October 2013

Edith Ramirez, the new chairperson of the Federal Trade Commission (FTC), said that self-regulation can be “an important tool for consumer protection that can respond more quickly and efficiently than government regulation.”  For the advertising industry, that is certainly the case.  When advertising self-regulation was created in 1971, there were plenty of skeptics.  But today, the Advertising Self-Regulatory Council (ASRC) – which establishes the policies and procedures for advertising industry self-regulation, including the National Advertising Division (NAD), Children’s Advertising Review Unit (CARU), National Advertising Review Board (NARB), and Electronic Retailing Self-Regulation Program (ERSP) – remains critical for the industry, providing guidance on new developments and technologies, and implementing real monitoring and enforcement to preserve consumer protection standards.  This fall’s NAD Annual Conference, held in conjunction with both the CARU Annual Conference and ERSP Summit, focused on legal trends and new developments, including digital and mobile trends that are impacting self-regulation.

The Way I See It

  • I see industry self-regulation playing an extremely important role for advertisers and marketers, particularly in defining standards and encouraging transparency when it comes to critical issues including behavioral advertising, app privacy, and advertising to children.
  • In the digital age, with constantly-evolving opportunities for advertisers with new technologies and new media, self-regulation – unlike the government – is able to keep up with the swift pace of change to provide guidance, set benchmarks, and monitor for issues.
  • I see an important moment for self-regulation as it continues to develop and enforce industry best practices and standards for consumer privacy and data protection, especially through the development of apps, new smartphone and tablet capabilities, and new social networks.

The Way The Industry Sees It

I sat down with C. Lee Peeler, President and CEO of the ASRC and Executive Vice President, National Advertising, Council of Better Business Bureaus (CBBB) to discuss industry self-regulation, consumer protection, and this year’s NAD Annual Conference.  Prior to joining the ASRC, he had a 33-year career at the FTC, where he served as Associate Director of the Division of Advertising Practices and Deputy Director, Bureau of Consumer Protection.

This fall’s NAD Annual Conference focused largely on self-regulation, government enforcement, and legal issues surrounding emerging social media and digital marketing.  How critical do you think this is for the industry and how is self-regulation monitoring and addressing it?

The advertising industry has established an extraordinary record of delivering real self-regulatory programs that address the needs of both ethical competitors and consumers.  The NAD’s Annual Conference is the place where the advertising industry can both look back at what it has accomplished and look forward to the challenges facing it. And, like the advertising industry itself, the challenge for self-regulation is going digital. That’s why our first panel was “3-inch screens and 140 characters.” We were so delighted to have representatives from Foursquare, Evidon, General Electric, and LG Electronics, as well as law professor Eric Goldman, Director of the Santa Clara University School of Law High Tech Law Institute. The advertising industry has a real opportunity in the digital space to demonstrate exactly the type of leadership and commitment to high standards and impartial oversight that it has in more traditional media.

In 2012, ASRC units resolved more than 175 cases.  What have been the most prevalent issues and challenges facing the industry over the past year?

One of the great things about self-regulation is the range of issues and products it deals with.  NAD in the past year has handled cases for products as diverse as telecommunications, infant nutrition, over-the-counter medications and dietary supplements, and “green” products.  ERSP’s casework has included the review of claims for work-at-home programs, affiliate marketing companies, and dietary supplements. Our Interest Based Accountability Program released its first compliance guidance to the industry and a decision on certain Facebook exchange privacy practices.  Child-directed marketing in any form is always a flash point and it receives careful and continuous scrutiny by CARU.  Priorities in child-directed advertising include anything having to do with child-directed mobile apps or COPPA compliance. For the adult-focused programs,  the implementation of basic privacy protections for mobile devices, health-related claims, and practices in new media that blur the line between advertising and editorial content are among our priorities.

Continue Reading Understanding Industry Self-Regulation: A Conversation with C. Lee Peeler

Madison Avenue is a hotbed for creativity and innovation. The evolving nature of the digital world means new opportunities and platforms, and also means that agencies are constantly pushing the envelope to meet new client needs, develop new campaigns, and rise to new challenges from global competition, the economy, and the like. The constant change that agencies are moving with is what has propelled the creative industry forward all these years.

 The Way I See It

  • I see more agencies successfully melding creative and data to meet the needs of clients and deliver the type of advertising and marketing campaigns that build upon the new trove of consumer data to frame brands in a positive light.
  •  I see competition in all industry segments constantly growing, with new brands launching all over the world, and each agency being forced to develop creative that both trumps competition in its segment and also stands out for consumers in terms of advertising.

The Way The Industry Sees It

I sat down with Peter Krivkovich, Chairman and CEO of integrated marketing communications agency Cramer-Krasselt, to discuss the industry and the state of today’s agency.

Cramer-Krasselt’s business model is built on the idea of integration with a constantly growing range of disciplines, from creative to public relations to CRM. How do you think this notion of integration plays into your work?

