Marketing in the 21st century encompasses a variety of printed marketing materials, online websites, blogs, case studies, text marketing, digital advertising, social media, and other digital, print and audiovisual materials. Its purpose includes providing information to current and potential customers, investors, and the public about your company, its vision, its goals, and its products/services; demonstrating thought leadership; building goodwill, credibility and trust with your target markets; and driving interest in your company and its offerings. It is a critical channel for generating new customers/clients, new revenue, and new value for investors and shareholders. Companies have a natural propensity to tout themselves and their products in the best possible light in their marketing, accentuating the positive and eliminating the negative. However, there are a number of common mistakes companies make in their marketing that inadvertently land them in hot water.
Think of the execution of your marketing strategies as walking a path on a mountain ridge. To the left are the legal and regulatory pitfalls. These include deceptive, unfair or unlawful advertising practices under federal and state law; native advertising issues; false advertising, trademark, and unfair competition claims by competitors; and the like. To the right are the contractual and customer relationship pitfalls. These include claims for fraudulent inducement to contract or material misrepresentation in your marketing materials, and clients/customers asserting a right to rescind their contract or commence legal proceedings against you, affecting your company’s revenue and reputation.
There are ways to navigate this path safely. Here are 7 key tips to help stay on the path to happy clients/customers and increased revenue.
1) Be transparent, truthful, and clear.
The easiest way for a company to get into trouble over its marketing practices is to be untruthful, unclear and/or misleading. The FTC and state attorneys general rely heavily on federal and state laws prohibiting deceptive and unfair trade practices as their “multi-tool” for cracking down on companies for marketing violations. According to the FTC, an act or practice is considered “deceptive” if it contains a material misrepresentation or an omission of information that is likely to mislead a reasonable customer.
To avoid transparency issues, make sure your marketing collateral and messaging includes all material facts and disclosures that a reasonable person would expect to see. For example, there are disclosures required under federal and state laws around “negative options” such as an auto-renewing subscription offer; there are opt-out and other disclosures needed for certain commercial email messages; if there are dependencies for your call to action (e.g., you must purchase a support package if you purchase a license to your company’s software), disclose them.
To avoid truthfulness issues, verify or qualify any facts or assertions you are using in your marketing. Keep a folder with documentation backing up your marketing facts and assertions. If you don’t have or can’t find the supporting facts, consider adding qualifications to your marketing statement.
To avoid clarity issues, marketing should be well-organized and well-formatted, written in short sentences with simple words and an appropriate level of detail, so that the information you are trying to convey is easily understood. Write from the perspective of the reader – is your marketing message(s) clear to someone who does not know much (if anything) about your company and its products/services?
2) Ensure your marketing meets design and functionality requirements.
One of the biggest mistakes companies make is assuming they know how their target audience will respond to their marketing, or worse, not thinking about it in advance at all. Proactive testing of marketing strategies before launch has parallels to performing user acceptance testing (UAT) in the software world. UAT is the process by which a deliverable is tested by actual or simulated users to validate that the deliverable meets its design and functionality requirements. Just like software UAT, before releasing marketing collateral and messaging it is important to validate that (a) it includes all important details, meets all legal requirements, and contains all legally required disclosures (the “design requirements” equivalent), and (b) it clearly and effectively delivers the marketing message such as a value proposition and/or call to action to its intended audience, and generates the target return on investment (ROI) or return on ad spend (ROAS) (i.e., “functionality requirements” equivalent). Investing time and energy to test your marketing, and incorporating feedback to ensure it meets its design and functionality requirements, will help it deliver the best possible ROI/ROAS.
3) Be careful using images of people or copyrighted works of others.
It’s often easy to grab a picture from Google Images or other online websites for use in marketing and social media. But remember, just because something is available online does not mean it is in the public domain, free to use. Even if you were not the person who originally posted a picture or other copyrighted content online, you could be liable for your use of it. (Even if you have an “innocent infringer” defense, you may still have to prove that in court, costing you and your company time and money.) Consider acquiring images for marketing use from a reputable stock photo company such as Getty Images, and ensure people whose images you capture for marketing use have given you a signed release and right to use the image. In general, you can’t use someone’s name or likeness to state or imply they are endorsing or promoting a product without their permission. Also, remember that images you use should not imply endorsement of your company’s products or services by a person without that person’s consent. Duane Reade, a drugstore chain, learned this lesson the hard way recently when they were sued by Katherine Heigl for $6 million after they used an image of her in a tweet without her permission.
4) Avoid unsubstantiated superlatives and figures.
