The Use of Cutting Edge Marketing Techniques: How to Reduce Legal Risk

Transcription

1 The Use of Cutting Edge Marketing Techniques: How to Reduce Legal Risk Presented by Kathyleen A. O Brien Partner Media and Advertising September 27, ,67,418v1

2 Topics Topics We Will Cover What Should You Know Before Your Company Uses the Following Popular Marketing Tools: o Social Media o User Generated Advertisements o Guerrilla and Viral Marketing o Social Influencer Campaigns What Can Go Wrong? What Are The Top Takeaways to Reduce Legal Risk? 2

3 Social Media Gone Wrong The Qwikster Debacle Netflix failed to obtain the Twitter before announcing its plan to spin off its DVD-rental service into a separate site called Qwikster. After making the announcement, it discovered that that handle already belonged to a foul-mouthed teen who enjoyed his newfound celebrity in a series of highly offensive tweets. Netflix killed Qwikster three weeks later but that didn t stop 800,000 subscribers from quitting the service over the next 3 months. 3

4 Social Media Gone Wrong Key Takeaways Social media is too powerful to be ignored. Do the necessary trademark and domain name clearances before launching your campaign. Consider purchasing key domain names, common misspellings and offensive domain names. 4

5 Social Media Gone Wrong The Kenneth Cole Debacle Kenneth Cole set off a media firestorm when he used the recent political and social protests in Egypt to plug the company s latest fashion collection on Twitter and Facebook: Millions are in uproar in #Cairo. Rumor is they heard our new spring collection is now available online. Cole apologized and removed the offending tweet within hours, saying that he wasn't "intending to make light of a serious situation." The Twittersphere snapped back with the hashtag #boycottkennethcole and a boycott resulted. 5

6 Social Media Gone Wrong Key Takeaways Be sensitive to important social and political issues. The more senior the executive, the higher the stakes. Consider prompt apology and take down for gaffes. 6

7 Social Media Done Right Taco Bell s Valentine s Day Campaign Launched interactive Valentine s Day campaign on Snapchat. Offered handful of pun-filled virtual Snapchat Valentines viewer could send to others. 7

8 Social Media Done Right Taco Bell s Valentine s Day Campaign Provided detailed step-by-step instructions for personalizing and sending a Valentine. Concluded by sending the viewer a Valentine from Taco Bell. 8

9 Advertiser Solicited UGC Example No. 1: The Doritos Commercial Doritos conducted UGC contest where winning entry was shown during the Super Bowl and winner received $10k prize. Example No. 2: The Quiznos Commercial Quiznos solicited video entries: Quiznos v. Subway TV Ad Challenge 9

10 Advertiser Solicited UGC Winning Entry Doritos Crash the Super Bowl Contest 10

11 Advertiser Solicited UGC Subway v. Quiznos the UGC Wars Quiznos v. Subway TV Ad Challenge Quiznos solicited user generated video entries depicting that Quizno s sandwiches have more meat than Subway s sandwiches. Subway took issue with the claims made in the resulting videos and subsequently filed a lawsuit alleging, among other things, that Quiznos engaged in false and misleading advertising in the spot. Doctor s Associates Inc. v. QIP Holders LLC, 82 U.S.P.Q.2d (BNA)

12 Advertiser Solicited UGC Consumer Generated Video Quiznos Challenge 12

13 Legal Challenges Key Takeaways No free pass for UGC. Advertisers creating or using UGC must comply with all federal and state laws and guidelines that govern traditional advertising: o UGC must not include false or misleading statements or omissions. Lanham Act; 15 U.S. C. 1125(a). o Advertisers must not engage in unfair or deceptive acts or practices. 5 FTC Act. o Advertisers must have a reasonable basis for objective claims. 5; Federal Trade Commission Act. 13

