Ideas and insights to take your marketing to the highest level

November 26, 2014
Michael Justus

Ad Law in the Digital Age

It’s a well-known fact in marketing and advertising that even the most brilliant and well-planned marketing campaigns can result in legal problems if they contain any claims that could be construed as false or misleading. However, many of the updates and nuances to advertising law these days are less well known.

Advertising law continually adapts to new technologies and marketing techniques. For instance, the laws governing endorsements now cover not only claims made in mass-media advertising by professional athletes and Hollywood stars, but also product reviews posted on “mommy blogs.” Here’s a brief overview of that regulatory area, along with three other areas of ad law that regularly impact marketing today.

1. Puffery

Creativity and humor not only make ads more entertaining, but also may help marketers minimize legal problems or avoid them altogether.

Most marketers are familiar with the term “puffery” and its basic meaning. This isn’t a new concept in advertising or in ad law, but it’s one worth reviewing. Simply put, false advertising laws do not prevent advertisers from stating obviously exaggerated claims that no reasonable consumer would perceive as a factual representation of the advertised product or service. For example, a food brand may state in its ad that its cereal is so delicious that “one bite will send you over the moon.” Hopefully viewers will not be packing their bags for a lunar expedition.

An example from a recent Duralast ad illustrates the effectiveness of puffery. In a TV spot for the brand’s car batteries, well-known professional fighter Chuck Liddell performs a series of outlandish feats of strength while carrying around a Duralast battery. Among other things, he punches an angry rhinoceros in the face and throws it across the desert with one hand, rips the gun off of a futuristic war machine and throws it into the sky—causing three airplanes to explode—and then plunks the battery down into his truck and drives off through an explosion with the angry rhino chasing him into the flames. Would it be a reasonable takeaway for consumers to expect Duralast batteries to give them superhuman strength and comic-book superpowers? Doubtful. But the ad does effectively convey the message that Duralast batteries are pretty tough.

I’m not saying this ad is or is not legally bulletproof, but it is a fun example of intended puffery. The lesson here is that you can get your general brand message across to customers in a humorous, engaging and memorable way, while also helping to guard against legal risk. And depending on your industry and target market, an entertaining montage filled with puffery may be even more effective than a deluge of facts and statistics, which you may need to substantiate in court.

2. User-Generated Content

Many major brand owners with a sophisticated marketing team and a robust social media presence might be surprised to learn that they could be held responsible for claims made in content generated by customers. In fact, many brands directly engage customers through social media, including re-posting content originally posted by the customers. This can lead to unexpected legal problems.

For example, if a customer’s tweet or pin contains false or misleading claims about your product, and you retweet or re-pin that user-generated content on your brand’s official social media account, you may have just adopted those false or misleading claims as if they originated from the company rather than from the customer—and your company may be held legally responsible for those claims, even if your intention was to simply recognize and engage the brand’s fans.

On the other hand, if the brand does not re-post or otherwise “adopt” misleading claims made in user-generated content, it might be shielded from legal liability for such claims under federal law. This depends on the facts of each particular situation, so social media teams everywhere should pause to review the content before posting or re-posting.

3. Native Advertising

Native advertising continues to play a prominent role in modern advertising, but there is a fine line—and plenty of gray area—between lawful content and misleading content. In particular, native advertising’s effectiveness comes from its appearance as “regular,” unsponsored content, while the law seeks to undercut that effectiveness with requirements to clearly label such content as an ad.

To avoid legal problems, native advertising should be marked with a clear and conspicuous disclosure that the content is, indeed, sponsored. Marketers, of course, may prefer not to stamp the word “advertisement” in giant red lettering on top of native advertising content, so what is the acceptable disclosure practice? There are no clear answers yet. The Federal Trade Commission and other authorities are continuing to explore this area.

For now, the baseline to work with is that consumers should be able to easily discern that native advertising is, in fact, advertising content rather than editorial content. Depending on the design of the particular content, conspicuous labels such as “sponsored content” could be sufficient. In the social media context, where characters and space are limited, it may be sufficient to simply type “ad” or “sponsored” in the post, or even to include a disclosure on the Web page to which a post links. But this, like most legal things, depends on the circumstances. The FTC provides a helpful guide, called “.com Disclosures: How to Make Effective Disclosures in Digital Advertising.”

4. Endorsements

Like native advertising, proper disclosures are the key to lawful endorsements—and some endorsement rules no longer apply only to celebrities and professional athletes. They also apply to amateur bloggers, social media stars and anyone else who makes public endorsements for your products or services.

Lawful endorsements generally must meet three requirements. First, the endorsements must be truthful and not misleading. Second, if the advertiser doesn’t have proof that the endorser’s experience is typical, the ad must clearly and conspicuously disclose the generally expected results. Third, if there is a “connection” between the endorser and the brand that would affect how people view the endorsement (for example, some form of compensation, free product samples or quid pro quo), it must be disclosed.

I recommend reading the FTC’s guidelines on proper endorsement use, including the “Guides Concerning the Use of Endorsements and Testimonials in Advertising” and “The FTC’s Revised Endorsement Guides: What People are Asking.”

Needless to say, the marketing and advertising world moves fast, but advertising law’s core principles are flexible enough that they continue to guide lawful advertising in both traditional mediums like print and newer mediums like mobile and social. Today’s marketers would benefit from a working knowledge of the basics of ad law and, ideally, a clear set of guidelines to help keep the brand out of hot water while effectively engaging customers.

Michael Justus is a trademark and advertising attorney at Katten Muchin Rosenman LLP in Washington, D.C.

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