SBJ/March 31-April 6, 2014/Opinion

Understanding your counsel’s concerns with creative marketing

Sponsorship and endorsement agreements once focused on defined, quantified marketing products: specific logo placements on specific assets for a specific number of events, a specific number of personal appearances and content production days, and a specific number of tickets and hospitality events. However, as sponsors look for fresh ways to maximize their returns and engage consumers, they seem to be increasingly focused on creative marketing benefits beyond the traditional elements.

I recently worked on a creative marketing relationship intended to engage fans through interactive social media content related to a promotional sweepstakes. The platform was somewhat new to both parties, and at times the negotiation got bogged down by questions regarding the logistics of the execution, the structure of the sweepstakes, and the ownership of intellectual property used in the program. Throughout the process, it occurred to me that marketing professionals might appreciate a better understanding of some of the issues raised by creative marketing in order to ensure the smooth documentation and activation of a campaign.

Sweepstakes

The law applicable to sweepstakes is multifaceted, with compliance issues arising from numerous federal and state statutes, case law, and regulatory agencies. The starting assumption for structuring a sweepstakes is that Prize+Chance+Consideration=Illegal Lottery. One element must be removed to make it legal, and it’s unlikely that it will be the prize.

What impact could Kyrie Irving’s “Uncle Drew” series of ads have after his association with Pepsi ends?

The element of chance generally can be eliminated if there is a contest of skill with clear criteria for selecting a winner. Consideration essentially means that participation requires anything more than free and easy, and this element generally can be eliminated by offering a free alternate method of entry. Adequate disclosure is critical. In 2008, H&R Block settled with the New York state attorney general for $245,000 after claims that it had failed to adequately disclose the official rules, including alternate methods of entry, for two sweepstakes.

Apart from law, some social media platforms have their own rules and guidelines for conducting promotions. Facebook’s rules were recently softened to allow easier use of promotions, and while Twitter doesn’t impose rules, it does offer guidelines to curb behavior likely to discourage other participants. Along those lines, official rules should be written to grant the advertiser latitude on enforcement, and advertisers should closely monitor participation for suspicious activity, including the use of multiple accounts and “vote farming,” a coordinated effort to solicit votes online. In 2013, a Boston radio station had to disqualify the winner of a promotion for a meet-and-greet with Taylor Swift after a group coordinated an effort to vote for a middle-aged man who wanted to take photographs of himself smelling the singer’s hair.

Social media


Rooney’s Nike tweet ran afoul of British regulators in 2012.
Photo by: GETTY IMAGES

Ownership and control of social media content (e.g., slogans, hashtags, videos and user-generated content) can also raise concerns. Sports promotions typically result in joint branding, so the sports property, advertiser and any agencies involved should think through the ownership and allowed uses of the produced content. Who owns the content? How can they use it? And how long do those rights last (aka, “The Internet is forever”)? Viral videos like Pepsi’s “Uncle Drew” series with NBA player Kyrie Irving could appeal to viewers long after the endorsement relationship has ended, and consideration should be given to the impact of a continued association in the future.
   
There are also various Federal Trade Commission rules that may apply to social media promotions, including the Guides Concerning the Use of Endorsements and Testimonials in Advertising, which require the disclosure of
material connections and the avoidance of false claims. As to disclosure, paid endorser relationships may be apparent in some cases but may not be in others, and this rule is not limited to celebrity endorsements. Other countries have similar rules. A 2012 Nike Twitter campaign was banned by the U.K.’s Advertising Standards Authority, comparable to the FTC, because it determined that soccer player Wayne Rooney failed to clearly indicate that his tweets for the campaign were paid advertisements, despite the inclusion of a link to a Nike site at the end of the tweets. The FTC has indicated that disclosure of endorsement relations in social media, particularly Twitter, is a focus, and the use of hastags such as #paid, #ad, and #spon to disclose a paid endorsement relationship seems to be gaining prevalence.

The FTC’s loss to Steve Garvey helped lead to changes in
endorsement rules in 2009. 
Photo by: GETTY IMAGES

As for false claims, advertisers should provide guidance to endorsers regarding approved claims and claims to be avoided, particularly if the advertiser operates in a heavily regulated industry. In the early 2000s, the FTC alleged that former MLB player Steve Garvey made false claims in infomercials for a weight loss supplement. A long legal battle ended in 2004, when after a win by Garvey in the lower courts, the 9th U.S. Circuit Court of Appeals agreed that there was insufficient proof that Garvey was aware that the claims were false, in part because he had anecdotal evidence of the product’s abilities based on his own weight loss. Many feel that the FTC’s loss to Garvey, together with an appreciation of the changing methods of communicating endorsements, is what led the FTC to revise the Guides to their current form in 2009.

Reduced control

Creative activation is generally more difficult to control and can result in accidental ambush marketing or unintended brand associations. For example, Samsung was an official sponsor of this year’s Academy Awards and was reported to have paid specifically for “selfies” during the broadcast (including the infamous group selfie that reportedly broke a record for retweets), but off-camera, host Ellen DeGeneres was tweeting from her iPhone, and each tweet bore the tag “via Twitter for iPhone.”

Hopefully, keeping these issues in mind will help marketing professionals anticipate potential legal concerns as they structure marketing campaigns, keeping attorneys like myself where we belong — far away from creative marketing.

Matt Efird (MEfird@rbh.com) is a corporate attorney at Robinson, Bradshaw & Hinson, P.A. in Charlotte, with a focus on sports and entertainment law, specifically in NASCAR and other motorsports series. The 7th annual The Racing Attorney Conference in Charlotte on April 8-9 (www.racingattorneys.com) will include discussion of legal issues in creative marketing, sponsorship and other areas relating particularly to motorsports.


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