RECENT DEVELOPMENTS IN DIGITAL MEDIA ADVERTISING LAW: Death of the Banner Ad
- Presented by Steve Combs at the 29th Annual Technology Law Institute in October 2014
- The presentation outline is below. You can also download the article.
The landscape of digital media advertising continues to evolve with rapidly changing devices, ad technologies, consumer behavior, and business strategies. The laws governing such developments remain but must also adapt. Commercial laws govern the transactions between parties who buy, sell, optimize and measure ads. Laws and self-regulatory frameworks are necessary to protect consumers and provide confidence to all stakeholders. This paper summarizes current developments in digital media advertising and the legal implications.
What is Digital Media Advertising?
- Using websites, mobile applications, and other online services to deliver promotional marketing messages to consumers.
- Email marketing
- Text message marketing
- Search engine marketing (SEM)
- Social media marketing
- Display advertising/web banners
- Video advertising
- Mobile advertising
- Native advertising
- (Emphasis on newest categories)
Digital Media Advertising Industry
- Digital media advertising remains strong with global revenue reaching $116 billion for 2013, a 16% annual increase.
- Mobile advertising currently comprises 11% of global ad revenue dollars with a 47% increase.
- The number of global Internet users is still increasing albeit at a slower rate of less than 10%.
- Most importantly, the manner in which users are accessing content is increasing significantly: Smartphones (+20%), Tablets (+52%) , Mobile Data Traffic (+81%)
- Source: Internet Trends 2014 – Code Conference May 28, 2014) (http://www.kpcb.com/internet-trends)
Who are the Parties?
- Various parties are involved in the delivery of digital media advertising to consumers.
- Media Companies/Publishers who integrate advertisements into its online content
- Advertisers who provide the advertisements to be displayed on the publisher’s content
- Advertising Agencies who help generate and place the ad copy
- Ad Servers and Other Technology Providers who use technology to deliver and track the ads
Interactive Advertising Bureau (IAB) Guidelines
- Ad Standards & Creative Guidelines
- Ad Verification
- Digital Video
- Email & Lead Generation
- Games Advertising
- Interactive Television
- Local Search Whitepaper
- Measurement Guidelines
- (Emphasis on newest categories)
- Online Ad Effectiveness Best Practices
- Online Traffic Fraud
- Operational Efficiency Best Practices
- Platform Overviews: Status Reports on Emerging Platforms
- Quality Assurance Guidelines Initiative
- Real-Time Bidding
- Terms & Conditions
- More info at http://www.iab.net/guidelines
V3.0 and V2.0 of the IAB/4A Terms
Significant portions of the following sections were updated in 2009 for Version 3.0
Section XII: Non-disclosure, Data Usage and Ownership, Privacy and Laws: Entirely new data usage language has been developed for Media Companies, Agencies, and Advertisers – this is the section where the most new material has been added so pay close attention.
Section II: Ad Placement and Positioning: Standard editorial adjacency language has been developed to handle most Advertisers’ concerns and specific language regarding UGC site/page requirements has been added.
Section III: Payment and Payment Liability: Among other things, invoicing requirements have been changed and proof of performance is no longer required unless explicitly requested.
Section V: Cancellation and Termination: Cancellation terms have been rewritten to include different cancellation periods for different types of inventory and services (guaranteed, performance, pre-launch development costs, etc).
Section IX: Ad Materials: The late creative policy has been updated to something that will hopefully be easier for Media Companies and Agencies to voluntarily agree to.
Section X: Indemnification: Indemnification language has been reorganized and updated.
Section XIII: Third Party Ad Serving and Tracking: Third party ad serving, tracking, and billing language outlines conditions in which, if satisfied, Agency third-party numbers can be used by default for billing
A Definitions section has been added at the front of document.
The IAB published an Education Guide is available to explain the key provisions. (http://www.iab.net/media/file/IAB_AAAAs_v_3_0_Education_20091215_FINAL.pdf)
Insertion Orders and Addenda: Insertion Orders and Addenda can fundamentally alter a deal including with respect to payment terms, cancellation rights, and adherence to additional privacy standards.
- As consumers consume content in more varied ways, native advertising is becoming an increasingly important category .
- Online advertising method in which the advertiser attempts to gain attention by providing content in the context of the user’s experience.
- Formats match both the form and function of the user experience in which they are placed.
- Intent is to make the paid advertising feel less intrusive and thus increase the likelihood users will click on it.
Native Advertising Units
- The IAB identifies six types of native advertising units
- In-Feed Units (e.g., Facebook “Sponsored Posts” in your Feed
- Paid Search Units (e.g., Google “Sponsored Ads)
- Recommendation Widgets (e.g., Outbrain “From Around The Web”)
- Promoted Listings (e.g., Amazon “Ads from External Websites”)
- In-Ad With Native Element Units (EA “Game Units”)
- Custom/Can’t Be Contained (e.g., Pandora)
Online Behavioral Advertising
- What is Online Behavioral Advertising?