14 Legal Challenges Key Takeaways UGC used in advertising must comply with laws which govern use of third-party materials and intellectual property. Any third-party materials used (e.g., photographs, video, news stories, Websites, music, names, images, likenesses, etc.) protected by copyright, trademark law, and rights of privacy or publicity must be cleared prior to use. 14

15 Guerilla and Viral Marketing What are Viral and Guerrilla Marketing? Viral Marketing uses pre-existing social networks such as Facebook, Twitter, etc. to deliver messages about products or services. Guerrilla Marketing uses unconventional or unexpected marketing methods to generate buzz about products or services. Both are methods that seek to enlist consumers to pass along the message. 15

16 Viral Marketing Gone Wrong The Toyota Matrix Maniacs Toyota launched its self-described terror marketing campaign. Targets = young male purchasers of Matrix automobile. The campaign invited consumers to nominate their friends to be victims of a prank. Participants could choose from a group of fictional characters created to terrorize their friends. 16

17 Viral Marketing Gone Wrong The Toyota Matrix Maniacs 17

18 Viral Marketing Gone Wrong: Toyota Matrix Amber Duick, one such nominee, received 9 s from a fictitious character called Sebastian Bowler. 18

19 Toyota Matrix The Lawsuit Ms. Duick filed suit in Los Angeles seeking $10 million in damages against Toyota and its advertising agency. Her complaint alleges she became so frightened, she slept with a machete and Mace next to her bed and that she became physically ill because she was convinced a disturbed man was on his way to her house. Major issue here: Did Ms. Duick knowingly consent to receive these communications and to participate in this campaign? 19

20 Legal and Business Challenges Key Takeaways Before launching an extreme campaign consider the following: Business challenges: Ø Consider your audience: what is the likely consumer reaction and the likely impact on your company s name and reputation in the marketplace? Ø How will you respond if things go south? Legal challenges: Ø Could the messaging have a potential negative impact on the average recipient and prompt reasonable concerns for health, safety, etc? Ø Have the recipients knowingly consented to participate? 20

21 Guerrilla Marketing: Boston Bomb Scare Turner Broadcasting System s Cartoon Network created a bomb scare when it advertised Aqua Teen Hunger Force by planting battery-powered LED placards throughout Boston. 21

22 Guerrilla Marketing: Boston Bomb Scare The LED placards depicted a cartoon character called a mooninite. The placards were mistaken for bombs. 22

23 Consequences to Turner Turner agreed to pay $2 million in restitution to the city of Boston. Head of the Cartoon Network was forced to resign. The independent contractors who Turner s advertising agency hired to display the LED placards were each sentenced to over 50 hours of community service. 23

24 Key Takeaways From Boston Scare Does the campaign involve the use of public or private property? o Are permits required? o Is consent required? Post 9/11, could a reasonable person possibly interpret the campaign as a threat to public health or safety? 24

25 FTC Guidelines Social Influencer Campaigns FTC s guidelines apply to endorsements of your client s products or services by: o Celebrities o Consumers o Employees/representatives Two questions: o Is the statement or communication sponsored, i.e., Is speaker acting independently or on behalf of an advertiser or its agent? o Does the statement or communication constitute advertising? 25

26 Social Influencer Campaigns Rule No. 1: You Must Disclose Material Connections FTC Guidelines require disclosure of any material connections between advertiser/seller and endorser o Material connection = information that would impact weight or credibility a consumer gives to endorsement o Must be clear and prominent Types of material connections: o Consideration given to a speaker or blogger by an advertiser in the form of benefits or incentives Ø Cash, free products, prizes, special access privileges, commission on the sale of a product o Relationship between the advertiser and the speaker Ø E.g., employment relationship Rule of Thumb: When in doubt, disclose affiliation 26

27 Social Influencer Campaigns Who is liable for failure to disclose? o All stakeholders -- advertisers, brands, companies, ad agencies, bloggers or others agents can be liable for: Ø Failure to disclose material connection Ø Speaker s unsubstantiated claims about the products and services of the advertiser or brand FTC requires advertisers to: o o Educate their agents and endorsers about their responsibilities Monitor the communications/ statements/claims by their agents/endorsers 27

