Report Says Microsoft Secretly Pays To Promote Xbox; Company Denies

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Microsoft Corporation (NASDAQ:MSFT) has been entangled in a legally questionable advertising campaign launched by Machinima to promote the Xbox One, and although the program is fairly small it is a sign that even major companies are getting involved in guerrilla marketing.

The campaign offered $3 per 1000 views for YouTube videos that included 30 seconds of footage from an Xbox One title and explicitly mentions the gaming system, reports Kyle Orland for Ars Technica. There were a few other requirements, such as tagging the video properly, but the terms also said that video creators had to keep the payments secret and could not say anything negative about the Xbox One or Microsoft Corporation (NASDAQ:MSFT) in the video.

These restrictions may have violated FTC requirements.

The problem is that the connection between the endorser and the company behind the product isn’t obvious, like it would be in a TV commercial, so the connection has to be disclosed because it might “might materially affect the weight or credibility of the endorsement.”

Guerrilla marketing can embarrass major companies

Guerrilla marketing is nothing new, and anyone who has spent time on the content creation side of the web knows that some companies are willing to pay for everything from positive Amazon reviews to editor advocates on Wikipedia, but it’s still surprising when a big company gets involved. After all, the potential embarrassment of getting caught seems to outweigh the upside of guerrilla marketing tactics.

When J.C. Penney got caught using black hat SEO techniques a few years ago, Google Inc (NASDAQ:GOOG) buried it in the search results in retaliation, undercutting the retailer’s online sales. If YouTube gets flooded with paid videos, drowning out real user-generated content, Google Inc (NASDAQ:GOOG) may decide that a similar crackdown is in order.

Microsoft distances itself from campaign

Microsoft Corporation (NASDAQ:MSFT) responded to Orland’s article by saying it wasn’t aware of the campaign.

“Microsoft Corporation (NASDAQ:MSFT) was not aware of individual contracts Machinima had with their content providers as part of this promotion and we didn’t provide feedback on any of the videos. We have asked Machinima to not post any additional Xbox One content as part of this media buy and we have asked them to add disclaimers to the videos that were part of this program indicating they were part of paid advertising,” the company wrote.

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