Smart Promotions for Smart Phones:
Avoiding Legal Pitfalls While Leveraging New
Trends in Mobile Apps and Gamification
Yvo...
Mobile Usage
A Snapshot of the Current Mobile Landscape
»According to comScore’s “2012 Mobile Future in
Focus” Report published in Febr...
A Snapshot of the Current Mobile Landscape
»Smartphone penetration is on the rise:
A Snapshot of the Current Mobile Landscape
»According to a KeyNote/Adobe Survey
conducted in 2010, US smartphone users use...
A Snapshot of the Current Mobile Landscape
Source: http://www.keynote.com/docs/news/AdobeScene7_MobileConsumerSurvey.pdf
A...
The Not-So Rise of QR Codes
What is a QR Code?
»A “QR Code” is an abbreviation for “quick
response code”. QR Codes are 2-dimensional/
matrix bar codes...
What is a QR Code?
»With the rise of smartphones, QR Codes started
to be used by marketers as ways to launch a
brand’s web...
How Does Mobile Tagging Work?
»Using the camera on a smartphone and a
downloaded Mobile Tag reader Mobile App, a
user “tak...
How Does Mobile Tagging Work?
The 3 larger dots
provide
reference points
and the fourth
smaller dot in
the lower corner
as...
Mobile Tag Uses
» Although primarily used to launch a mobile website on
the smartphone’s browser, the uses have expanded
b...
QR Scanning Usage & Frequency
»Usage skews Male to Female, in the 24 – 35 age
range and with the average household income
...
QR Scanning Usage & Frequency
»Of those Shoppers who have used a QR Code:
Sources: Consumer Behavior and QR Code, CMB (201...
QR Scanning Usage & Frequency
The Downside to Mobile Tagging
»Each Mobile Tag type requires its own specific
reader App
»There are numerous Apps availab...
The Future of Mobile
Alternatives to QR Codes
» Mobile internet browsing grew from 98 million
users to 129 million users in just one year
» Mob...
The Future of Mobile
»In addition to smartphone growth, Tablet sales
are also on the rise: according to research-based
con...
The Future of Mobile
»Consumers are expecting the same content on
their mobile devices as they are on their
computers: “Th...
Sweepstakes and Contests
What You’re Up Against
»Promotions are governed by 50+ sets of laws.
»Most were written long before mobile phones.
»Most d...
Lottery and Gambling Laws
»Lottery and gambling laws prohibit combining:
»Prizes
»Chance
»Consideration
»You need to remov...
Option One: Eliminate Prizes
»Don’t offer prizes:
»If it has monetary value, it’s probably a prize.
»If it doesn’t, it’s p...
Option Two: Eliminate Chance
»Chance is something outside entrant’s control.
»Ensure winners are selected based on skill.
...
Option Two: Eliminate Chance
»Can I require a purchase?
»In most cases, but . . .
»Some states prohibit payments in skill ...
Option Three: Eliminate Consideration
»Consideration includes:
»Purchases and payments (even to third parties).
»Maybe mor...
Consideration?
Yes to Probably
»Payment
»Purchase
»Premium text fees
»Standard text fees
Probably Not to No
»Check-ins
»Vi...
Option Three: Eliminate Consideration
»Alternate method of entry:
»Ensure all aspects are equal.
»Consider what makes sens...
Lawsuits Involving Premium Rates
»Four game show sweepstake were challenged.
»Viewers could enter by paying a premium fee;...
Tips for Text-to-Win
»Standard Rate
»Have an alternate method of entry.
»Premium Rate
»Have an alternate method of entry; ...
Disclosures
»No purchase/text necessary
»Material terms
»Link to rules
»Link to privacy policy
»Consider a layered approac...
MMA Disclosures for Text Message Programs
»Depending on context, you may have to include:
»Msg&Data Rates May Apply
»Help ...
Other Things to Keep in Mind
»MMA and carrier requirements
»Platform requirements
»Registration and bonding
»Contracts wit...
Official Rules
The Official Rules
»Now that you know the parameters within which
to create your promotion you need an official
way to com...
Official Rules Requirements
Official Rules Requirements
Next the rules need to let you, the users, know
when and how to enter the sweepstakes.
“3. Pro...
Official Rules Requirements
Prizes
Rules have to explicitly define the prize – what’s
included and what’s excluded.
The ru...
Official Rules Requirements
“Rules of Protection”
-Unforeseen events;
-Typos or mistakes in the rules or promotional
mater...
Official Rules Requirements
»Remember the rules create the legal binding
agreement between the participants and the
sponso...
Gamification
Gamification
»Gamification is the use of game
design techniques, game thinking and game
mechanics to enhance non-game cont...
Gamification
» Typically gamification applies games to non-game applications and
processes, in order to encourage people t...
