some companies have turned to deception as a way around that. But, as we all know, a lie is easier in the beginning. It gets harder and harder is it progresses.

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