Technology: The legal issues of advertising online and through social media

With social media’s use rapidly expanding, advertisers should learn the legal hurdles that come with the new landscape

Social media is quickly becoming the preferred method for advertisers to reach consumers. According to one study, revenue derived from advertising in the social media space is expected to exceed $6 billion by 2015. As advertising through social media continues to grow and expand, it is important for advertisers and agencies to understand the legal and regulatory requirements that apply. 

Over the next several weeks, we will highlight some of the important legal issues that advertisers and agencies face when advertising through social media platforms. In this series of articles, we will examine:

  1. Controlling and monitoring social media to protect a brand
  2. The Federal Trade Commission’s (FTC) March 2013 guidelines regarding effective online disclosures and the Securities and Exchange Commission’s (SEC) guidance regarding the use of social media to disclose material information
  3. The Twitter and Facebook terms of use regarding advertising, promotions and data collection and use
  4. The Digital Millennium Copyright Act as it relates to social media
  5. The industry self-regulatory side of digital place-based advertising 

As a starting point, it is important to remember that the same rules and regulations that govern traditional advertising apply in the social media context. This means that the advertisement must be truthful (and not misleading or deceptive), the claims made in the advertisement must be substantiated (backed by evidence), and the advertisement cannot be unfair. The FTC recently made clear that the rules as expressed in its new guidance are platform and device neutral and that it “will continue to enforce its consumer protection laws,” and “evaluate online advertising, using traditional criteria, while recognizing the challenges that may be presented by future innovations.”

In our next column, we will explore how companies can protect their brand when advertising through social media. Advertisers must ensure the proper use of their intellectual property by internal and external teams and protect against the improper use of that intellectual property by a third parties. Agencies responsible for creating and deploying social media content must also understand what they can and cannot do. Protecting the brand in the social media space is challenging and requires proactive measures. We will explain what you need to know in the next article.

Then, we will discuss the FTC’s guidelines for online advertising. In 2013, the FTC updated its guidelines for online advertising for the first time since 2000 (before Facebook and Twitter even existed). We will examine the FTC’s March 2013 .com Disclosures: How to Make Effective Disclosures in Digital Advertising (“.com Disclosures”), as well as the SEC’s April 2, 2013, guidance regarding the use of social media to disclose corporate earnings and other “material” financial information.

(As to the former, the good news is that the FTC did not dramatically change the landscape so much as it confirmed how existing rules apply to the evolving digital and social media advertising space. As to the latter, the SEC’s guidance confirms that Regulation FD evaluation “is always a facts-and-circumstances” exercise and “communications through social media channels requires careful Regulation FD analysis.”)

In our next contribution, we will examine some of the advertising-specific terms of use for mainstream social media platforms, such as Facebook and Twitter, in light of some recent court decisions interpreting them. As companies continue to rely more heavily on Facebook and Twitter to market their goods and services, advertisers and agencies should be aware of the terms of use for social media platforms that constitute a separate set of rules governing the relationship between provider and user.

Next, we will look at the Digital Millennium Copyright Act (DMCA) compliance, safe harbor protection and takedown procedures, and generally how the DMCA applies to digital advertising and social media. 

Lastly, in our final article of this series, we will address some of the self-regulatory efforts by the advertising industry to promote the continued use of social media and digital advertising as a means of giving consumers what they want, while also promoting the protection and privacy of consumers and controlling the use of data collected online. 

Advertising through social media platforms is an evolving and potentially lucrative endeavor. The legal and regulatory environment is evolving along with it. Understanding the important legal issues is vital for any company pursuing an online strategy to advertise products and services, share or collect information.

Contributing Author

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Christopher D. Mickus

Christopher D. Mickus is an attorney with Neal, Gerber & Eisenberg LLP (Chicago). He is a partner and leader of the firm’s recently-launched Advertising, Marketing...

Additional Contributors: Andrew G. May

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