Avoiding Legal Pitfalls in Online Advertising. Background

Transcription

1 Avoiding Legal Pitfalls in Online Advertising Amir Azaran NEAL GERBER EISENBERG Background Annual amounts spent advertising online in the US: 1999: $4.6 Billion 2009: $22.6 Billion 2011: $31.7 Billion approx. 20% increase per year over last two years 1

2 2011 Newspapers were ahead of Internet in 2009: $25B to $22B Broadcast TV Internet Cable TV Newspapers Magazines Radio Source: IAB Internet Advertising Revenue Report 2011 Internet Advertising Breakdown of Dollars Spent Mobile advertising: up 149% from 2010 Search Display Classifieds Mobile Lead Generation Source: IAB Internet Advertising Revenue Report 2

3 Online Advertising Fundamentals Merchant Cost Per Click (CPC) Cost Per Impression (CPM) Cost Per Action (CPA) $$$ Ad Network Ad $ Website Legal and Regulatory Framework Generally, online advertising is governed by the same rules as traditional advertising Both state and federal agencies Main federal agency: Federal Trade Commission (FTC) Other federal agencies for specific industries FTC Act: gives FTC authority to enforce laws against false advertising, unfair methods of competition, and unfair or deceptive acts or practices in commerce 3

4 Legal and Regulatory Framework FTC principles (Sources: FTC s Advertising and Marketing on the Internet: Rules of the Road and Dot Com Disclosures) Truthful, not misleading Disclosures must be clear and conspicuous No legalese / jargon Must be able to substantiate all objective claims Endorsement requires disclosure Legal and Regulatory Framework FTC s Guide on Endorsements and Testimonials Revised in 2009 to address posts on blogs and message boards Anyone paid in cash or in kind to provide an online endorsement must disclose the financial relationship Includes employees posting positive reviews of their company s products 4

5 Legal and Regulatory Framework CAN SPAM Act of 2003 Applies to unsolicited commercial Prohibits deceptive subject lines and false or misleading header information Requires: Functioning return address or other reply mechanism Sender s valid physical postal address Clear and conspicuous notice that is an ad Ability to unsubscribe, which must be honored in 10 business days FTC has a helpful compliance guide Legal and Regulatory Framework COPPA Children s Online Privacy and Protection Act Applies to Websites directed at children under 13, and Websites whose operators have actual knowledge of collecting children s information See FTC s helpful FAQ on COPPA 5

6 Legal and Regulatory Framework Trademark Law Plaintiff must prove: Use of its mark in commerce Likelihood of confusion Source of some litigation regarding pop up ads in mid 2000s Currently a major component in paid search advertising Google allows purchase of marks as keywords Trademarks and Online Advertising Pop up Ads U Haul v. WhenU.com (Virginia 2003) Wells Fargo v. WhenU.com (Mich. 2003) Contacts v. WhenU.com (N.Y. 2005) Paid Search GEICO v. Google (Virginia 2004) Rescuecom v. Google (N.Y. 2006) Rosetta Stone v. Google (Virginia 2012) 6

7 Behavioral advertising: use of data regarding a user s attributes and behavior to serve up targeted ads Nobody cares who you are, people care about who you re like, and what you ll do Based on ability to analyze vast amounts of data very quickly Math Men instead of Mad Men Individual sites analyze user s prior interaction with the site to determine preferences E.g., Amazon.com s use of prior shopping/browsing history Marketing ecosystem Ad networks use data gathered from multiple sites and third parties to build a picture of the user WSJ: Almost every major website you visit is tracking your online activity Cookies Flash cookies HTML 5 new web computing language Data analysis companies quickly collect and analyze user data 7

8 Digital Envoy, Inc. Data Zip Code Data [x+1], Inc. Nielsen Demographic Group Browser Data Analysis Capital One.com Targeted Ad FTC: aware of implications of behavioral advertising a decade ago Recommended Congress enact legislation to protect consumer privacy Congress declined to act In absence of legislation, FTC has tried to use its current authority to prohibit unfair or deceptive trade practices Companies involved in online commercial activity need privacy policy FTC often brings action if a company s privacy policy is inaccurate 8

9 Weakness: no violation if privacy policy is accurate, even if it is vague We use information we collect to provide, maintain, protect, and improve our services (including advertising services) and develop new services We provide [your personal] information to trusted businesses for the purpose of processing personal information on our behalf FTC Principles on Behavioral Advertising (2009) ( Self Regulatory Principles ) Transparency and consumer control Data security and retention Consent for modification of posted privacy policy Consent for use of sensitive data Health, finances, or children 9

10 Industry self regulation Google: Why this ad? plus chance to opt out After opting out, you ll still see relevant ads, but Google won t use additional information to personalize those ads on Google search and Gmail. Google also revamped privacy policy to make it much more clear (March 2012) Do Not Track Will soon be supported by all major browsers (end of 2012 for Google chrome) But its enforcement is based on the honor system FTC actions: data gathering or use practices cannot be deceptive FTC v. Toysmart (2000) Shared data with third parties, contrary to privacy policy FTC v. Sears (2009) Paid users $10 to participate in the My SHC Community Had to download software to participate Terms of data collection appeared in a lengthy license agreement Software tracked all web browsing 10

11 Take Aways Remember FTC s core principles Advertising and Marketing on the Internet: Rules of the Road Dot Com Disclosures Guide on Endorsements and Testimonials Special rules CAN SPAM Act for marketing COPPA for collecting children s information Take Aways Trademark law Be cautious before using another party s trademark as purchased search term Establish enforcement strategy for your own trademarks Behavioral advertising Privacy policy must accurately reflect reality Trend: greater disclosure of data gathering practices Beware of red lines (Sears) 11

12 Avoiding Legal Pitfalls in Online Advertising Amir Azaran NEAL GERBER EISENBERG 12