Managing the Affiliate-Network-Marketer Relationship

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This session will explore the relationship with respect to issues such as fees, contracts, advertising content, liability, data, tracking, compliance and other key issues.

Experience level: Intermediate
Target audience: Affiliate/Publisher
Niche/vertical: Business

Gary Kibel, Partner, Davis & Gilbert LLP (Twitter @GaryKibel_law)

Published in: Business
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Managing the Affiliate-Network-Marketer Relationship

  1. 1. Presentation to Affiliate Summit West 2013MANAGING THEAFFILIATE-NETWORK-MARKETERRELATIONSHIPJanuary 14, 2013Gary A. KibelPartner212.468.4918gkibel@dglaw.com @GaryKibel_law 0 Managing the Affiliate-Network-Marketer Relationship© 2013 Davis & Gilbert LLP
  2. 2. TODAY’S TOPICS»Law School 101»Contracts, contracts, contracts»Who is responsible / liable ? - Advertising Content - The Affiliate Tax - Do Not Track - Privacy - Federal Trade Commission (FTC)1 Managing the Affiliate-Network-Marketer Relationship
  3. 3. ONLINE VS. OFFLINE»Online is not the wild west»The same rules offline apply online, plus more …»Click-through agreements are enforceable2 Managing the Affiliate-Network-Marketer Relationship
  4. 4. CONTRACTS
  5. 5. 4 Social Media Social Media and Hot Topics in and Privacy Law Mobile Marketing Law
  6. 6. TERMS, CONDITIONS, POLICIES,GUIDELINES, yada yada…»Facebook - Statement of Rights and Responsibilities - Promotions Guidelines - Platform Policies - Advertising Guidelines - Brand Resource and Permissions Center5 Managing the Affiliate-Network-Marketer Relationship
  7. 7. CONTRACT TERMS»Parties to be bound»Term / Cancellation - Evergreen»Fees - Payment terms (penalties / holdbacks) - One-time vs. Recurring charges - Escalations; MFN»IP Ownership - Data7 Managing the Affiliate-Network-Marketer Relationship
  8. 8. CONTRACT TERMS»Restrictive Covenants - Exclusivity - Non-solicit • Customers • Employees»Representations - Ad Content - Compliance with Law & Third Party T&Cs - Services8 Managing the Affiliate-Network-Marketer Relationship
  9. 9. CONTRACT TERMS»Indemnification - What type of third party claims»Limitation of Liability - Cap - Exclusions»Assignment or “Change of Control”»Other policies»Changes to the agreement9 Managing the Affiliate-Network-Marketer Relationship
  10. 10. INTERNAL CONTROLS
  11. 11. INTERNAL CONTROLS»Confidentiality / Leaks»Employees»Contractors / Vendors11 Managing the Affiliate-Network-Marketer Relationship
  12. 12. 12 Managing the Affiliate-Network-Marketer Relationship
  13. 13. OWNERSHIP OF A TWITTER ACCOUNT» Sept. 2011, Phonedog Media sued former freelance editor for misappropriating twitter account» Handle: @Phonedog _ Noah, changed to: @Noahkravitz and took all 17,000 followers» Trade secret misappropriation (the password and compilation of subscribers), and unlawful conversion of company property» Started publishing for competing publishers using same twitter handle. Phonedog emphasized that it invested a lot of money in editor and sent him to trade shows and conferences to increase exposure to Company and grow Company’s social media following» Damages: alleged $2.50 per twitter follower» Settled – December 2012 13 Managing the Affiliate-Network-Marketer Relationship
  14. 14. ADVERTISING CONTENT
  15. 15. FEDERAL TRADE COMMISSION ACT §5»“Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful.”15 Managing the Affiliate-Network-Marketer Relationship
  16. 16. BASIC ADVERTISING RULES»Deception - Misrepresentations or omissions likely to mislead consumers acting reasonably under the circumstances16 Managing the Affiliate-Network-Marketer Relationship