28 Social Influencer Campaigns FTC v. Machina Social Influencer Campaign Machina, an online entertainment network, paid popular video bloggers to promote Microsoft s Xbox One System through You Tube. Machina did not require gamers to disclose that they received payments of as much as $30,000 for producing You Tube videos that had up to 730,000 views. Machina also guaranteed that the influencer videos would be viewed at least 19 million times. FTC found that Machina s failure to disclose its relationship with the gamers was deceptive and required them to ensure that in the future influencers would clearly disclose when they had been compensated for their endorsements. 28

29 Social Influencer Campaigns Test: Has Endorser Received Compensation? No compensation, no endorsement - Consumer who regularly purchases Pedigree brand dog food purchases Pedigree Plus, the company s new, more expensive brand. She writes on her own in her personal blog that the change in diet has made her dog s fur softer and shinier, and that the upscale brand is definitely worth the extra money. NOT an endorsement. Compensation of any kind = endorsement. If consumer is part of a network marketing program where she receives free dog food and can write reviews if she wants to, any review she writes IS an endorsement. 29

30 Social Influencer Campaigns Rule No. 2: Influencer Cannot Make Unsubstantiated Claims A skin care products advertiser participates in a blog advertising service. The advertiser requests that a blogger try a new body lotion and write a review of the product on her blog. Although the advertiser does not make any specific claims about the lotion s ability to cure skin conditions, in her review, the blogger writes that the lotion cures eczema and recommends the product to her blog readers who suffer from this condition. 30

31 Social Influencer Campaigns Result The advertiser is liable for the unsubstantiated representations made through social influencer s endorsement even if it does not have control over the message. The social influencer is also subject to liability for the unsubstantiated representations made in her endorsement. The social influencer is also subject to liability if she fails to disclose clearly and conspicuously that she is being paid for her services and the advertiser is also subject to liability for its failure to disclose. 31

32 Employee Disclosures What About Employees? Apple employee posts positive reviews of the iphone on a message board which discusses that product. The employee must clearly and conspicuously disclose that he works for Apple. 32

33 Top Takeaways What Should You Do Now? Develop a strategy for your company s use of social media: What do you want to achieve? How do you plan to use social media to get there? Up front, determine all the ways your company plans to use the content submitted. Have appropriate protections and response mechanisms in place before you begin. o Includes purchase of appropriate domain names to protect against negative sites. 33

34 Top Takeaways Take Steps to Minimize Legal Risk Take advantage of the federal laws that were enacted to protect you. Post a takedown policy to take advantage of the protections of the DMCA. Be aware that if you use a consumer s submission to create your own content you have forfeited the protections of the DMCA and the CDA. 34

35 Top Takeaways Take Steps to Minimize Legal Risk Clearly communicate your expectations and requirements to consumers in terms and conditions and at the point of submission. Make sure your terms and conditions clearly communicate what the consumer is agreeing to. Make sure your terms and conditions are accepted in a way that is binding. Monitor content and refuse to post content that violates your terms and conditions. 35

36 Top Takeaways Take Steps to Minimize Legal Risk Implement technological screening methods including filters that screen for profanity and hate messages. Deal appropriately with minors. Use appropriate disclaimers. If you are concerned about the proper use of your company s trademarks, copyrighted material or other intellectual property, provide pre-cleared content for consumers to use. 36

37 Top Takeaways Take Steps to Minimize Legal Risk Make sure that all testimonials and endorsements: o Disclose material connections. o Communicate truthful information. o Avoid misleading or deceptive statements. 37

38 38 QUESTIONS?

39 Speaker Kathyleen A. O'Brien, Partner Reed Smith LLP Tel.: (Century City, CA) 39