The same legal rules that apply to traditional media, apply online. Equip yourself with solid practices when you engage consumers through consumer generated advertising (CGA), user generated content (UGC), social media, blogs, and other applications.
- Review online campaigns for any representations that may be false or misleading – what is the actual consumer take-away from the ad?
- Address unwelcome comments/content posted to the site in website terms of service, and review posts regularly.
- Exercise caution with product performance comparisons.
- Make sure disclaimers are clear and accessible online.
- Good guidelines are available for testimonials and endorsements – don’t get caught unfairly seeding or cherry-picking.
The vast potential of the online environment is providing new opportunities for advertising and marketing. Canadians are spending more time with interactive online content.1 The online environment encourages consumer participation, which in turn shapes how advertising is created, accessed, and used. We hear about the "value of a Facebook Brand Fan", for factors that include loyalty and recommendations.2 And we increasingly hear that advertising is shifting from "reach" to "engagement": online, everyone can reach; the challenge has become more about engaging with the consumer.
Advertisers invest a great deal of time and resources to shape and launch an online campaign. Protecting that investment and the brand itself is good legal and ethical practice, and can go a long way to maintaining the integrity that consumers expect, on every platform.
The Competition Act – the essentials
Last year, the Competition Bureau updated its Bulletin, "Application of the Competition Act to Representations on the Internet" (the Internet Guidelines).3 The Bureau has emphasized that the Act does not distinguish between traditional and online media: "[t]he same basic rules that govern truthfulness in traditional advertising and marketing practices apply to on-line representations and on-line marketing practices."4 In a sense, everything old is new again.
The Competition Act prohibits representations that are "false or misleading in a material respect", and deceptive marketing practices in promoting products and business interests.5 "Materiality" has traditionally meant that the representation could influence the purchase of a product or service. The general impression conveyed by a representation, to a "reasonable person", is the test to determine whether a representation is false or misleading in a material respect. Simply put, it is the actual consumer take-away from the advertisement that matters for the purpose of the Act.
New platforms and new connections with the consumer
These principles have become fairly familiar in traditional media, but what do they mean in the context of consumer engagement online and Web 2.0 applications? Consider these characteristics of online advertising and marketing:
- Consumers may have only the Internet experience, and the representations they see there, to judge a product before purchase
- Consumers have a role in promoting the product and comparing it to others, through Facebook, Twitter, YouTube, and blogs
- The dynamic and interactive aspects of the online experience for consumers can present challenges to effective disclosure, and accessible disclaimers
- Social networking, blogging and similar types of consumer engagement online may tempt advertisers to "seed" or "cherry pick" consumer testimonials
Although the rules themselves remain the same, the approach to applying them online may be different. This calls for careful attention by advertisers and product suppliers.
Consumer generated advertising: Marketing in real time
The Internet is an increasingly popular forum for consumer comment, and consumers are beginning to expect companies to give them space to voice their opinions. Moreover, as advertising shifts from reaching consumers to engaging them, many companies are actively encouraging consumer generated content, consumer generated advertising, and consumer referrals, inviting consumers to take the campaign viral through Facebook, Twitter and email. These forms of social media are all about immediacy and getting the word out "right now", but there are ways to do it "right" as well.
There are various practices advertisers can adopt to safeguard their site and reputation with consumers as collaborators in marketing and advertising. While the lines of responsibility may appear blurred when third parties are providing content, it is important to recall that advertisers are responsible for their campaigns, including all content on their websites, and external blogs that they pay for or otherwise sponsor. It is therefore incumbent on the advertiser to:
- Address offensive and disparaging comment in website terms of service;
- Address content ownership and copyright issues, particularly if the advertiser requests submissions or sets up a forum for them;
- Review consumer generated content posted on the site on a regular basis;
- Ensure that advertiser-initiated product performance comparisons are based on a prior adequate and proper test of the product attributes, as they are intended to be understood by consumers6; and
- Review the clarity and accessibility of disclaimers on their site – more on this following the second example below.
Practical examples: Speaking out online?
Make sure you’re not out of line.
Randy Cohen, "The Ethicist" columnist of the New York Times, fielded a question last summer on "impersonating a reviewer":
I work for a company that creates iPhone apps. When we release a new one, our boss urges the staff to download it at the App Store and give it a five-star rating, even employees who don’t own a device that can run it. I think such false reviews are wrong in themselves and that our boss should not pressure employees in this way, but I want to support our company.7
The perceived anonymity of the Internet makes this type of seeding irresistible to some unscrupulous marketers, particularly as many consumers look at the average results, and not the specific reviews, to judge for themselves. In his column, Mr. Cohen attacked the ethics of impersonating a reviewer, and concluded, "[t]o post bogus reviews is akin to circulating counterfeit money: it undermines the credibility of a useful institution".8 Why would a marketer interested in promoting long-term brand favorability want to run this risk?
Planted reviews are, however, not only unethical, but against the law. As noted above, The Competition Act prohibits representations that are "false or misleading in a material respect", and deceptive marketing practices in promoting products and business interests.9 Moreover, the Act also prohibits the unauthorized use or distortion of testimonials, and permitting such representations to be made to the public.10 Given these rules, and the fact that it is not legally necessary to prove that anyone was deceived or misled, advertisers would do well to exercise caution with testimonials.
Endorsements in blogs
The U.S. consumer protection agency, the Federal Trade Commission, revised its Endorsement Guidelines11 ("Guides") last year. After receiving a flood of response and questions, it published an FAQ, "What People are Asking"12, including the following questions:
"What are the essential things I need to know about using endorsements in advertising?"
"In our ads we want to feature endorsements from consumers who achieved the best results with our product. Can we do that under the revised Guides?"
