Australia: Minimising Risks When Marketing Through Social Media

Last Updated: 15 May 2013
Article by J. Michael Keyes and Anna Trist

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

According to a recent study conducted by The Nelsen Company, use of smart phones increased more than 400% during the last four years. In the same time period, the number of Facebook accounts swelled by more than 900%, and the number of Twitter accounts exploded by more than 29,000%. 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 possesses endless possibilities for a myriad of businesses, 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 should consider before you set out on your journey for social media prominence.

  1. Register trademarks

Registering your company's trademarks (brands, logos, tag lines) as early as possible has always been important. Registration takes on increased importance in the context of social media promotions given the vast reaches of this media.

The filing and registration fees for trademarks are low, and the application process is relatively straightforward (through IP Australia). K&L Gates can assist clients with the trade mark registration process. File early and often.

  1. 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. The Australian Competition & Consumer Commission (ACCC), Consumer Affair Offices and Offices of Fair Trading 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. Click here for more information on what the ACCC expect of advertising campaigns.

  1. Endorsement 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. Where products are being offered to American consumers, there are 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 favourable; that is likely to be 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 which will attract American customers, you will need to review the Federal Trade Commission's (FTC) Guides Concerning the Use of Endorsements and Testimonials in Advertising. The guides are easy to understand and contain useful examples as to what you can and cannot do when using endorsements and testimonials in your social media ad campaign. There is not yet an equivalent guide that applies in Australia.

  1. 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.

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.

  1. 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.

  1. 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 will then be used in various advertising endeavours.

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.

  1. Contests and promotions

Be careful of offering competitions or contests through social networks, especially if you are offering a cash prize to the winner. Each state and territory in Australia has specific laws that apply to such competitions.

  1. 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 best that the terms of the campaign should be clearly and prominently disclosed, the marketing material should include the amount to be donated to the charity per action, the name of the charity, the dates of the campaign and any minimum or maximum amount to be donated.

  1. Great to be "green"

Developing and selling ecologically friendly services and products is on the rise. It is important that any "green" claims are not misleading or deceptive. Click here for more information on Green claims, which are discussed by the ACCC in detail in a speech given last year.

  1. Employees and social media

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, 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.

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.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

K&L Gates has been awarded a 2012 EOWA Employer of Choice for Women citation acknowledging our commitment to workplace diversity.

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