Social Media Policy Discussion with Lawyers

and Marketers

WEBINARJune 14, 2010

Tony DiResta WOMMA General CounselPartner, Manatt, Phelps & Phillips, LLP

Digital Marketing:Key Considerations

Social media jurisprudence revolves around 4 fundamental values that apply to all industry sectors and substantive disciplines:

1.Transparency (disclosing “material connections”);2.Accuracy (communicating truthful information);3.Honesty (avoiding misleading or deceptive communications); and4.Respect (recognizing the personal or property rights of others).

Digital Marketing:Key Considerations

These 4 values - - which are at the heart of WOMMA’s Ethics Code and Standards of Conduct - - are the fundamental pillars of the substantive laws governing:

Advertising and marketing;Intellectual property;Defamation; andPrivacy and publicity.

Litigation and negative PR from social media campaigns or employee uses of social media result from a failure to recognize one or more of these values.

Setting the Stage:A Brief Overview of the FTC Guides Governing the Use of Testimonials and Endorsements

They impact what your employees or representatives may say about your products or services.

Setting the Stage:An Overview of the FTC Guides Governing the Use of Testimonials and Endorsements

Two factors to determine whether a communication by your employee or representative is covered by the Guides:

1. Whether the statement or communication is “sponsored:” key consideration is whether the speaker is acting independently or on behalf of an advertiser or its agent.

2. Whether the statement or communication constitutes an “advertising message”

Setting the Stage:An Overview of the FTC Guides Governing the Use of Testimonials and Endorsements

There are 4 types of endorsements or testimonials:

Communications made by •Consumers (which may include your employees);•Experts (which may include your employees);•Celebrities; and•Associations or organizations.

Setting the Stage:An Overview of the FTC Guides Governing the Use of Testimonials and Endorsements

The Guides require the disclosure of any “material connection” between the advertiser/seller and its endorser.•A “material connection” is information that could impact the weight or credibility a consumer gives to the endorsement.

Types of “material connections:”•Consideration given to the speaker (such as cash, free products, or prizes)•Relationship between the advertiser and the speaker(e.g., the speaker is employed by the advertiser)

Setting the Stage:An Overview of the FTC Guides Governing the Use of Testimonials and Endorsements

The FTC Guides raise liability issues: Now, all stakeholders - - whether advertisers, brands/companies, ad agencies, and bloggers (or other agents) - - are liable for (i) their failure to disclose “material connections” and (ii) the speaker’s making unsubstantiated claims about the products/services of the advertiser or brand.

And

The FTC mandates that advertisers and brands develop policies that:1. educate their agents/endorsers about the responsibilities; and2. monitor the communications/statements/claims by their agents/endorsers.

Setting the Stage:An Overview of the FTC Guides Governing the Use of Testimonials and Endorsements

In other words, brands/advertisers must develop a formal policy that trains and monitors their endorsers and agents. Which means: you must develop a “Social Media Policy” by creating standards of conduct for your sponsored speakers.

For employeesExample 8 in 16 C.F.R. Part 255.5 illustrates that both the employee and employer are potentially liable for an employee’s failure to disclose her material connection with the employer.

For third parties and agencies•Training for your speakers and bloggers•Monitoring their communications

Recent Investigation by the

FTC involving Ann TaylorOn April 20, 2010, the FTC closed its investigation involving an Ann Taylor promotion

Issue: whether Ann Taylor violated the FTC Act where company provided gifts to bloggers who company expected would blog about company’s LOFT division.

Some bloggers failed to disclose they had received free gifts from LOFT.

FTC staff determined not to recommend enforcement action, because, in part, “LOFT adopted a written policy . . . stating that LOFT will not issue any gift to any blogger without first telling the blogger that the blogger must disclose the gift in his or her blog.”

FTC said it expects company to monitor bloggers’ compliance with obligation to disclose gifts they receive from LOFT.

Role of WOMMA

Determination made to create a Social Media Policy template

Efforts of the Legal Affairs Committee

Adoption by the Board

May 25, 2010 Press Release

WOMMA’s Recommendation for a Social Media Policy: Two Core Elements

I. Standards of Conduct

Communications by sponsored speakers must:•reflect honest beliefs, opinions, or experiences;•not make objective claims about products/services without authorization;•not constitute defamatory statements;•not violate privacy of others;•not be offensive, profane, harassing, derogatory, or discriminatory;•not infringe upon the intellectual property rights of others; and•not constitute deceptive or misleading statements about products/services.

WOMMA’s Recommendation for a Social Media Policy: Two Core Elements

II. Disclosures

Communications by sponsored speakers must disclose:

All connections that can influence the weight a consumer or customer would give to the communication; and

Do so clearly and conspicuously in light of the platform environment.

WOMMA’s Recommendation for a Social Media Policy:

Also consider:confidentiality;press inquiries; andmatters that reflect your company’s culture and HR policies.

Luis-Xavier HernandezCategory Regional Counsel at Unilever

The Company Perspective:Why should companies have Social Media Policies or Guidelines?

Framework for employees, agencies, contractors. – Standards of conduct.

Protect our brands against legal liability – two aspects: (i) unauthorized speech by employees, and (ii) marketing law issues.

Protect our company’s corporate reputation.

Promote a positive corporate image.

Consistent standards to all brands and agencies/contractors.

The Company Perspective:Key considerations when implementing your company’s social media policy or guidelines

Policies are not one-size-fits-all.

Seek input from different functions: Legal (marketing lawyers, litigators, employment lawyers), Marketing, Media, Integrated Marketing*, Communications, HR, Agencies, Associations and Influencers (WOMMA), Peers.

Set the principles – don’t be too specific.

Opportunity to raise the bar.

* Some companies have chosen to set up specific legal teams or practice groups that focus on New Media Issues.

The Company Perspective:Challenges you may face when implementing your company’s social media policy or guidelines

Alignment of several functions.

Alignment of several regions.

Right Balance (Raising the bar vs. brands freedom and ability to move fast)

The Company Perspective:Other KEY documents that a company should review/implement

Privacy Policy.

Terms of Use.

Social Media Rules of Engagement.

Form Endorsement Agreements (bloggers, agencies).

Specific Terms of Use – e.g. Facebook Terms of Use, Twitter Terms of Use.

Monitoring guidelines.

The Company Perspective:Be a partner not a show stopper…

Earn the respect of your marketing teams. Don’t say NO but show them HOW.

Educate your business and clients.

Be always ahead of the game.

Keep your marketing colleagues informed.

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