Gamification
Early examples of gamification were based on
rewards. For example making users read
through websites to find ...
Gamification
Some of the techniques include:
»achievement "badges"
»achievement levels
»"leader boards”
These all play on ...
Gamification
» A progress bar or other visual meter to indicate how
close people are to completing a task a company is try...
7-up Sweepstakes tied to Survivor TV Show
Survivor TV Show Sweepstakes
Survivor Fantasy Game
Words with Friends - Grammy Live
Grammy Live App
Grammy Live on Facebook
Dogs in the City Game
Big Bang Theory
Big Bang Theory
Facebook Issues
Issues Using Facebook:
You cannot administer/conduct a promotion directly on the
Facebook platform
Promoti...
Facebook Disclaimer
THIS PROMOTION IS IN NO WAY
SPONSORED, ENDORSED OR
ADMINISTERED BY OR ASSOCIATED WITH
FACEBOOK. YOU UN...
Sports Fantasy Games
Sports Fantasy Games
Gamification
»Through the nature of gamification as a data
aggregator and its growing adoption, multiple
legal restriction...
Questions?
Gonzalo E. Mon
Partner
Kelley Drye & Warren LLP
gmon@kelleydrye.com
Yvonne M. Imbert-Garraton
Director, Busines...
Smart Promotions for Smart Phones
Smart Promotions for Smart Phones
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Smart Promotions for Smart Phones

  1. 1. Smart Promotions for Smart Phones: Avoiding Legal Pitfalls While Leveraging New Trends in Mobile Apps and Gamification Yvonne M. Imbert-Garraton CBS Interactive John Panourgias PrizeLogic Gonzalo E. Mon Kelley Drye & Warren LLP
  2. 2. Mobile Usage
  3. 3. A Snapshot of the Current Mobile Landscape »According to comScore’s “2012 Mobile Future in Focus” Report published in February 2012, nearly 42% of mobile subscribers in the US are smartphone users and by the end of 2011 nearly 1 in 5 smartphone users used their device to scan a product barcode. »By 2016 it is expected smartphone users will make up 74.1% of mobile subscribers in the US.
  4. 4. A Snapshot of the Current Mobile Landscape »Smartphone penetration is on the rise:
  5. 5. A Snapshot of the Current Mobile Landscape »According to a KeyNote/Adobe Survey conducted in 2010, US smartphone users use their device in 4 key categories: » Media and Entertainment » Travel and Mapping » Banking and Finance » Shopping
  6. 6. A Snapshot of the Current Mobile Landscape Source: http://www.keynote.com/docs/news/AdobeScene7_MobileConsumerSurvey.pdf Activity Participation Accessing Maps/Directions 81% Social Networking 76% Obtain Local Info 73% Read News 68% Check Bank Account 67% Listen to Music 63% Play Games 61% Conduct Bank Transactions 51% Research Travel 47%
  7. 7. The Not-So Rise of QR Codes
  8. 8. What is a QR Code? »A “QR Code” is an abbreviation for “quick response code”. QR Codes are 2-dimensional/ matrix bar codes originally designed by the Automotive Industry to quickly track vehicles during the manufacturing process and assist with inventory management as an alternative to the single beam-scanned traditional bar code.
  9. 9. What is a QR Code? »With the rise of smartphones, QR Codes started to be used by marketers as ways to launch a brand’s website or other mobile site – an easier way to drive consumers to mobile content instead of having them remember and type in long URLs. »QR Codes make up just 1 of over 70 “Mobile Tagging” options. The Mobile Tagging process is the same, regardless of the mechanism:
  10. 10. How Does Mobile Tagging Work? »Using the camera on a smartphone and a downloaded Mobile Tag reader Mobile App, a user “takes a picture” through the Mobile App of the Mobile Tag. »The Mobile Tag reader program then digitally analyzes the matrix barcode, converting the images and positions (and sometimes colors) into binary numbers, decoding and launching a website in a mobile browser or other content on the user’s smartphone.
