Ifrah Law is a proud member the Brand Activation Association (“BAA”). This week, we attended the BAA’s 36th annual BAA Marketing Law Conference in Chicago. Just as “Mad Men” reflects the 1960’s era advertising business, this year’s BAA conference demonstrated this generation’s marketing dynamic – where mobile is key, privacy concerns abound, and the Federal Trade Commission (“FTC”) and other agencies are watching and enforcing. Other key “take aways” from the conference are that sweepstakes, contests, and other promotions remain hugely popular via mobile devices and social networks.
Advertisers representing top brand names made clear that companies must reach consumers through various digital devices. Smartphones, tablets, and wearable technologies each represent ways to advertise a product or service. Today’s consumers, especially younger consumers, rely extensively mobile devices. Many actually welcome behavioral and other advertising. Consumers in the U.S. and abroad have shown receptiveness to “flash sales,” instant coupons and other deals, including those geared to their geo-location.
Emerging Privacy and Consumer Protection Trends
While advertisers interact with consumers and many consumers welcome offers and information, regulators’ and individuals’ concerns with the privacy of personal information dominate the landscape. Almost a year after the notorious Target data breach, and with the holiday shopping season approaching, all stakeholders are understandably cautious about how to utilize various methods of marketing while securing consumer information. Even assuming a network is secure, the FTC, state attorney generals, foreign regulators, consumer advocacy groups and consumers want to know how personal data is being collected, utilized and shared. In the consumer protection context, the FTC actively enforces the Federal Trade Commission Act’s prohibition on “deceptive acts and practices,” requiring that advertisers have substantiation for product claims.
Two Significant Forces – the FTC and California’s Attorney General
Top representatives from the FTC and the California Attorney General presented at the conference. Both representatives asserted their agencies remain active in enforcing their consumer protection and privacy laws, especially as to certain areas. Jessica Rich, Director, Bureau of Consumer Protection at the FTC, discussed the agency’s focus on advertising substantiation, particularly as to claims involving disease prevention and cure, weight loss, and learning enrichment (such as the “Your Baby Can Read “ case).
On the privacy side, Ms. Rich also noted the FTC’s specialized role in enforcing the Children’s Online Privacy Protection Act (“COPPA”). The FTC’s recent action against Yelp demonstrates that the FTC will not hesitate to enforce COPPA even where a website is not a child-focused website, per se. If a website or online service (such as a mobile app) collects personal information from children under 13, it must comply with COPPA’s notice and consent requirements. The agency is also exploring the privacy and consumer protection concerns associated with interconnected devices, known as “the Internet of Things.”
Promotions – Sweepstakes, Contests, Games
While some may think sweepstakes and contests are outdated, the opposite is true. Companies are utilizing mobile and social networks to engage with consumers through promotions. Facebook and Pinterest-based sweepstakes and contests continue to grow in popularity. Advertisers also increasingly look to “text-based” offerings.
These promotions can generate great marketing visibility and grow consumer relationships. However, advertisers need to be aware of many legal minefields. First and foremost is the federal Telephone Consumer Protection Act (“TCPA”), which requires prior express “written” consent for advertisements sent to mobile phones via text or calls utilizing an autodialer or prerecorded message. Plaintiffs’ lawyers continue to file hundreds of TCPA class actions based on texts without consent. Second, the social networks have their own policies. For instance, Facebook now bars advertisers from requiring consumers to “like” a company Facebook page in order to participate in a promotion.
BAA conference sessions were packed – many standing room only. The popularity of programs about comparative advertising, native advertising, sweepstakes and contests, and enforcement trends demonstrates that advertisers are finding innovative ways to reach consumers across devices. These marketing initiatives face a host of federal, state, and international laws and regulations, as well as restrictions imposed by social networks and providers. It’s an exciting and complex juncture in global marketing.
Advertisements for electronic cigarettes, or “e-cigarettes,” are increasingly drawing scrutiny from consumer advocates and public health groups who are calling for the federal government to regulate these advertisements in the same manner that traditional cigarette advertisements are regulated.
The e-cigarette industry is growing at a rapid pace, particularly among younger people. Last year, the industry generated roughly $2 billion and industry sources estimate sales are on pace to hit $5 billion this year.
Currently, there are no regulations governing advertisements of e-cigarettes. In contrast, advertisements of traditional cigarettes are heavily regulated. For instance, various federal laws and regulations prohibit cigarette manufacturers from sponsoring sporting events, and advertising cigarettes on television is also barred. Under the terms of a settlement from a lawsuit in 1998, tobacco companies agreed to not use cartoon characters to market cigarettes.
For roughly 10 years, the marketing team at R. J. Reynolds used the cartoon character “Joe Camel” to promote cigarettes. After years of pushback and under pressure from a pending lawsuit, Congress and various consumer groups, R.J. Reynolds announced that it would settle the pending lawsuit out of court and voluntarily end its use of Joe Camel.
BlueCigs, a leading manufacturer of e-cigarettes, uses a cartoon character named Mr. Cool in a television advertising campaign. Industry watchdogs have criticized the television ads, particularly given the growth of the industry and the regulations faced by traditional tobacco manufacturers. Some in the industry have noted the similarity between Mr. Cool and Joe Camel and worry that these advertisements will have the same effect of luring young people to try e-cigarettes that many believe Joe Camel had with traditional cigarettes.
Last month, a group of Senate Democrats introduced legislation to prohibit e-cigarette producers from marketing their products to children. This bill marked the first legislative attempt to regulate the e-cig industry. The bill would ban marketing e-cigarettes to children based on standards promulgated by the Federal Trade Commission (FTC), and would empower the FTC and state attorneys general to enforce the advertising ban.
Additionally, the White House Office of Management and Budget has been reviewing a rule proposed by the U.S. Food and Drug Administration that would bring e-cigarettes under its jurisdiction. The regulations have been under review since October. We have previously written about FDA plans to regulate the e-cigarette industry here.
The e-cigarette industry should be aware that their marketing and advertisements are being closely monitored. Regulation and potential lawsuits could be on the horizon and companies should review their policies and practices to make sure they are prepared. The use of cartoon characters may be one advertising method to forego at this point, instead focusing on mature individuals using the product.