Legal concepts every social media marketer should know: Part II -- Rules of the road for online advertising

by BakerHostetler
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Editor's Note: This blog post was originally published on August 26, 2013, courtesy of iMedia Connection's Blog. It is repurposed with permission.

As long as we have sold stuff, we’ve used images or stories to help sell them. As Calvin Coolidge of all people once said in one of his rare Don Draper moments - “Advertising ministers to the spiritual side of trade.” And just like most other aspects of trade, advertising has long been subject to a number of rules and regulations so that the consuming public isn’t totally taken for a ride. In most cases, traditional advertising rules have been relatively straightforward—tell the truth, don’t trick consumers and back up your claims. These basics have stayed true to form thru the evolution of print, radio and TV. With the advent of online and mobile advertising, although the medium may have changed, the basic principles remain constant. In this second installment of Legal Concepts Every Social Media Marketer Should Know, we’ll examine these fundamentals in the context of the regulations and guidelines specific to online and mobile advertising. Be sure to also check-out our earlier post Legal Concepts Every Social Media Marketer Should Know: The Privacy Problem - With Big Data Comes Big Responsibility and stay tuned for the next two installments.

Part Two: Rules of the Road for Online Advertising (The More Things change, the More They Stay the Same)

The Federal Trade Commission (“FTC”) regulates print, television, radio and online advertising. Generally, what you need to know to comply with the FTC’s marketing and advertising laws and regulations you learned in grade school: tell the truth, don’t be sneaky, and if you are going to make a statement you better be able to back it up. To that end, the FTC Act requires that ads be truthful and non-deceptive, if advertisers make objective claims they need solid proof to substantiate them, and ads cannot be unfairor deceptive. The latter usually means an ad that contains a statement or omission that is likely to mislead reasonable consumers in a meaningful way (i.e., tip the scales in favor of buying the advertised product). And if you need to make a disclosure or disclaimer to make your ad accurate, the disclosure has to be clear and conspicuous. The FTC has been very active recently in applying these common sense principles to the digital age:

  • FTC Advertising Guidelines—Last March, the FTC published a set of guidelines for online advertising—Dot Com Disclosures: Information about Online Advertising —that apply the rules of the road online. These guidelines are directed towards marketers (not lawyers), and are full of helpful dos and don’ts. We recommend anyone in the online marketing space to take a few minutes and check these out. There are several practical, high level takeaways from the Guidelines that companies should keep in mind when assessing their online ad campaigns; (1) same screen, adjacent disclosures are the best practice; (2) consumers should not have to scroll to view disclosures but if necessary use cues to encourage scrolling; (3) space-constrained ads are no excuse for failing to make appropriate disclosures; (4) hyperlinking to a disclosure is discouraged but if necessary should be obvious; and (5) advertisers should account for viewing of disclosures across all platforms and avoid technology that hinders viewing disclosures. For more in-depth discussion of the FTC’s guidelines see the author’s prior blog post and article .
  • FTC Endorsement Guidelines—Social networks and online marketers should also be aware of FTC guidance on endorsements. Endorsements are an ubiquitous part of advertising. Online endorsements appear in many different contexts. Social networks and online marketers need to understand that the FTC sees failure to disclose the relationship between contributors and bloggers receiving cash, freebies, or other benefits for giving an endorsement as a deceptive trade practice if not properly disclosed. Even if it’s just a small gift card thanking someone for posting a positive review of a product, under the FTC laws and its guidelines that relationship will need to be disclosed. Similarly, paying or giving someone a gift to “Like” or fan your client’s Facebook page is something that could possibly be considered an endorsement and would have to be disclosed. In the more blatant violations of this rule, companies and their marketing firms will get into trouble when they post bogus “anonymous” reviews of their own products and services. In general, common sense and honesty will ensure compliance with this rule—don’t try and artificially generate positive reviews, likes, and other endorsements of a company.
  • FTC Mobile Apps Report —The FTC has issued specific guidance on marketing and advertising mobile apps. In their guide, “Marketing Your Mobile App: Getting it Right from the Start”, the FTC reiterates many of the same principles from their guidelines on online marketing. First and foremost, tell the truth about what your app can do. Also, if you claim it has something like health or safety benefits, be prepared to substantiate those claims with scientific evidence. In addition to these guidelines, the FTC has published guidelines concerning mobile apps directed at children. These work alongside regulations such as COPPA (discussed in our last installment) to regulate advertising directed at children in the mobile app environment. Specifically, the FTC is concerned with apps that include interactive features (chat, messaging, etc.) or share kids’ information with third parties without disclosing these practices to parents. The FTC is also concerned about the types of in-app advertising directed at kids and whether or not this is disclosed prior to purchase of the app.
  • CAN-SPAM— Although not an FTC law or regulation, online marketers should also be aware of the federal law “Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003” or “CAN-SPAM” for short. CAN-SPAM places certain restrictions on the sending of commercial email. For websites utilizing newsletters or email advertising, compliance with this law is a must. In relevant part, CAN-SPAM requires websites to include an “opt out” link with every email and honor that request. Further, this law restricts how exactly email addresses a company uses may be gathered in the first place (if they didn’t voluntarily provide you with it, you’re generally better off not using it).

The foregoing federal guidelines, rules and laws are just the basics. Depending on the industry such as food and drugs, FDA rules and regulations could apply, and depending on the nature of the marketing campaign, e.g., comparative advertising, the Lanham Act or state advertising laws might also be relevant. There are also self-regulatory bodies that should be considered such as the National Advertising Division of the Better Business Bureau (“NAD”) and its guidelines. The NAD is a self-regulatory forum for the advertising industry that offers a voluntary, informal proceeding as an alternative to litigation. There are also self-regulatory bodies specific to mobile advertising. The Digital Advertising Alliance, for instance, recently released its Mobile Guidance setting out principles for advertising and privacy on the mobile web.

Moreover, keep in mind that although the principles remain constant, the FTC is cognizant now more than ever of adapting and applying these fundamentals to new technology and practices. For instance, responding to the changing ways in which sponsored search results are displayed, the FTC has increased its focus on search engine optimization. Earlier this summer the FTC sent letters to a number of search engine providers asking them to ensure sponsored search results are easily distinguishable from natural search results. Further on the horizon, we can likely expect some regulation specific to native advertising, i.e., the 21st century version of the halcyon days of brand sponsored radio programs which seamlessly weaves online brand promotion into editorial content. Buzzfeed is perhaps the best example of this today, although native advertising can be found throughout Facebook, Twitter and many other sites. The regulatory concern is that consumers may be deceived if native ads are not conspicuously disclosed as such. We’ll be examining in more detail native advertising and other cutting edge marketing trends in upcoming posts.

Speaking of which, stay tuned for the part three of this four part series, where we will review the best practices for using third party images, graphics, and content in your marketing campaign.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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