  11. 11. How Does Mobile Tagging Work? The 3 larger dots provide reference points and the fourth smaller dot in the lower corner assists with angle, size and orientation. QR Code Example
  12. 12. Mobile Tag Uses » Although primarily used to launch a mobile website on the smartphone’s browser, the uses have expanded beyond web browsing: »Share contact information and import into address books »Ticketing » Concerts & Events » Transportation »Loyalty Program Tracking »Mobile Couponing »“Check In” and Location Based Programs »Send an SMS »Create a calendar event »Sharing a Text Note
  13. 13. QR Scanning Usage & Frequency »Usage skews Male to Female, in the 24 – 35 age range and with the average household income (HHI) of $100K+, presumably due to that group’s adoption of smartphones. Sources: comScore Mobilens, comScore (June 2011; updated August, 2010) Gender Composition of Visitors to mobile websites, Nielsen (December 2011) Winter 2012 NHCS Adult Survey 06-month
  14. 14. QR Scanning Usage & Frequency »Of those Shoppers who have used a QR Code: Sources: Consumer Behavior and QR Code, CMB (2012) Digital Marketing Factbook, Marketing Profs (May 2010)
  15. 15. QR Scanning Usage & Frequency
  16. 16. The Downside to Mobile Tagging »Each Mobile Tag type requires its own specific reader App »There are numerous Apps available for download for each type of Tag »Many consumers are confused by the range of options available and unfamiliar with the required technology to successfully use a Mobile Tag »To ease this confusion some operating systems, like Blackberry, are programming reader programs directly into the handsets
  17. 17. The Future of Mobile
  18. 18. Alternatives to QR Codes » Mobile internet browsing grew from 98 million users to 129 million users in just one year » Mobile App downloads grew from 42 million in 2011 to 72 million in 2012 » 152 billion SMS were sent in 2009 in the United States, that figure is projected to rise to 9 trillion in 2012 » 75% of smartphone users prefer receiving offers via SMS » SMS spans all ages, HHI, education levels, and demographics with 51% of all adults sending and receiving at least 1-10 texts a day
  19. 19. The Future of Mobile »In addition to smartphone growth, Tablet sales are also on the rise: according to research-based consulting firm Frank N. Magid Associates, the Tablet audience is predicted to grow from 51 million users to 106 million users by the midpoint of next year. »Consideration: Flash is not support by Apple OS – iPhones and iPads; you will see more HTML5 in the marketplace to adjust
  20. 20. The Future of Mobile »Consumers are expecting the same content on their mobile devices as they are on their computers: “There's no such thing as distinct mobile content anymore," says Tom Godfrey, Executive Director/Mobile Strategy at Frank N. Magid Associates. "What publishers and advertisers have to realize is that most content going forward will be consumed on a mobile device and that it must be accessible and optimized for that platform."
  21. 21. Sweepstakes and Contests
  22. 22. What You’re Up Against »Promotions are governed by 50+ sets of laws. »Most were written long before mobile phones. »Most don’t fit neatly with mobile technology.
  23. 23. Lottery and Gambling Laws »Lottery and gambling laws prohibit combining: »Prizes »Chance »Consideration »You need to remove at least one element.
  24. 24. Option One: Eliminate Prizes »Don’t offer prizes: »If it has monetary value, it’s probably a prize. »If it doesn’t, it’s probably not. »Virtual currency may be OK if it can’t be cashed in. »If you don’t offer prizes, you can: »Charge for game play; and »Include chance.
  25. 25. Option Two: Eliminate Chance »Chance is something outside entrant’s control. »Ensure winners are selected based on skill. »Easier said than done: »Many states use a predominance test. »Some states have higher thresholds. »Laws/cases don’t provide clear guidance.
  26. 26. Option Two: Eliminate Chance »Can I require a purchase? »In most cases, but . . . »Some states prohibit payments in skill contests. »Laws/cases don’t provide clear guidance. »Option Two requires a state-by-state analysis.
  27. 27. Option Three: Eliminate Consideration »Consideration includes: »Purchases and payments (even to third parties). »Maybe more? »Definitions change over time: »Internet access is probably not consideration. »We may not be there yet on mobile access.
  28. 28. Consideration? Yes to Probably »Payment »Purchase »Premium text fees »Standard text fees Probably Not to No »Check-ins »Virtual currency »Data »Time/effort
  29. 29. Option Three: Eliminate Consideration »Alternate method of entry: »Ensure all aspects are equal. »Consider what makes sense in context. »Clearly and conspicuously disclose free option.
  30. 30. Lawsuits Involving Premium Rates »Four game show sweepstake were challenged. »Viewers could enter by paying a premium fee; or »Viewers could enter for free online. »Georgia Lawsuit »Plaintiffs alleged games were gambling. »Court disagreed and dismissed case. »California Lawsuit »Plaintiffs alleged games were a lottery. »The case settled.
  31. 31. Tips for Text-to-Win »Standard Rate »Have an alternate method of entry. »Premium Rate »Have an alternate method of entry; and »Give something of value for the premium rate.
  32. 32. Disclosures »No purchase/text necessary »Material terms »Link to rules »Link to privacy policy »Consider a layered approach. »Consider the mobile context. »Do you need consent?
  33. 33. MMA Disclosures for Text Message Programs »Depending on context, you may have to include: »Msg&Data Rates May Apply »Help instructions »Stop instructions »Message frequency »Point to full terms
  34. 34. Other Things to Keep in Mind »MMA and carrier requirements »Platform requirements »Registration and bonding »Contracts with partners »Tax reporting obligations
  35. 35. Official Rules
  36. 36. The Official Rules »Now that you know the parameters within which to create your promotion you need an official way to communicate the workings of the promotion while complying with the different existing laws and regulations. »This way is via the Official Rules of the promotion.