Integration is a highly over-claimed word. The question is not whether everyone has access to those various disciplines – the better question is how does everyone have access to them. If they are run as separate profit centers, separate profit and loss statements (P&L) with the people heading them up having separate budgets or separate revenue-based bonuses, then it can’t possibly result in sustained unbiased contributions to a marketing solution. The former is more akin to the old corporate world conglomerates. And they didn’t work out that well – few synergies beyond a revenue pile-on. Integration plays into our work from inception. Because we are outcome – rather than output – driven, because we have no profit-center walls between people, we can have a diverse group of thinkers around the table minute one, with no discipline politics agenda biasing a solution. It’s never about simply checking boxes – it’s all about connection points that will drive results and that require multiple disciplines in constant motion and in constant sync.

For any creative firm, there is a constant pressure to show return on investment (ROI) and to harness data to drive results. How do you think data has changed the role of advertising?

Data has certainly made us smarter about the people with whom we need to connect. If we’re smarter about them we can get closer to them and be more relevant to them. And, of course, data – big or small – helps us optimize our approach in ways we never could before. We’re much more real-time now. It’s an exciting development, and really just beginning. But like integration, it’s also a terribly over-used word – and more importantly, data is a misused one.  Getting consumer information is no longer difficult, it’s prolific. Knowing which data leads to genuine actionable insights is. That’s where we concentrate our talent. Not on data compilation and output, but on what specifically will lead to an outcome for what’s next.

Continue Reading Breaking the Traditional Agency Model in Today’s Data-Driven Economy with Cramer-Krasselt’s Chairman & CEO, Peter Krivkovich

When we think about advertising law and regulation, we typically focus on Washington, D.C. and the federal regulatory agencies – for example, the FTC’s guidance, including in many industry-specific areas, the FDA’s regulation of food products and cigarettes, and the Consumer Financial Protection Bureau’s efforts of late in the financial services sector, among others.  But state Attorneys General are also very active in the enforcement of consumer protection and advertising laws and regulations, both independently within their jurisdictions and jointly through multi-state investigations and actions.  The increased presence of many advertisers in digital and social media does not have geographical borders, and state regulators can take issue with the advertising claims and methods used in these new media platforms along with more traditional ones.

State Attorneys General offices use consumer protection laws and regulations to help shape public policy and improve communications to consumers, but they are also subject to, and driven by, the partisan politics of elections and the complex webs of relationships that operate day-to-day in state governments.  This can mean national advertisers may face state regulation from a number of different angles.

The Way I See It

  • I see state Attorneys General becoming increasingly active in enforcing consumer protection laws, with increased initiatives to regulate online, mobile, and social media.
  • I see state regulators initiating investigations and taking action in response to national advertising campaigns, which have an impact on consumers within their states and which may not comply with the letter of each particular state’s unique laws and regulations.  There is a greater need than ever to carefully consider these nuances when vetting national advertising materials.
  • I see a complicated political structure in each state when it comes to interpreting regulators’ motives and actions, and a symbiosis between the actions and interests of federal regulators and their state counterparts.

The Way The Industry Sees It

I sat down with Al Shelden, Ex-Senior Assistant Attorney General of California who was in charge the state’s Consumer Law Section, to get a state regulator’s perspective on some key consumer protection issues.

As a former state regulator, how important do you think state Attorneys General are for shaping regulation of national advertisers and big brands?  How did you view national advertising campaigns during your tenure in California?

The state Attorneys General have a long history of shaping the regulation of national advertisers and big brands.  Starting in the ’80s and ’90s, the states were the first to challenge “health” advertising by cereal, fast food, and vitamin companies.  We also were the first to challenge the use of deceptive environmental claims in advertising.  The FTC and Congress followed.  Today the states are leading the way in actions against pharmaceutical companies for off label promotion of drugs.  The states’ actions and adoption of legislation against the deceptive use of sweepstakes and other product promotions also preceded federal action in these areas.  Likewise, actions brought by the Attorneys General involving improper telephonic solicitations and advertisers’ improper use of information they obtained from customers lead to the adoption of telephonic seller registration, do not call and privacy protection laws, first on a state level and then on the national level.  Since national advertising in California affects tens of million California residents, we always viewed it, and still do, as “local” advertising, meaning that any advertising which is used to obtain business from California residents must comply with California law.

What has been the historical relationship between the Federal Trade Commission and state Attorneys General?  What is the current relationship like?

