Spokane Journal of Business

Minimize risks when marketing through social media

Hurdles should be vetted before using popular sites for business promotion

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Creating an effective social media advertising campaign is the holy grail of large and small businesses alike. And for good reason.

According to a recent study conducted by The Nielsen Company, use of smart phones increased more than 400 percent during the last four years. In the same time period, the number of Facebook accounts swelled by more than 900 percent, and the number of Twitter accounts exploded by more than 29,000 percent. With figures like these—and the exceedingly low economic barrier to entry for businesses—it's no wonder creating effective social media advertising is an imperative for any going concern.

While the advent of social media poses endless possibilities for businesses of all stripes and sizes, several potential legal hurdles and issues should be considered as one ventures into the realm of social media advertising and promotion.

The law in this area—like many laws involving the intersection of technology and commerce—is dynamic and continually evolving, but here are 10 tips you and your legal counsel should consider before you set out on your journey for social media prominence.

Register trademarks and copyrights. Registering your company's important trademarks and copyrights with Uncle Sam has always been important. But registration takes on increased importance in the context of social media promotions given the vast reaches of this media.

The registration fees for both trademarks and copyrights are relatively low, but the applications likely will call for careful consideration by you and your legal counsel. Fortunately, the federal government has put your tax dollars to good use and has established two sites that explain in exhaustive detail everything you would ever want to know about the trademark and copyright registration process. For trademarks visit www.uspto.gov and for copyrights take a look at www.copyright.gov. Register early and often.

Truthful advertising. Any ad campaign that takes place through social media is still subject to the same rules and regulations that would be applicable had the campaign taken place through more traditional advertising means. Both the federal government (through the Federal Trade Commission, or FTC) and state governments (typically through the state Attorney General's Office) monitor the marketplace to ensure that commercial advertising isn't going to deceive consumers.

Advertisements that make claims about how products work must be adequately "substantiated," that is, you must have a sufficient basis to be able to make the advertising claim in question. The Federal Trade Commission maintains a rather robust online library of rules and regulations regarding advertising and marketing. For more information on what the federal government expects of advertising campaigns in the context of social media and otherwise, check out the "Advertising and Marketing Basics" at http://business.ftc.gov/advertising-and-marketing/advertising-and-marketing-basics.

Endorsements and testimonials. Social media advertising lends itself to others "promoting" or "liking" your company's products or services. So, is it permissible for you to solicit others to like or endorse your product? The answer generally is yes, but there are recent government regulations that require you to disclose certain "material connections" that you may have with the endorser.

For example, suppose there is a blog or popular Facebook page that rates products and services and that you would like your product or service to receive the imprimatur, or approval, of this blog or page. If you compensate this third party in the form of, for example, providing free products or demos if the review is favorable, then that is likely a "material connection" that must be disclosed by you in any advertising where you rely on the endorsement. If you are considering using endorsements or testimonials in your social media ad campaign, make sure to review the FTC's Guides Concerning the Use of Endorsements and Testimonials in Advertising on the agency's website. The guides are by and large free of legalese and contain a number of useful examples.

Third-party affiliate marketers. Another important rule to keep in mind is that if you use third parties to market or promote your product, you have an obligation to make sure that what they are saying is truthful.

So, if one of your affiliates has pushed the envelope and disseminates false or misleading information about your product, then you, too, may bear legal responsibility for what was distributed on your behalf.

Social media sites' policies. Facebook, LinkedIn, YouTube, and all other major social media sites have terms of use you agree to abide by when you create your account. There are specific rules that these sites have regarding what users can and cannot do in terms of advertising and promotion.

You will want to read these carefully to make sure any product or service promotion you undertake through these sites is harmonious with the terms to which you're asked to agree.

User-generated content. Social media is a great way to harness the creativity of consumers in developing or enhancing a particular ad campaign. Many businesses encourage consumers to post their ideas and/or content online that then will be used in various advertising endeavors.

While this can be a very economical way to develop a campaign and promote brand awareness, companies need to be vigilant about making sure that they have the rights to then use or modify that user-generated content.

The best practices typically include requiring consumers to acknowledge through some sort of click-through agreement that the company owns the rights to the content that is being generated and that they understand the company is being granted a license to use and modify the content in the future.

Contests and promotions. Be careful of offering "sweepstakes" or contests through social networks, especially if you are offering a cash prize to the winner.

Most states have specific laws that apply to such promotions. In Washington, you can visit www.atg.wa.gov/ConsumerIssues/Sweepstakes.aspx for more information and tips on conducting sweepstakes and promotions.

The rise of "cause marketing." Cause marketing is the practice by a for-profit company of donating a portion of the purchase price of an item or service to a charity. Cause marketing is becoming increasingly popular via social media outlets.

While the law still is developing on this front, it's generally thought to be best at this point to adhere to the following guideposts in developing a social media cause campaign: The terms of the campaign should be clearly and prominently disclosed, and the marketing material should include the amount to be donated to charity per action, the name of the charity, the dates of the campaign, and any minimum or maximum amount to be donated.

Great to be "green." Developing and selling ecological-friendly services and products are on the rise. Combine the green movement with social media and that will certainly lead to one thing: more government regulation.

Just late last year, the FTC promulgated its revised "green guides." For more information, you should visit www.ftc.gov/opa/2012/10/greenguides.shtm.

Employees and social media. Another thing to keep in mind is that companies may be liable for the statements made by employees on social media sites if those remarks relate to the course and scope of the employee's employment.

For this reason, it is a good idea to develop an employee social media policy that outlines what type of information about the company, if any, employees are allowed to disclose on social media sites.

On this note, a recent bill titled the Social Networking Online Protection Act was reintroduced into Congress. If it passes, this proposed law may, among other things, limit the liability of businesses regarding the online and social media activities of their employees. Stay tuned.

Social media poses a number of unique and exciting opportunities for businesses. With a bit of diligence and attention to detail, you and your business should be able to thrive in creating and deploying a socially legal advertising campaign.

  • J. Michael Keyes

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