  37. 37. Official Rules Requirements
  38. 38. Official Rules Requirements Next the rules need to let you, the users, know when and how to enter the sweepstakes. “3. Promotion Period. The Sweepstakes begins on June 6, 2012 at 2:00:00 PM ET and ends at 5:00:00 PM ET on June 6, 2012 (the "Promotion Period"). 4. Entering. To enter this Sweepstakes, send an e- mail with your name, telephone number and the secret word _________ to __________ [EMAIL ADDRESS] via the CBSI Service.“
  39. 39. Official Rules Requirements Prizes Rules have to explicitly define the prize – what’s included and what’s excluded. The rules also have to disclose specifics about the drawing and notification of potential prizewinners.
  40. 40. Official Rules Requirements “Rules of Protection” -Unforeseen events; -Typos or mistakes in the rules or promotional materials (proofread, proofread, proofread) -Indemnity/limitations of liability/disclaimers of warranties; -Governing law; -Technical disclaimers; and -Identity disputes.
  41. 41. Official Rules Requirements »Remember the rules create the legal binding agreement between the participants and the sponsor – and they will be construed against the sponsor in the event of a claim, so they need to be followed to the letter.
  42. 42. Gamification
  43. 43. Gamification »Gamification is the use of game design techniques, game thinking and game mechanics to enhance non-game contexts and promotions.
  44. 44. Gamification » Typically gamification applies games to non-game applications and processes, in order to encourage people to adopt them, or to influence how they are used. » In promotions, gamification works by making technology more engaging, by encouraging users to engage in desired behaviors and by taking advantage of humans' psychological predisposition to engage in gaming. » Using games can encourage people to perform chores that they ordinarily consider boring, such as completing surveys, shopping, reading web sites or engaging with sponsor’s products.
  45. 45. Gamification Early examples of gamification were based on rewards. For example making users read through websites to find answers to clues to enter sweepstakes and have a chance to win a prize. Now days the tactic has not changed much the rewards have changed a bit, now we give points to people who share experiences on location- based platforms such as Facebook’s "Place" feature, Foursquare, etc.. Some of the techniques include:
  46. 46. Gamification Some of the techniques include: »achievement "badges" »achievement levels »"leader boards” These all play on the competitive nature of human beings.
  47. 47. Gamification » A progress bar or other visual meter to indicate how close people are to completing a task a company is trying to encourage, such as completing a social networking profile or earning a frequent shopper loyalty award. » Virtual currency » systems for awarding, redeeming, trading, gifting, and otherwise exchanging points » challenges between users » embedding small casual games within other activities.
  48. 48. 7-up Sweepstakes tied to Survivor TV Show
  49. 49. Survivor TV Show Sweepstakes
  50. 50. Survivor Fantasy Game
  51. 51. Words with Friends - Grammy Live
  52. 52. Grammy Live App
  53. 53. Grammy Live on Facebook
  54. 54. Dogs in the City Game
  55. 55. Big Bang Theory
  56. 56. Big Bang Theory
  57. 57. Facebook Issues Issues Using Facebook: You cannot administer/conduct a promotion directly on the Facebook platform Promotions can only be administered within third party apps on either a canvas page or an app on the brand’s page tab You can require that someone “Like” your page to be eligible, but that can’t be the method of entry Entries can not be accrued for posting on Facebook/ so need to be careful of giving entries for sharing on Facebook. You can’t use Facebook for any voting You can’t use Facebook to notify winners
  58. 58. Facebook Disclaimer THIS PROMOTION IS IN NO WAY SPONSORED, ENDORSED OR ADMINISTERED BY OR ASSOCIATED WITH FACEBOOK. YOU UNDERSTAND THAT YOU ARE PROVIDING YOUR INFORMATION TO SPONSOR AND NOT TO FACEBOOK AND THE INFORMATION COLLECTED WILL ONLY BE USED IN CONNECTION WITH THIS PROMOTION.
  59. 59. Sports Fantasy Games
  60. 60. Sports Fantasy Games
  61. 61. Gamification »Through the nature of gamification as a data aggregator and its growing adoption, multiple legal restrictions may apply to gamification. Some refer to the use of virtual currencies and virtual assets, data privacy laws and data protection, or labor laws. So you need to make sure when developing a promotion that utilizes gamification that you do not violate any laws or regulations.
  62. 62. Questions? Gonzalo E. Mon Partner Kelley Drye & Warren LLP gmon@kelleydrye.com Yvonne M. Imbert-Garraton Director, Business & Legal Affairs CBS Interactive yvonne.imbert@cbsinteractive.com John Panourgias Assistant General Counsel PrizeLogic jpanourgias@prizelogic.com

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