Historically, the relationship has been one of benign neglect, conflict, and cooperation.  In the 1960’s, when those states that did not yet have consumer protection laws started to adopt them, a large portion looked to the FTC and the FTC Act.  During the ’60s and ’70s, the FTC and the Attorneys General “got along” but seldom regularly worked together on issues.  Starting in the early ’80s, things between the Attorneys General and the FTC became somewhat “testy” when, under Chairman James Miller III, the FTC adopted its “deception” and “unfairness” policies.  Many states thought these policies incorrectly defined FTC case law requirements for advertisers and argued they should only be viewed as the FTC’s own enforcement guidelines. Because some states’ laws tie the meaning and interpretation of their laws to FTC regulations and decisions, there was great concern.  One state, Missouri, changed its consumer law so that it was no longer tied to FTC law.  Things remained cold until Janet Steiger became FTC Chair in 1989.  She worked tirelessly to reach out to the Attorneys General and convince them that going forward the Attorneys General and the FTC needed to be trusting partners who should be working together toward the same goals.  Her term marked the true beginning of the Attorneys General and the FTC working cases jointly, sharing information and deferring to one another in the proper circumstances.  Improving relations continued under Robert Pitofsky’s tenure and while there have been periods of ebb and flow since then, things again were very harmonious during Jon Leibowitz’s term as Chair and David Vladek’s term as Head of the Bureau of Consumer Protection. There appears to be no reason to think that such cooperation will not continue during the term of Edith Ramirez as Chair.

Continue Reading The Role of State Consumer Protection Regulation and Enforcement in a National Advertising Landscape

Consumer protection in our digital age is becoming an ever more complex challenge, with technology constantly evolving and always “newer” new media emerging at lightning speeds. In recent years, online behavioral advertising has taken center stage as one of today’s most hotly-debated marketing practices. There seems to be a consensus amongst regulators that the industry, through self-regulation, should take on the challenge of establishing a transparent opt-out program for addressing privacy concerns and allowing consumers to choose not to have their data collected for future targeted ads.  However, the water gets more murky when it comes to online and mobile advertising to children.  Advertising to children is laden with issues and I’ve talked here on Madison Ave Insights about how the FTC and other regulators have taken a particular interest in children’s privacy and data security.

This year’s Children’s Advertising Review Unit (CARU) Annual Conference will discuss a number of critical issues in children’s advertising, including apps, social media, and location and other data security.  With more children online (even at school) in today’s age, how do we as advertisers ensure we are keeping kids safe?

The Way I See It

  • I see more challenges arising with new digital, mobile, and social media to address privacy and data security concerns through self-regulation, especially when it comes to children.  With new technologies emerging, the advertising industry is forced to adopt new standards to meet the issues for regulators and consumers.
  • A lot of progress has been made in recent years to address privacy and data security challenges raised by new technology and social media, including the CBBB’s self-regulatory guidelines that implemented the Ad Choices program to allow consumers to opt out of targeted online advertising.
  • I see an increasing commitment from the advertising industry to self-regulate when it comes to children’s issues, as well as new online and mobile platforms, which is a strong signal that the industry will meet calls from regulators to enforce privacy and data issues.

The Way The Industry Sees It

I sat down with Genie Barton, Vice President and Director, Online Interest-Based Advertising Accountability Program and Mobile Marketing Initiatives at the Council of Better Business Bureaus (CBBB), to discuss the effectiveness and challenges of online behavioral advertising (OBA), especially for children.

Online behavioral advertising (OBA) has been under the microscope in recent years with regulators and consumers.  How have you worked to address these issues and what do you expect to improve with OBA moving forward?

Regulators and privacy advocacy groups have varying degrees of concern about the collection and use of data to provide consumers with advertising that is based on their previous browsing activities across websites and time.  In addition, some consumers also have concerns, but there is a high degree of debate regarding consumer preferences. Some studies show significant concern, while others show that in real life scenarios, consumers prefer ads that are relevant over ads that are random.  But what I think we can all agree on is that the two largest areas of concern for regulators, privacy advocates and consumers stem from the largely “invisible” nature of online interest-based advertising.  The industry responded to those concerns, as expressed by the Federal Trade Commission in a staff report providing guidance on how to implement self-regulatory principles governing OBA, by creating consensus principles that provide the transparency and control that were missing.  I like to say that the DAA Principles took the mystery and potential “creepiness” out of interest-based advertising by providing real-time notice and a direct link to an easy-to-use opt-out. These innovations—the sideways blue triangle known as the AdChoices Option Icon, which appears in all interest-based ads, and takes the consumer to an explanation of OBA and a link to a choice mechanism—shine a light for consumers on interest-based ads.

How do you navigate the complexity of and constant changes in online and mobile advertising?  Any tips for advertisers?

I navigate this ecosystem with a lot of help from my friends and fabulous staff, and by constant reading and discussions with people in the industry. Just when I think I have a handle on something, there is another innovation. But that is what makes the job fun and keeps it fresh.  I would advise advertisers to make privacy a positive differentiator for their brand. To do this successfully, the advertiser has to be extremely careful with what companies it engages to guide it on developing an ad campaign. Be sure to deal with an agency and all others in the ecosystem that follow (and ensure that you will be following) the highest industry standards. While an OBA campaign can be the most effective way of reaching the right customer, doing it without the transparency and control provided by the DAA program can actually damage the brand and its relationship with its customers. A recent study showed that consumers prefer to do business with companies that engage with their customers on privacy issues. The study also showed that consumers click on ads with the icon more readily than on ads without it.  So providing consumers with transparency and choice is a positive for the bottom line.

Continue Reading CARU Annual Conference: Online Behavioral Advertising & Industry Self-Regulation for Marketing to Children