Companies sometimes fall off the marketing path by using superlatives and figures that they can’t substantiate. One of the bedrocks of FTC policy is the FTC Policy Statement Regarding Advertising Substantiation. Under this policy, objective product/service claims “represent explicitly or by implication that the advertiser has a reasonable basis supporting these claims.” A “reasonable basis” depends on factors including the product which is the subject of the claim, the type of advertising claim, the consequences of a false claim, and the benefits of a truthful claim. Failing to have support for your claims is a deceptive and unfair trade practice under §5 of the FTC Act. Watch out for figures and superlatives such as “the best,” “the quickest,” etc. Make sure you have a reasonable basis for your superlative and data to back up your figures. For superlatives you cannot back up with documented facts (e.g., “a leading” vs. “the leading”), consider whether a comparative would work better (e.g., “easier” vs. “easy”, “more cost-effectively” vs. “cost-effectively,” etc.) As noted earlier, if a specific number is cited, ensure you have documentation for that specific number. If not, qualify it or generalize it (e.g., “approximately X,” “more than Y,” “less than Z,” “A to B”).
5) Avoid quoting quotes.
Just like images, it can be easy to find great quotes, facts and figures through an Internet search. If you are under a deadline or have a limited marketing budget, it might be tempting to find an article which cited the study and then cite to that article. However, beware of “quoting the quoter.” Quotes and cited facts/figures should be substantiated by the source material, not an article quoting the source material. If you quote a quote and not the source material, you run the risk that the author of the quote changed or misquoted the source material in their article. For example, suppose you’re looking for a statistic that at least half of participants in a study believe that the demand for products in your market segment will double in the next two years. You find and quote an online article citing research that 50% of respondents stated exactly that. What you didn’t know is that the number is really 46%, and the author of the article you cited decided to round up to 50%. This inaccurate quote could cause significant headaches if the inaccuracy proves material to your marketing message or value proposition.
6) Tread carefully when using product endorsers and native advertising.
Native advertising, as defined by the FTC, is “content that bears a similarity to the news, feature articles, product reviews, entertainment and other material that surrounds it online.” For example, a featured article on a website that looks like an objective article, but is in fact an advertisement for a product or service written by or for the product or service provider, is native advertising. Native advertising uses the appearance of authenticity to drive interest in a product or service. This is also its Achilles’ heel. If it is too difficult to distinguish native advertising from surrounding content, it may be considered deceptive; the FTC looks at the “net impression [an] ad conveys to consumers” in determining deceptiveness. If an ad misleads a consumer by stating or implying that it’s not advertising, it’s likely deceptive. Native advertising must be accompanied by clear and prominent disclosures as to the source and/or sponsorship of the advertising to avoid misleading consumers, such as “paid content” or “advertisement” or “sponsored” disclaimers next to native advertising content or links. The FTC’s Native Advertising Guide for Business contains clear guidance on how to avoid running afoul of native advertising traps.
Similar issues have arisen with respect to “product endorsers,” people who endorse a product, brand or company. While paid celebrity endorsements (think Michael Jordan for Nike and Hanes, William Shatner for Priceline) are clearly paid to do so, companies also use employees, and non-employees such as bloggers and online personalities, to promote and drive interest in their products. Companies also run contests and sweepstakes through social media to drive awareness and increase buzz for their products. But content posted by employee brand ambassadors, compensated non-employee endorsers, and participants in a promotion who fail to identify their content as sponsored or paid may be deceptive and misleading in the eyes of the FTC (as Cole Haan discovered when they ran a Pinterest campaign to drive interest in their Wandering Sole product) and state attorneys general. The FTC stated that a “material connection” between a marketer and an endorser must be disclosed “if the relationship is not otherwise apparent from the context of the communication that contains the endorsement.”
7) Avoid statements that are forward-looking or may trigger a Regulation FD disclosure requirement.
Finally, if you work for a public company, SEC laws and regulations impose additional restrictions on what you can and cannot say in your marketing communications. Watch out for “forward-looking statements,” statements of potential or projected future events as expectations or possibilities. Saying “we plan on adding a European office in 2019” or “we expect to double our manufacturing capacity in the next six months” are likely forward-looking statements. Forward looking statements can lead to securities litigation unless accompanied by cautionary language required by the statutory “safe harbor” for forward-looking statements by public companies. Additionally, it’s important to ensure any targeted marketing or social media posts do not inadvertently selectively disclose material, non-public information about your publicly-traded company, which is prohibited by SEC Regulation FD (Fair Disclosure). For example, if an employee posts a picture while on-site at a prospective major new client, and the client’s identity can be determined by a logo in the background the employee did not see, the potential relationship inadvertently disclosed by the social media post may trigger the need for a Regulation FD disclosure.
Eric Lambert is Assistant General Counsel and Privacy Officer at CommerceHub, a leading cloud services provider helping retailers and brands increase sales and delight shoppers by expanding product assortment, promoting and selling products on the channels that perform, and enabling rapid, on-time customer delivery. Any opinions in this post are his own. This post does not constitute, nor should it be construed as, legal advice. Eric works primarily from his home office outside of Minneapolis, Minnesota. He is a technophile and Internet evangelist/enthusiast. In his spare time, Eric dabbles in voice-over work and implementing and integrating connected home technologies.