The New Advertising Ecosystem
Advancements in technology have made the marketer’s toolbox more effective than even the boldest could have imagined. At the same time, regulators have seen the need for the enactment of new marketing laws and increased enforcement of existing ones to respond to a variety of emerging challenges.
Few sectors have seen the radical transformation that the advertising industry has experienced since the internet entered the mainstream. Primarily seen as advantageous, these changes significantly improved the capability and efficiency of marketing. For the most part, the advancements were due to the formation of technical, data-focused frameworks made possible by the internet. This data-centric approach allowed for granular targeting and tracking in an increasingly precise and progressive manner. Whereas previously advertising was practiced in a much less nuanced way, the new data-heavy ecosystem allowed for radically improved returns on ad spend.
Here in the United States, a dynamic change in the perception of potential abuse of the new advertising ecosystem has spurred lawmakers to take a closer look at existing legal frameworks and the passage of new laws.
Most of the newer laws relate to the use of data in a marketing context, while the older regulations generally apply to new enforcement applications from the FTC for native advertising and influencer marketing. It is essential to state that this is a summary of some of the legal frameworks relating to advertising but is by no means comprehensive.
Each scenario has its specific nuances and therefore requires particular counsel, which can only be properly achieved through speaking with an attorney.
Laws Regulating Marketing Data
Some of the most substantial advancements in advertising were made possible by the internet giants. The Google and Facebook of the world created a business model where the collection of immense troves of data on their user base translated into a new and vastly improved world for marketers where any customer profile could be targeted in a laser-focused manner.
With all of this data and the desire to collect as much of it as possible, the race for acquiring this intangible asset has never been greater. The desire for data means that both private and state actors are willing to go to great lengths to acquire it for various motivations. It is primarily because valuable specific data can be in the right hands that we have seen so many data breaches.
With the proliferation of data collection, its potential for abuse, and because of a multitude of data breaches, regulators and policymakers have been passing laws on the state, national and international levels.
A Fractious Tapestry
Depending on the nature of the marketing activity, there are various potential legal obligations to take into account. Particularly when employing digital advertising campaigns, the myriad of emerging data-focused regulatory frameworks come into effect. They range from the European Union’s passage of the broad-ranging General Data Protection Regulation (GDPR) to the California Consumer Privacy Act (CCPA) and its successor the California Privacy Rights Act (CPRA). The regulative landscape is changing rapidly, and it is a challenge for organizations to stay compliant within a tapestry of fractious obligations.
Retargeting & HIPAA Compliance
There is a broad consensus among those familiar with targeted digital advertising that retargeting is one of the best tools in the marketer’s toolbox. The power to remarket and reach those who have previously expressed interest in particular products or services offers significant potential. It helps to move them further along the customer journey. Based on the strong potential that retargeting and related capabilities, it is a common strategy utilized by marketers.
When it comes to retargeting practices for specific offerings, though, there are some critical points to keep in mind from a regulatory and legal perspective. Specifically, for those healthcare offerings subject to HIPAA, retargeting presents a frequent pitfall for non-compliance. The issue relates to the Privacy Rule obligations for Protected Health Information (PHI.) The risk of disclosing PHI based on retargeting ads that speak to the nature of a health condition implicates a technical yet potentially problematic compliance issue. Therefore, it is important not to include details about the patient or medical conditions in retargeting ads.
Furthermore, the execution of Business Associate Agreements (BAAs) with all entities handling PHI, including marketing firms, should be a top priority. It is also essential to ensure compliance regardless of whether a healthcare organization (covered entity) undertakes marketing activity in-house or utilizes a third party’s services such as an agency (business associate). In either scenario, there is a duty to maintain patient privacy.
Political & Issue-Based Ads
As the reach of digital advertising has been increasing, we see a tectonic shift of political and issue advertising being moved away from legacy platforms such as print toward digital platforms that offer more extensive targeting capabilities. Through the likes of Google and Facebook, campaigns can tailor messaging in a more nuanced and relevant manner than was ever previously possible.
Some have raised the alarm about the potential for such hyper-targeted advertising to manipulate the electorate in nefarious ways. Also, there is growing concern about the lack of transparency concerning the individuals, organizations, or even state actors behind a specific political or issue-based targeted digital ad. Such critical discussion catapulted to the fore in the election of 2016. Ever since we see greater scrutiny and an overall reckoning as these ads’ power and related content distribution affect elections throughout the world.
In response to what some legislators and platform executives see as a danger to democracy, new regulatory frameworks are being proposed to tackle the anonymity and other issues arising from issue-based digital ads. Platforms are taking societal feedback into account, and we have seen a speedy enactment of policies to add transparency and restrictions on certain issue-based advertising.
Influencer Marketing Everywhere
Influencer marketing has proven to be a useful tool in the marketer’s tool chest. Billions of dollars are poured into this marketing channel every year, and all indications point to an increase in future spending. With the proliferation of influencers marketing a wide variety of products to consumers, there is an increase in regulation and enforcement. We review some of the most common aspects of the law that come into play relating to influencer marketing campaigns.
Contests, Sweepstakes, & Lotteries
A common strategy for increasing engagement for various marketing campaigns is by utilizing various promotions that usually take the form of a contest, sweepstakes, or lottery. These are used on an increasingly frequent basis because they can radically increase campaign performance. With that said, several issues arise when employing such contests.
Recurring Charges & Subscriptions
Recurring charges and subscription-based offerings are alluring ways for businesses of all kinds to increase their revenue. These kinds of billing practices are experiencing an uptick in usage as of late. They have become so popular and widespread that they gained the apt nickname of “the subscription economy.” The list of subscription services seems endless from monthly charges for entertainment streaming services to specialty and themed boxes.
The expanding ubiquity of such recurring charges has brought to light a susceptibility for abuse. In response, various services that help consumers track and efficiently manage recurring charges have gained adoption. Even with these services, though, there are legal issues to be mindful of when embarking on offering such recurring subscriptions and related billing in light of increased regulatory enforcement.
A common area we see enforcement, specifically from the FTC, centers around opaque and misleading charges in the context of subscription boxes. For example, in this enforcement action, the FTC alleged that a free trial subscription box with an automatic charge for six months of boxes if not canceled during the trial be an unfair and deceptive practice. In addition to being deemed a violation of the FTC Act, it was also held to be a violation of the Restore Online Shoppers Confidence Act (ROSCA).
The rationale behind the action centered around the alleged lack of adequate notice of the six-month renewal term, which meant that customers were not aware of the extent of the consequences for not canceling within the free trial period. In the consent order resolving the action, the company agreed to both undertake specific actions aimed at compliance with disclosures and payment of monetary relief to the Commission. The takeaway for staying compliant with both the FTC Act and ROSCA relates to transparency in the form of clear terms. Details about free trials, recurring billing practices, and cancellation details should be clearly and conspicuously displayed for customers to review.