- Online behavioral advertising means the tracking of a consumer’s online activities over time − including the searches the consumer has conducted, the web pages visited, and the content viewed − in order to deliver advertising targeted to the individual consumer’s interests. (http://www.ftc.gov/reports/federal-trade-commission-staff-report-self-regulatory-principles-online-behavioral)
- “Online behavioral advertising” is also sometimes called “interest-based advertising.“
- Behavior is tracked and data collected by the cookies, pixels, or other technology using a consumer’s browser or mobile device.
- Online behavioral advertising is NOT
–First-party advertising-where no data is shared with third parties
–Contextual advertising-where advertisements are based on a single visit or search query
–First-party data collection and analysis-for website optimization/analytics
FTC Guidance on Online Behavioral Advertising
- There is no federal law governing online behavioral advertising. The FTC has issued staff reports and guidance which are summarized below.
- FTC’s Self-Regulatory Principles for Online Behavioral Advertising
- In February 2009. The FTC released Self-Regulatory Principles for Online Behavioral Advertising (www.ftc.gov/reports/federal-trade-commission-staff-report-self-regulatory-principles-online-behavioral). The 2009 FTC Report set forth key principles of online behavioral advertising: transparency, consumer control and consent.
- FTC’s Mobile Privacy Disclosures: Building Trust Through Transparency
- In February 2012, the FTC issued Mobile Privacy Disclosures: Building Trust Through Transparency http://www.ftc.gov/reports/mobile-privacy-disclosures-building-trust-through-transparency-federal-trade-commission). The 2012 FTC Report called for notice, choice and more transparency for the mobile environment.
- FTC’s Protecting Consumer Privacy in an Era of Rapid Change, Recommendations for Businesses and Policymakers
- In March 2012, the FTC issued Protecting Consumer Privacy in an Era of Rapid Change, Recommendations for Businesses and Policymakers (http://www.ftc.gov/reports/protecting-consumer-privacy-era-rapid-change-recommendations-businesses-policymakers). The 2012 FTC Report (based on prior 2010 preliminary report) details a framework for privacy by design, simplified choice, greater transparency, and a Do Not Track mechanism. The FTC also describes using “just-in-time” disclosures for space-constrained mobile devices at the time of download or at collection or transmission of data.
Industry Self-Regulatory Frameworks for OBA
- In response to FTC guidance on online behavioral advertising, various trade groups issued their own principles and frameworks
- Digital Advertising Alliance (DAA) Self-Regulatory Principles for Online Behavioral Advertising
- In July 2009, the DAA, a network of media companies and marketing trade associations released its own Self-Regulatory Principles for Online Behavioral Advertising having the same name as the 2009 FTC Report (http://www.aboutads.info/obaprinciples).
- The Material Changes Principle calls for obtaining consumer consent before a Material Change is made to an entity’s Online Behavioral Advertising data collection and use policies unless that change will result in less collection or use of data.
- The Sensitive Data Principle recognizes that data collected from children and used for online behavioral advertising merits heightened protection, and requires parental consent for behavioral advertising to consumers known to be under 13 on child-directed Web sites. This Principle also provides heightened protections to certain health and financial data when attributable to a specific individual.
DAA Implementation Guide
- In October 2010, the DAA published an Implementation Guide as its self regulatory program.
- The DAA Program corresponds to the FTC guidance and recommendations in the 2009 FTC Staff Report. (http://www.aboutads.info/resources)
- The Blue Pointy Icon
- What’s the blue pointy thing that’s all over the Internet?
- The DAA Program introduces the “Advertising Option” icon along with the approved words: ‘Why did I get this ad?’, ‘Interest Based Ads‘, or ‘Ad Choices‘. The icon indicates that indicates that the advertising is covered by the self regulatory program, and by clicking on it consumers will be able to link to a clear disclosure statement regarding the data collection and use practices associated with the ad, as well as an easy-to-use opt-out mechanism.
Other DAA Principles
- DAA’s Self-Regulatory Principles for Multi-Site Data
- In November 2011, the DAA published the Self-Regulatory Principles for Multi-Site Data (http://www.aboutads.info/msdprinciples) to standards governing the collection and use of data collected from a particular computer or device regarding Web viewing over time and across non-affiliated Websites.
- DAA’s Application of Self-Regulatory Principles to the Mobile Environment
- In July 2013, the DAA published Application of Self-Regulatory Principles to the Mobile Environment (http://www.aboutads.info/principles) to provide guidance on collection and use of data in the mobile Web site and application environment as it relates to the DAA OBA Principles and the Multi Site Data.
- The online home of the DAA’s Self-Regulatory Program for Online Behavioral Advertising is at http://www.aboutads.info.
Network Advertisers Initiative (NAI)
- NAI members include ad networks, exchanges, platforms, creative optimization firms, yield optimization firms, sharing utilities and other technology providers.
- Network Advertisers Initiative (NAI) Code of Conduct, a set of self-regulatory principles for collection and use of data for interest-based advertising.
- In 2013, the Network Advertising Initiative (http://www.networkadvertising.org) published a new version of the NAI Code of Conduct (http://www.networkadvertising.org/code-enforcement/code).
- The 2013 Code updates are directed at the more complex online advertising eco system, technology updates, and regulatory changes such as enhanced notice requirements.
