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Introduction

Social Media Disclosure –

Marketing and Communicating Effectively and Ethically in 140

Characters

Tom Chernaik, CEO, CMP.LY

Co-Chair WOMMA MEAP

tom@cmp.ly

@CMPLY

• Overview

• Recent Investigations & Activity (FTC/ASA/OFT)

• Overview of Key Issues

• Examples & Considerations

• Overview of the Corporate Social Media Policy

• Disclosure & Transparency Best Practices

Agenda

The regulation of social media or digital marketing revolves around four fundamental principles that cut across all industry sectors and legal disciplines:

•Transparency - disclosing “material connections”

•Accuracy - communicating truthful information

•Honesty - avoiding misleading or deceptive communications

•Respect - recognizing personal or property rights of others

Overview

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Need for Disclosure

• FTC: Endorsements/Testimonials; Material connection disclosures

• SEC: Antifraud; Compliance; Recordkeeping; Safe Harbor

• FINRA: Conflict of Interest Disclosures; Suitability Disclaimers

• FDA: Safety warnings; Fair balance information; Sunshine Act

• FEC: Political disclosures in short-form social channels

• OFT: UK Advertising Codes

• ASA: Revised CAP Code

• Privacy: Privacy Notices

• Liability: Terms & Conditions; Offers; Contest Rules; Social Media Policies

The Problem

How to get this...

...into this

The FTC Guidelines for Testimonials & Endorsements were created in 1975, updated in 1980 and again in 2009.

2009 update applied existing guidelines to digital, in particular to web, social and short-form contexts.

• Disclosure of “material connections” – Connections are both paid and unpaid

• Shared responsibility of advertisers and advocates– Look to advertiser to mandate a policy and monitor programs

• Specific requirements for advertisers to consider– Advertisers are required to use proper disclosure and process and are responsible for the actions and claims of their agencies, affiliates and employees as well as reasonable monitoring

FTC Endorsement Guides

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First FTC Investigation

Ann Taylor LOFT Preview Campaign:

“…Bloggers who attend will receive a special gift, and those who post

coverage from the event will be entered in a mystery gift card drawing…”

“…goes against the rules of ethical journalism…”

“…stench of pay-to-play in the wake of FTC disclosure guidelines.”

“…the [Ann Taylor] case serves to let marketers know that the FTC is keeping a close eye on their interactions with bloggers.”

Facts:

• Ann Taylor LOFT invited selected bloggers to a preview event, provided gift cards and promised to activate the gift cards if an article/review was posted within 24 hours. Some bloggers failed to disclose they had received free gifts from LOFT.

Issue:

• Whether Ann Taylor engaged in deceptive practices where it provided gifts to bloggers who the company expected would blog about the LOFT division.

Resolution:

• FTC closes investigation, and determines not to recommend action, because “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 – Ann Taylor LOFT

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First FTC Enforcement

FTC says Reverb engaged in deceptive advertising for not disclosing that the reviews came from paid

employees working on behalf of the developers.App Store reviews written by agency with no disclosure

Internal User Reviews Process:• Internal “User Reviews”• Pre-written by in house writers• Positive reviews – not over the top – endorsing the game as a good product• Age ranges –Written for each age group with key words that resonate

• Reviews begin to go live on day of launch on the iPhone storefront• Release reviews starting at launch as stretch over 14 days from release

FTC sanctions agency and agency

owner personally for engaging in

deceptive

advertising

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Facts:

• PR Firm uses employees to post reviews as ordinary consumers.

Issue:

• Reviews were not independent; and reviews failed to disclose material connection between reviewer and employer. Therefore, endorsements were false, misleading, and deceptive.

Resolution:

• Consent Decree with injunctive relief.

• Reporting and compliance provisions for both the agency and owner

• Order lives for 20 years.

FTC – Reverb

FTC Financial Settlement

FTC investigation - $250,000

• Program lacked disclosure and monitoring

• Positive endorsements with links to product

• Did not adequately disclose connections

• Misrepresented reviewer compensation

• Would not be reasonably expected by consumers

• Responsible for representations of affiliates

Facts:

• Legacy Learning Systems engaged a network of affiliates to promote and market products, including a DVD set to teach guitar lessons.

Issue:

• Affiliates failed to disclose material connections and commission payments. Claims, endorsements and statements were not being monitored.

