Promotional Marketing Concerns Associated with Online and Mobile Media (July 2021) – Media, Telecommunications, IT, Entertainment
Using promotions and contests related to online and mobile marketing can be a dynamic and cost-effective way to increase conversions, build a database of engaged consumers, and increase brand awareness. However, businesses should be aware that government entities, such as the Federal Trade Commission (“FTC”), are responsible for regulating, investigating and sanctioning non-compliant promotional marketing practices. In this article, we discuss the legal issues surrounding the online and mobile marketing space related to promotion.
Online and mobile contest marketing
The appeal of promotional contests, games and sweepstakes is obvious: consumers are drawn to the possibility of winning prizes. Despite the allure of the raffle model, there are specific federal and state laws that apply to promotional games. Social media websites, such as Facebook®, Instagram®, and Twitter®, also have their own promotional marketing policies. Please note: you could incur substantial liability if these laws and platform rules are not strictly observed.
When assessing your liability risk, the basic question to ask is whether your promotion is a game of chance or skill. Games of chance are considered illegal lotteries, unless there is a free, unconditional means of entry. Skill games are an attractive alternative, but may violate certain anti-gambling laws depending on the prize structure and the degree of participation of the game sponsor.
When holding such contests, it is important that your promotional marketing approach complies with other applicable laws and guidelines. For example, you must comply with intellectual property laws at all times. This is especially true when you are offering a prize that carries a registered trademark, such as an iPhone®, or when you market your contest on a social media platform, such as Facebook®, and wish to use the name Facebook® in your marketing materials.
Promotional Marketing on Blogs and Social Media
Using a different approach, many companies have recognized the promotional benefits of incorporating their brand messages into various blogs and websites. Some have even created fake blogging / social networking site pages masquerading as review sites, and posted fake articles that include paid testimonials.
While potentially lucrative, this confusion between marketing and blogging / social media comes with significant legal risk. Due to the historic nature of the Internet as a place for the public to express their opinions, the blogger / site member in question is not expected to be a paid spokesperson. But when a blogger / site member markets products for a fee, or when that person is an employee of a company that sells products on the blog, there is an inherent conflict of interest when those relationships are not properly disclosed. . In these circumstances, blog / website posts can be a form of deceptive marketing.
In fact, the FTC recently updated its guides on using mentions and testimonials in advertising to address these issues. The essence of the guidelines is that promotional marketing material should prominently display a disclaimer that informs the reader of any financial interest that bloggers or writers have in relation to the products featured / discussed in the media. Likewise, the author of a fake article must disclose: 1) that the article is not real, but rather a marketing device; and 2) what the author has to gain by writing / posting the same.
The guidelines also make it clear that false testimonials are strictly prohibited, and when using an authentic testimonial, the blogger or writer must not modify or change it from the original in any way. Finally, where the provider of the testimonial can gain something of value by providing the testimonial, that fact should be disclosed to the reader.
Daily Deals Website Marketing
The “daily deal” business model, which is most closely associated with industry leaders Groupon® and LivingSocial®, offers businesses a unique way to promote their brand and attract customers through coupons, discounts and other benefits. However, many businesses are unaware that federal and state laws may apply to these discount offers. Problems arise because discount offers expire after a certain period. Since consumers have to pay a fee for these “daily offers”, the offers can be considered gift certificates and, therefore, fall under the Credit Card Liability, Disclosure and Disclosure Act (” CARD Act ”).
CARD and its state law counterparts require that all gift certificates have an expiration date of at least five years from the date of purchase. While Groupon®, LivingSocial®, and their competitors argue that challenge offers are coupons, not gift certificates, several state attorneys general have started examining this business model to determine the nature of the offers. In addition, several class actions have been filed alleging a violation of CARD law and corresponding state law.
Email and mobile marketing
While games, contests, and other promotional vehicles are valuable marketing tools, email and mobile marketing shouldn’t be overlooked as another way for businesses to monetize their customer databases. Many businesses do not take full advantage of these marketing options because they are unfamiliar with the laws that govern email and mobile marketing. If a business chooses to engage in email and / or SMS marketing, or to engage the services of a third party to manage and market its databases, the business should ensure that it and / or the third party distributor complies with all applicable laws, as well as its privacy policies.
Please note that the FTC and Federal Communications Commission (“FCC”) require that you obtain prior written consent from consumers before sending automatically generated or pre-recorded text messages to cell phones. Consumer express consent to receive SMS and email marketing should always be obtained from consumers at the time of registration.
Additionally, the Federal CAN-SPAM Act of 2003 (“CAN-SPAM”) includes requirements that must be followed when marketing by e-mail. As part of CAN-SPAM, the use of false or misleading header and sender information is prohibited and the subject line of the applicable email must accurately reflect the advertised products / services. in the subject line. CAN-SPAM requires that when sending commercial email, businesses must clearly identify the email as an advertisement, include a valid physical mailing address for the sender, and provide consumers with a mechanism to decline. receiving future e-mail.
Hire a promotional marketing lawyer
While using promotions, games, consumer reviews, and blog posts related to online and mobile marketing can bring great benefits to your business, you should also be aware of the associated pitfalls, which can expose you to legal risks. As such, businesses should consult with knowledgeable attorneys before starting any online or mobile marketing campaign.
Similar blog posts:
How to use promotional marketing legally
The ultimate guide to the law of contests and sweepstakes
Make your mobile app competition more attractive
This blog post was originally published in 2013 and updated on July 9, 2021.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.