- The Code requires (i) transparency and notice, including an opt-mechanism to disallow interest based advertising; (ii) user control including with respect to merging data; collection of geolocation data; and use of financial, health, and other sensitive data; (iii) use limitation, such as employment, credit, healthcare, and insurance eligibility information; (iv) transfer restrictions with respect to personal data and merging data; and (v) data access for users, quality systems, and security of data.
- NAI members must meet various requirements in addition, to the opt-out mechanism,
- The application and enforcement of the NAI self-regulatory principles across mobile devices (including mobile web browsers and mobile applications) are scheduled to begin in 2015. The NAI Mobile Application Code is limited to “cross app” advertising and review process.
- The NAI opt out tool is hosted at http://www.networkadvertising.org/choices/ for purposes of allowing consumers to “opt out” of the interest-based advertising delivered by NAI members.
Other Digital Media Advertising Laws
- FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising
- The FTC revised its Endorsement Guides in October 2009 to keep them up-to-date with current marketing techniques, such as blogging and word-of-mouth advertising. Marketers who are compensated to promote or review a product should disclose it. (http://www.ftc.gov/policy/federal-register-notices/guides-concerning-use-endorsements-and-testimonials-advertising-16 )
California Do Not Track Law
- Effective January 1, 2013, the California’s Online Privacy Protection Act (CalOPPA) (http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB370 ) requires operators of websites, mobile applications, and online services that collect personally identifiable information about consumers to disclosed their “do not track” policies and procedures. The new law does not require the operators to honor do not track requests, but it requires operators to inform consumers if they disclose consumer data to third parties.
- The responses to California’s Do Not Track Law fall into the following categories:
–Parties who follow the Do Not Track browser signal. See Twitter.com and others at http://donottrack.us/implementations
–Parties who do not follow the Do Not Track signal because does they do not track users over time and across third party websites to provide targeted advertising. See Apple’s California Do Not Track Notice at http://www.apple.com/legal/privacy/california-dnt/
–Parties who do not have specific “Do Not Track” language in their privacy policies. As of a May 2014, a survey of Top 100 Websites indicates 67 websites did not have “Do Not Track” language in their privacy policies.
–See Athena Privacy California Online Privacy Protection Act–Do Not Track Survey at http://www.athenaprivacy.com/cookiesandcookieaudits/caloppadntsurvey.html
- The law includes penalties of up to $2,500 per violation which for apps could be measured in app downloads. However, a violation of the law occurs, “only if the operator fails to post its policy within 30 days after being notified of noncompliance.”
FTC Dot Com Disclosures
- In March 2013, the Federal Trade Commission updated its staff guidance known as the “Dot Com Disclosures.” (http://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-staff-revises-online-advertising-disclosure-guidelines/130312dotcomdisclosures.pdf ) The Commission originally issued such guidance in 2000 to explain how to make online disclosures clear and conspicuous and avoid deception. The 2013 guidance addresses new issues related to smartphones and social media marketing.
- The 2000 guidelines defined proximity as “near, and when possible, on the same screen” (i.e., no scrolling required). The 2013 guidance indicates disclosures should be “as close as possible” to the relevant claim recognizing that smaller screens on mobile devices and in social media may require other approaches. The new guidance provides examples disclosures to assist advertisers in these new areas.
Search Engine Guidance
- On June 25, 2013, the Commission sent letters to search engines with updated guidance emphasizes the need for visual cues, labels, or other techniques to effectively identify advertisements in search engine results. (http://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-consumer-protection-staff-updates-agencys-guidance-search-engine-industryon-need-distinguish/130625searchenginegeneralletter.pdf) Such guidance was issued in response to concerns that paid search results were becoming increasingly less distinguishable as advertising.
- The Federal Trade Commission had previously issued guidance to search engines on distinguishing paid search results and other forms of advertising from natural search results. http://www.ftc.gov/enforcement/cases-proceedings/closing-letters/commercial-alert-response-letter).
- The letters acknowledge that “social media, mobile apps, voice assistants on mobile devices, and specialized search results that are integrated into general search results offer consumers new ways of getting information.” The letters advise that such forms of advertising must still be clearly distinguishable from natural search results.
FDA Social Media Guidance
- In June 2014, the Food and Drug Administration published draft social media guidelines for pharmaceutical companies and medical device manufacturers. The FDA issued two documents for public comment:
- Internet/Social Media Platforms with Character Space Limitations—Presenting Risk and Benefit Information for Prescription Drugs and Medical Devices
- Internet/Social Media Platforms: Correcting Independent Third-Party Misinformation About Prescription Drugs and Medical Devices
- Available at http://www.fda.gov/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/CDER/ucm397791.htm
- The guidance emphasizes that despite limited space, risk information must be adequately disclosed to consumers. Sample tweet for a fictional drug NoFocus: “NoFocus for mild to moderate memory loss – may cause seizures in patients with a seizure disorder www.nofocus.com/risk.”
- The FDA draft guidance clarifies FDA’s policies on the correction of misinformation created or disseminated by independent third parties on the Internet or through social media platforms.
- Steve Combs