"Our company runs a social media marketing network. We understand we’re responsible for monitoring our network. What kind of monitoring program do we need? Will we be liable if someone in our network says something false about our product?"
Because the online experience may be the chief or only way for a consumer to inform him or herself about the product, testimonials carry a great deal of weight and can be very valuable. This explains in part why the Federal Trade Commission issued its revised Guides Concerning the use of Endorsements and Testimonials in Advertising.
In Canada, the Competition Act directly prohibits the publication of untrue, misleading or unauthorized testimonials.13 The Canadian Marketing Association (CMA) Code of Ethics also provides a good overview of the essentials on testimonials and endorsements. Article 16 focuses on the authenticity of the testimonial or endorsement, and appropriate attribution.
Testimonials and endorsements must be:
- Authorized by the person or organization quoted;
- Genuine and related to the experience of the person or organization quoted, both at the time made and at the time of the marketing communication;
- Positioned as opinion, not fact, unless supported by valid research; and
- Not taken out of context so as to distort the opinion or experience of the person or organization quoted.
One of the questions above asks about using "best results". While these results may be genuine, testimonials about specific results can easily lead to the expectation that they are typical. Recall that legally, the applicable standard is the consumer’s general impression. Online, the general impression may be shifted to what is prominently displayed or highlighted. "Cherry picking" can be risky. The onus is on the advertiser to prove that these are typical results, or clearly disclose the typical results. Disclaimers such as "results not typical" on their own do not cure a misleading representation.
The Competition Bureau’s Internet Guidelines14 provide good practical advice on "how to avoid common pitfalls" in disclosing relevant information online. The Bureau reviews various factors to determine whether an online disclaimer "is sufficient to alter the general impression created by the principal representation".15 These include the location of the disclaimer, hyperlinks, graphics, sounds or flash images, prominence, accessibility and repetition. The dynamic and fast-paced characteristics of video and rich media may sometimes make the use of disclaimers feel awkward, but they should always be part of advertising considerations, regardless of the platform.
Blog endorsements are a very personal way to reach consumers, and are attractive to advertisers for that reason. Because they are based on personal experiences and perceptions, however, consumers may not expect a commercial involvement. There are legal and good business reasons to disclose that an advertiser has paid the blogger, or provided the product to him or her to try. Under the Competition Act, an undisclosed commercial relationship behind a representation may constitute misleading advertising, and under the CMA Code of Ethics, the blogger would be considered to be an agent of the advertiser. The Code provides that the relationship must be made clear to site visitors.
Fundamentally, however, disclosing any relationship with the blogger (or in fact any person providing a testimonial or review) is a good ethical business practice that will serve an advertiser well. The potential risks of bad press over a perceived hidden sponsorship, and on the flip side, the potential advantages of being seen to be open and truthful, are too great not to disclose the relationship with a blogger.
Conclusion: The long view
A 2009 Bain & Company report, "Building Brands Online"16 revealed that the factors brand marketers want to develop online are first and foremost: brand awareness, purchase intent, likelihood to recommend, and favorability – and that they prioritize these over reach and ROI buys. This means that they want vehicles that will build and maintain their brands, a long-term proposition.
While online advertising is now surpassing radio in terms of spend,17 Canadians’ take-up of mobile applications is taking off18, and the pace of change in media is faster than ever, the long view remains important for advertisers and their brands. Sound ethics and a good legal approach continue to provide the basis for good marketing.
1ComScore recently reported major increases over the last three years in time spent on social networking (+11%), multimedia (+93%) and blogs (+16%). ComScore Inc. research, Canada, Ages 2+, All Locations, Jun 2007 – Aug 2010, as presented at the Interactive Advertising Bureau of Canada MIXX Canada Cross-country Roadshow in Ottawa, October 6, 2010.
2 "The Value of a Facebook Fan", Sycapse, June 2010, as presented at the IAB MIXX Roadshow, ibid.
3 Competition Bureau, "Information Bulletin – Application of the Competition Act to Representations on the Internet", October 16, 2010, available at: http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/vwapj/RepresentationsInternet2009-10-16-e.pdf/$FILE/RepresentationsInternet2009-10-16-e.pdf.
4 Ibid. at p. 1.
5 Subsections 52(1), 74.01(1) and sections 74.02 and 74.03 of the Competition Act.
6 A useful reference is Advertising Standards Canada’s April 2010 "Guidelines for the Use of Comparative Advertising – Guidelines for the Use of Research and Survey Data to Support Comparative Advertising Claims" available at http://www.adstandards.com/en/ASCLibrary/guidelinesCompAdvertising-en.pdf.
7 See the question and The Ethicist’s answer at http://www.nytimes.com/2010/08/01/magazine/01FOB-Ethicist-t.html?_r=2&emc=eta1.
9 Subsections 52(1), 74.01(1) and sections 74.02 and 74.03 of the Competition Act.
10 Section 74.02 of the Competition Act.
11 Federal Trade Commission, "Guides Concerning the Use of Endorsements and Testimonials in Advertising", CFR Part 255,
13 Section 74.02 of the Competition Act.
14 See footnote 3 for full reference.
15 Ibid. at pages 7-10.
16 "Building Brands Online 2009" survey results, as presented at the Interactive Advertising Bureau of Canada MIXX Canada Cross-country Roadshow in Ottawa, October 6, 2010.
17 Canadian Net Advertising Volume, 2000-2009, Television Bureau of Canada, available at http://www.tvb.ca/pages/nav2_htm, reported at Ontario Association of Broadcasters Connection 2010, October 21, 2010.
18 See for example, El Akkad, Omar, "RIM rolls out ad network", The Globe and Mail, September 27, 2010.