ReACTS: Word of mouth and the law

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Do you know your flog from your blog? What about legal and ethical issues around privacy, UGC, copyright, incentivisation and more? Advertising compliance team ReACTS give this excellent overview of WOM, social media and the law for WOM UK.

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ReACTS: Word of mouth and the law

  1. 1. Do you know your blog from your flog? The benefits and legal risks of Word of Mouth Marketing in Social Media Marina Palomba Christopher Hackford
  2. 2. Word of Mouth Marketing Many types of marketing:   Brand Blogging   Buzz Marketing   Advocate Marketing   Referral Programmes   Conversation Creation   Viral Marketing
  3. 3. Word of Mouth Marketing Many types of media:   Blogs   Social Networks   Discussion Forums   Online Video sites   Social Search sites   Review sites
  4. 4. Word of Mouth Marketing Some techniques and terminology: Astroturfing: “artificially creating the impression of spontaneous, grassroot behaviour” Flog: “promoting a product in a fashion one might find on a fan site or regular blog entry” Sock Puppet: “a fake online identity used to deceive others”
  5. 5. Word of Mouth Marketing Plenty of legal issues involved…
  6. 6. Consumer Protection Regulations Consumer Protection from Unfair Trading Regulations 2008 “Any act, omission, course of conduct or representation, commercial communication including advertising and marketing, by a trader, directly connected with the promotion, sale or supply of a product to (or from) a consumer.” Covers all business to consumer marketing, but not B2B.
  7. 7. Consumer Protection Regulations The Regulations ban “unfair commercial practices” and create 5 new types: 1.  Misleading actions 2.  Misleading omissions 3.  Aggressive practices 4.  Practices that (i) contravene professional diligence and (ii) materially distort consumer’s behaviour 5.  31 automatically unfair practices (Schedule 1)
  8. 8. Consumer Protection Regulations Who must comply?   Advertisers   Agencies   Directors and Senior Managers of both the above
  9. 9. Consumer Protection Regulations Rule 22 of Schedule 1: “falsely claiming or creating the impression that the trader is not acting for the purposes relating to his trade, business or craft or profession, or falsely representing oneself as a consumer”
  10. 10. Consumer Protection Regulations Breach of this rule is automatically unfair and thus a criminal offence Fines of up to £5,000 for companies Fines of up to £5,000 for companies and up to 2 years in prison for consenting or negligent directors or senior managers
  11. 11. Consumer Protection Regulations How does this apply to Word of Mouth?   Blogs /Flogs   Fake profiles on social networking sites   Brand ambassadors/Advocates   Street teams   Reviews
  12. 12. Consumer Protection Regulations How does this apply to Word of Mouth? Fundamentally important to ensure that the advocate explains that he or she is acting for the advertiser
  13. 13. Copyright Particularly relevant to Blogs and Viral   Ensure that all material is original to the creator and not copied from other blogs or third party works   Requires careful instruction to advocates
  14. 14. Copyright User Generated Content   Inform users about copyright position prior to submission of content. Failure to do so may invalidate any disclaimer   Decide who owns copyright in submitted materials   Subway v Quiznos
  15. 15. Defamation and Offence Who monitors what is said?   Blogs   Discussion Forums   User Generated Content   Review sites
  16. 16. Moderation Three types   Pre-publication   Post-publication   Reactive - “Notify and Take Down”   Copyright infringement   Report Abuse Who undertakes the moderation?
  17. 17. Moderation and Children Content aimed at or involving children should be moderated pre-publication
  18. 18. Moderation A word of warning… The more moderation undertaken by the advertiser, the more likely it is that they will be held liable for posts. Important to ensure that moderators know what they are doing.
  19. 19. E-commerce and Privacy Privacy is a serious issue.   E-mail addresses are personal information   Personal information is commercially valuable   Need to comply with Data Protection Act: Make clear who is collecting data and why?   Have a proper privacy policy in place   Comply fully with social networking sites’ policies
  20. 20. E-commerce and Privacy Friend referral schemes   These can be trickier than you might think   Not permitted to send unsolicited communications   Not permitted to encourage others (e.g. by offering incentives) to send communications   OK if initial recipient forwards message on of their own volition
  21. 21. Employment Issues A word of warning…. Providing that they do not masquerade as a consumer, it is fine to encourage employees to review, comment or blog about products, but you need to ensure that the employees do not leak confidential information.
  22. 22. Advertising and Marketing CAP Code “advertisements in non-broadcast electronic media, including online advertisements in paid-for space (eg banner and pop-up advertisements)” Includes advertisements posted onto social networking sites
  23. 23. Advertising and Marketing Extension of CAP Code remit Proposal to extend remit to cover all online promotional messages, including those on corporate websites and third party websites.
  24. 24. Brand Reputation – Where it went wrong Radio station TalkSport was censured by the ASA for placing advertising on football blogs that pretended to be normal postings. The ads breach CAP Code clauses 7.1 (misleading) and 22.1 (identifying marketers)
  25. 25. Where it went wrong Wal-marting across America Walmart fake blogger led to a huge PR fiasco and embarrassing apologies
  26. 26. Where it went wrong American Express Fake blog writer told readers to “check out a great Amex billboard” Found out to be an Oglivy employee: caused extensive negative word of mouth across the world
  27. 27. Where it went wrong Consumers hate being conned
  28. 28. Where it went wrong Consumers hate being conned Sony got attacked for a bogus PSP blog: “Incredibly insulting to the intelligence of their customers”
  29. 29. Where it went wrong Consumers hate being conned
  30. 30. Where it went wrong
  31. 31. Ethics Code of Ethics and Standards of Conduct for the Word of Mouth Marketing Association UK Standard 3 – Disclosure of relationship: A WOMMA member shall require their representatives involved in a word of mouth initiative to disclose the material aspects of their commercial relationship with a marketer, including the specific type of any remuneration or consideration received.
  32. 32. Ethics The WOMMA Guide to Disclosure in Social Media Marketing Clear and Prominent Disclosure “No matter which platform is used, adequate disclosures must be clear and prominent. Language should be easily understood and unambiguous. Placement of the disclosure must be easily viewed and not hidden deep in the text or deep on the page. All disclosures should appear in reasonable font size and color that is both readable and noticeable to consumers.”
  33. 33. Federal Trade Commission USA FTC regulations state: “When there exists a connection between the endorser and the seller of the advertised product which might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience) such connection must be fully disclosed.
  34. 34. Summary   Good advertising does not rely on tricking or deceiving your target audience   The consumer is smarter than you think. Marketing tactics must be genuine and transparent   These days, everything you do will come under scrutiny   Involve your consumers in brand conversation and give them the tools to get involved.   Adverse ASA adjudications will not enhance value of brand   CPR infringements leave you liable to fines
  35. 35. Thank You! www.advertisingcompliancelaw.com

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