Without a doubt, today’s world of communications is changing daily. Consumers, advertisers, businesses and brands, and governmental regulators are witnessing an explosion of “social media platforms” and emerging technologies. Our society has not only accepted, but uses daily (if not hourly), platforms like Facebook, Twitter, YouTube, and blogs. At the same time, our society habitually uses “search” in the consumer experience that encourages consumer-to-consumer communications about businesses and brands.
This new reality constitutes a fundamental shift in the workings of commercial discourse, where consumers are playing a critical role in shaping and sharing commercial messages. Simply put, there has been a fundamental paradigm shift, where the role of advertisers is no longer merely to communicate with passive consumers who either accept or reject commercial communications. Rather, today, consumers are the controlling agent of the message, and social media has emerged as a powerful and necessary marketing tool.
The governmental agency in charge of regulating and investigating “unfair and deceptive” business practices, including false advertising, is the Federal Trade Commission (“FTC”). In 2000, the FTC provided formal guidance that advised businesses how advertising law applies to marketing and sales on the Internet. Since 2000, the FTC adopted a “clear and conspicuous” standard to online advertising disclosures, and provided for key factors to determine whether the advertising was deceptive or misleading: (1) prominence; (2) presentation; (3) placement; and (4) proximity.
Yet, the FTC realizes that the communications and advertising world has changed dramatically —where “mobile marketing” with small screens has become a reality, the “App” economy has emerged, and online social networking (where communications spread across multiple platforms instantaneously) is culturally ingrained—and is now seeking to review whether these four factors are applicable to “social media platforms” and emerging technologies (including, for example, “location-based” technologies that incorporate the real world location of a consumer in the information and advertisements a consumer receives). As a result, on May 26, 2011, the FTC requested formal public comments about how its guidance or regulations should be modified to reflect the changes in the online world.
Winston & Strawn was privileged to represent three leading advertising trade associations, submitting comments to the FTC on behalf of each association. A common, consistent theme emerged from these submissions: while the advertising industry and leading brands seek to protect the core consumer protection values of transparency and accuracy that are designed to give consumers the appropriate and necessary information they need to make meaningful purchasing decisions, the FTC must allow emerging technologies to develop and mature so that consumers can enjoy the benefits of communication platforms that not only enhance their commercial transactions but provide opportunities for effective social dialogue and entertainment. In other words, any guidance by the FTC should be flexible and fluid, recognizing the practical constraints of certain platforms (such as Twitter that only allows 140 characters) as well as the need to stimulate innovation that can benefit consumer’s access to and control over their commercial and personal information and communications. Each of the three associations specifically recommended that the FTC holds a public workshop on the technological developments and regulatory issues to obtain full input from all relevant stakeholders.
The initiative by the FTC to update its guidance or regulations concerning online advertising is likely to stimulate a lively debate, the consequences of which may significantly impact almost all promotional campaigns conducted by businesses, compliance programs, and risk management evaluations. Stay tuned—and fasten your seat belts.