Resolution:

• $250,000 penalty on $5mm of sales

• Requirement for reasonable monitoring & process

• Reporting and compliance provisions in place for 20 years

• Responsible for claims, endorsements & disclosure by affiliates

FTC – Legacy Learning

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Facts:

• During Super Bowl XLV, Hyundai hired a PR firm to build buzz around their Super Bowl commercial. Bloggers were asked to write about the commercial and were given a gift certificate.

Issue:

• No disclosure that the bloggers received something in exchange for participation in the promotion.

Resolution:

• The FTC issued a closing letter and a blog post with more info

• Social media policies of advertiser and agency were both violated by rogue employee

• 3 M’s Mnemonic– Mandate a disclosure policy that complies with the law

– Make sure people who work for you or with you know what the rules are

– Monitor what they’re doing on your behalf

FTC – Hyundai

Facts:

• Handpicked Media engaged advocates to promote brand marketing initiatives in social media channels

Issue:

• Lack of disclosure in blog posts, Facebook Status Updates and Tweets

Resolution:

• Office of Fair Trading (OFT) settled with Handpicked Media, terms not disclosed. ASA to promulgate additional guidance to CAP Codes. Disclosure required in all marketing messages, including short-form messages and celebrity endorsements.

OFT – Handpicked Media

Facts:

• Mercedes-Benz ran a contest online where the contestant with the most votes wins a van. Some contestants were soliciting votes in an effort to gain an advantage. One user noticed this activity, asked company for guidance and received no response. She went ahead and solicited votes as well after which company changed policies and disqualified all contestants who solicited votes.

Issue:

• Rules for contest did not address manipulation. Delays in replying caused confusion. Change in rules during contest invalidated contest entries

Resolution:

• Settled by ASA, terms not disclosed.

ASA - Mercedes

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Facts:

• Snickers (MARS) ran a celebrity campaign consisting of a series of intentionally confusing Tweets with a reveal at the end

Issue:

• Was disclosure required in early (teaser) Tweets and was the #SPON that was used sufficient as a disclosure

Resolution:

• ASA investigated and settled. Disclosure is required. The series was considered a consolidated unit, but the timeliness and proximity of messages was a concern.

ASA – Snickers/MARS

ASA - Nike

Facts:

• Nike had its #makeitcount campaign banned by the ASA for lack of disclosure.

Issue:

• Tweets lacked disclosure. Brand assumed that everyone knew that sponsored athletes were compensated

Resolution:

• Branded Nike URL was not sufficient as a disclosure.

• Cannot assume that “everyone knows” that sponsored athletes are paid.

• Celebrity endorsements require disclosure (no exemption).

• ASA investigated and settled.

• Disclosure is required.

ASA – Nike

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ASA – Toni & Guy

Facts:

• Toni & Guy had its Twitter campaign banned by the ASA for lack of disclosure.

Issue:

• Tweets lacked disclosure. Celebrity was given a free styling in exchange for promotion of the salon and a special offer.

Resolution:

• Celebrity endorsements require disclosures (no exemption).

• ASA investigated and settled.

• Disclosure is required.

ASA – Toni & Guy

May 30, 2012- Washington, DC

• Key takeaways– All must be considered in context with cons. behavior, timing, placement, etc.

– Finding the right balance between providing enough information, at the right time, not overwhelming the consumer

• Universal & Cross-Platform Advertising Disclosures– Context is key

– Importance of advertising disclosures is increasing

– Support for self-regulation, backed by regulators

• Social Media Advertising Disclosures– Short space, syndication, authenticity is key

– Updated WOMMA Guidelines are coming

– Best practice to disclose in body of message

• Mobile Advertising– Still very nascent; screens size challenges; apps v. browsers

• Mobile Privacy– Different approaches by OS; No standards to date

– Running in parallel to OBA but new platforms are starting from scratch

FTC Disclosure Workshop

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Corporate IR

• Safeharbor

SEC/FINRA

• 10-06

• 11-39

• Static vs. Dynamic Content

• Archiving & Retention

• Industry Adopting Slowly

• Two-way Communications on the Horizon

FDA

• November 2009 Hearings

• Multiple delays – no guidance appears to be coming

Regulated Industries

Sponsored & Celebrity Endorsements

Ad Hoc Efforts

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Ad Hoc Efforts

Ad Hoc Efforts

What About Hashtags?

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Ad Hoc Efforts

What About Hashtags?

• #AD

• #SPON

• #Endorse

What is wrong?