  17. 17. WHAT HAPPENSIF THE FTC CATCHES US?»FTC v. Skechers - Skechers claimed buyers would shape up while they walked without need for additional exercise - Over $40 million to settle claims of deceptive advertising»FTC v. Reebok - EasyTone and RunTone claimed “better legs and a better butt with every step” - $25 million to settle deceptive advertising claim17 Managing the Affiliate-Network-Marketer Relationship
  18. 18. WHAT IS A “GOOD” DISCLOSURE?»Clear and Conspicuous Standard - A fluid concept - Dependent on multiple factors - Consider the placement of the disclosure and its proximity to the qualified claim - Cannot directly contradict prior statements - ** applies online and in mobile18 Managing the Affiliate-Network-Marketer Relationship
  19. 19. 19 19 The Basics of Advertising and Marketing Basics of Advertisingthe Affiliate-Network-Marketer Relationship Managing and Marketing Law
  20. 20. 20 Managing the Affiliate-Network-Marketer Relationship
  21. 21. POM WONDERFUL»Claims - This incredible juice has more naturally occurring antioxidants than any other drink. Antioxidants fight free radicals, those molecules that can cause heart disease, premature aging, Alzheimer’s, even cancer. Drink eight ounces a day and you might even save a life. Yours!”21 Managing the Affiliate-Network-Marketer Relationship
  22. 22. 22 Managing the Affiliate-Network-Marketer Relationship
  23. 23. WHO IS LIABLE –AFFILIATES – NETWORKS – MARKETERS?»FTC - Central Coast Nutraceuticals - Jesse Willms - Intermark / COPEAC - Coleadium / Ads4Dough23 Managing the Affiliate-Network-Marketer Relationship
  24. 24. AFFILIATE TAX
  25. 25. AFFILIATE TAX»Arkansas, California, Connecticut, Georgia, Illinois, New York, North Carolina, Pennsylvania, Rhode Island, Vermont»Annual affiliate certifications re: non-solicitation activities»Liability25 Managing the Affiliate-Network-Marketer Relationship
  26. 26. DO NOT TRACK
  27. 27. DIGITAL ADVERTISING ALLIANCE (DAA)WWW.ABOUTADS.INFO»Self-Regulatory Principles for Online Behavioral Advertising»License Icon»Implementation - Evidon - Truste27 Managing the Affiliate-Network-Marketer Relationship
  28. 28. DO NOT TRACK» DNT refers to interactive companies honoring a user’s browser preference settings to stop online tracking through the use of cookies and other technologies by all sites through that user’s browser (rather than opting out of tracking site by site)» No consensus on how far DNT should extend and whether it should be opt-in or opt-out» World Wide Web Consortium (W3C) is working with browser vendors and industry groups for the “complete implementation of an easy-to-use, persistent, and effective Do Not Track system.”» Microsoft (a W3C participant) announced that Internet Explorer 10 will have DNT turned “on” by default29 Managing the Affiliate-Network-Marketer Relationship
  29. 29. PRIVACY / FTC HOT TOPICS
  30. 30. FTC INITIATIVES»Privacy Framework»Update COPPA»“Big Data”»Mobile marketing disclosures»DNT»Privacy / Data Security Enforcement Actions»Customary Investigations – Unfair or Deceptive Practices31 Managing the Affiliate-Network-Marketer Relationship
  31. 31. GENERAL PRIVACY PRINCIPLES»FTC Fair Information Practice Principles http://www.ftc.gov/reports/privacy3/fairinfo.Shtm - Notice - Choice - Access - Security - Enforcement»It’s all about transparency and consumer expectations32 Managing the Affiliate-Network-Marketer Relationship
  32. 32. QUESTIONS? To receive D&G’sadvertising/new media newsletters email gkibel@dglaw.comGary A. KibelPartner212.468.4918gkibel@dglaw.com @GaryKibel_law 33 Managing the Affiliate-Network-Marketer Relationship© 2013 Davis & Gilbert LLP

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