• No Context

• Not designed for use

• Tracking is limited

• Does not scale

• Clarified roles & responsibilities

• Marketers and advocates must share responsibility and work together to ensure compliance

• Addressed new platforms, methods and challenges

• Syndication of content presents unique risks

• Ad Hoc/Hashtags are limited in scope

• Increased use of contests, promotions and advocates (employees)

• Three Ms – Mandate (policy), Make sure (training) & Monitor (efficacy)

• Identified key areas of concern beyond endorsements

• Available at www.womma.org/ethics/disclosure

Updated WOMMA Guide

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• Disclosure by design

• Third parties/Agencies/Vendors/Sub-contractors

• Content syndication

• Rapidly expanding tools and platforms

• Changing terms and policies

• Regulated vs. Unregulated

• Corporate Social Communications

• Employee Social Communications

• Delegation of risk management

Key Issues

Standardize & Centralize

• Mitigate social media risks

• Optimize marketing

• Reduce social media overhead

• Standardize practices across all platforms

• Develop and maintain consumer trust

Types of Programs

• Contests, promotions, sponsorships, endorsements

• Corporate communications, PR, IR

• Employee social engagement

• Social advocate and affiliate programs

• Industry-specific compliance requirements

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CMP.LY Solutions

• Universal system of social media disclosures

• Easy-to-use program management tools

• Automated documentation and monitoring

• Performance measurement and compliance reporting

Plain Language URLs

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Disclosure for Regulated Industries

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Disclosure in Regulated Industries

Disclosure in Regulated Industries

Creating a Value in a Social Media Policy

• Anchor to not just house ethics & disclosure guidelines, but also may include planning background, responsible parties and measurement tips.

• Important that the policy be a collaborative effort between marketing and corporate affairs teams.

• Important to ensure policy is upheld and that training is mandatory on its guidelines - identify an internal team resource to serve as ambassadors/trainers for internal and agency partners.

Social Media Policies

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Develop a Social Media Policy

• Articulate Standards of Conduct for your sponsored speakers/bloggers

• For Employees

For third parties and agencies

• Determine who is responsible for what

• Who trains

• Who monitors the speakers/bloggers & how

• Who obtains confirmation by the speaker/blogger that he/she understands

General

• Determine the appropriate conduct

• Determine the consequences for violations of the policy

Social Media Policies

Standards of Conduct must require that communications by sponsored speakers/bloggers:

• reflect honest beliefs, opinions, or experiences;

• not make objective claims about products or services without authorization;

• not constitute defamatory statements;

• not violate privacy of others;

• not be offensive, profane, harassing, derogatory, or discriminatory;

• not infringe upon intellectual property rights of others; and

• not constitute deceptive or misleading statements about products or services.

Social Media Policies

• Revised guidance from FTC Workshop and WOMMA Guidelines

– Marketers and advocates must share responsibility and work together to ensure compliance

– Marketers must communicate policies and monitor for compliance

– Increasing challenges with new channels and increasing syndication

– Hashtags are limited

– Unique disclosure issues expand beyond endorsements

Disclosure Best Practices

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• FTC Workshop – Disclosure/Social/Mobile

• NTIA/Commerce Department – Mobile Privacy

• The Three M’s

• Contests & Promotions in social

• Social Media Policies

• Advocate/Employee Communications

• Corporate Communications

• Privacy in web/mobile/tablets/apps/social

• Delegation of risk management

What To Watch For

• FTC Endorsement Guides– http://www.ftc.gov/opa/2009/10/endortest.shtm

• FTC Dot-Com Disclosures (currently updating)– http://business.ftc.gov/documents/bus41-dot-com-disclosures-information-about-online-advertising

• WOMMA– Ethics http://womma.org/ethics/code/

– Disclosure http://womma.org/ethics/disclosure/

• OFT– http://www.oft.gov.uk/news-and-updates/press/2010/134-10

– http://www.oft.gov.uk/OFTwork/consumer-enforcement/consumer-enforcement-completed/handpicked_media/q-and-a/

• ASA– http://www.asa.org.uk/Regulation-Explained/Online-remit.aspx

For More Information

Thanks!

Social Media Disclosure –

Marketing and Communicating Effectively and Ethically in 140

Characters

Tom Chernaik, CEO, CMP.LY

Co-Chair WOMMA MEAP

tom@cmp.ly

@CMPLY