CMP.LY - FTC .Com Disclosures Executive Summary

How the Updated FTC .Com Disclosures Affect

Social, Mobile & Digital Advertising  

EXECUTIVE SUMMARY Note: for complete white paper please visit www.cmp.ly/dcdreport

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About CMP.LY CMP.LY offers the only purpose-built social media disclosure solution. For more than three years, CMP.LY has worked with leading brands and agencies to address disclosure challenges and demonstrate best practices. For more information about CMP.LY solutions, and to stay abreast of industry updates, please visit www.cmp.ly. Legal Disclaimer This document is not intended to provide legal advice and you should seek the advice of counsel to discuss specific application of disclosure solutions to your unique circumstances. How the Updated FTC .Com Disclosures Affect Social, Mobile and Digital Advertising On March 12, 2013, the FTC released a report to address issues presented for disclosures in social, mobile and other digital channels. The .Com Disclosures report provides updated guidance—the previous report was issued in 2000—and adds further clarification to the FTC’s 2009 Guide to Endorsements and Testimonials. Like the original, the updated report emphasizes that consumer protection laws apply equally to marketers across all mediums, whether delivered on a desktop computer, a mobile device or more traditional media such as television, radio or print. Technological restrictions on space, the design of certain social media tools or the size of a given advertisement in a small screen or window do not exempt advertisers from making required disclosures and notices on the platforms such as Twitter, Facebook, Pinterest, etc., or on mobile phones, smartphones, tablets and other communications devices. Best Practices for Disclosure There are a few key considerations that we at CMP.LY feel are fundamental to developing and establishing best practices, including:

• Ensuring the delivery of notice and/or disclosures, as well as a good user experience • Providing consumers with access to all relevant information • Ensuring programs can be reasonably monitored for both the inclusion and omission of

disclosures • Streamlining and standardization of disclosure methods • Using clear, attention-getting labels and plain language • Educating the marketplace with regard to the importance and meaning of disclosures

Note: for complete white paper please visit www.cmp.ly/dcdreport

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The Top Things You Need to Know about Disclosure 1. Disclosure Standard The FTC has drawn a hard line and it’s time for companies to get serious about disclosures. The overall rules are largely unchanged, but now they’ve been put in context for the modern marketing landscape, including social and mobile. 2. Say What You Mean Marketers can no longer rely on hacks and ad-hoc solutions—such as generic links and vague hashtags like #SPON—to make disclosures. Disclosures need to be written in clear, plain language that consumers can easily understand and placed as close as possible to the claim. 3. Space Constraints If a disclosure is required for a space-constrained ad—such as a tweet or status update—it should be made each time the ad is posted. Don’t assume that consumers will see your posts in sequential order. If the disclosure doesn’t fit, the FTC says the ad should be changed to include the disclosure or the platform should not be used. 4. Hyperlinks – Dos and Don’ts Disclosures should not be buried behind a hyperlink when they can be written out in context. In situations where a hyperlink is unavoidable (such as space-constrained formats like Facebook and Twitter), it should be labeled as clearly as possible and used in such a way as to maximize the chance that the consumer will actually click through to the full disclosure information. 5. Design Factors Disclosures must be responsive and account for device limitations such as screen size and technology constraints such as the fact that mouseovers, pop-ups and PDFs that may not function as intended in all display environments. 6. Other Considerations Disclosures must be accessible from any device or platform (across all mediums) that a consumer may use to view a marketer’s ad. Don’t forget that there are also other use cases (e.g. contests and promotions), requirements (e.g. reasonable monitoring) and challenges (e.g. cross-platform syndication) that must be taken into consideration when disclosing important legal information via digital platforms. Note: for complete white paper please visit www.cmp.ly/dcdreport

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What Has Changed? In many ways, nothing has changed regarding the requirements for disclosure. However, the FTC has offered up much clearer guidance as to how these requirements apply to the inclusion of disclosures in digital marketing channels, giving particular consideration to social and mobile channels that have emerged since the original report. As before, required disclosures must be “clear and conspicuous” and the report goes as far as saying that “if a particular platform does not provide an opportunity to make clear and conspicuous disclosures, then that platform should not be used to disseminate advertisements that require disclosures.” Disclosures must also be unavoidable, in close proximity to the claim that requires disclosure, give context to the message and function as intended across all formats. Furthermore, when hyperlinks are the most effective way to deliver disclosure information (such as in space-constrained environments), they should be “obvious” and explicitly labeled in language that clearly conveys information about the content on the linked page. What Does this Mean for Marketers?  Marketers selling and promoting goods online should review current practices to ensure that the placement and prominence of required disclosures are sufficient. The FTC also now requires that marketers take into account mobile-specific factors, such as responsive website design, screen resolution and device limitations. For marketers promoting or marketing in social and mobile channels, the changes are more pronounced. Some ad-hoc disclosure methods were specifically called into question—in particular the use of #SPON, generic link shorteners and including disclosure information in preceding or subsequent messages. Clear and prominent disclosures that provide unavoidable context must be used in the body of the message moving forward. Marketers need to review and update their social media policies to reflect these guidelines. Note that brands and agencies should have a conversation to ensure that policies and practices are aligned—doing so can avoid further inquiry and costly investigation by regulators. Don’t forget that under the FTC’s Guide for Testimonials and Endorsements reasonable monitoring of disclosures is also required. This requirement goes beyond mere social listening and includes monitoring known third parties for the omission of required disclosures as well as the inclusion of false, misleading or unsubstantiated claims. Marketers should not avoid programs simply because of compliance requirements; process and automation solutions do not need to be onerous or restrictive. With some foresight and planning, programs can be structured, managed and even measured more effectively as a result of applying best practices.

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How CMP.LY Addresses these Challenges CMP.LY is the one commercial solution purpose-built to help marketers and businesses address disclosures and compliance challenges in social media networks such as Twitter and Facebook. Our patent-pending technology helps businesses and individuals alike meet their legal obligations while increasing openness and transparency on the social web. We created the CMP.LY Standard Disclosure Framework to provide marketers and legal stakeholders a simple, documented, and effective way to address required disclosures and applicable monitoring requirements across all social and digital channels, and at scale. Designed with both consumer and business needs in mind, our solutions address the need to communicate with consumers in plain English and in space-constrained environments while still delivering the often lengthy and nuanced disclosure content required of businesses. The CMP.LY approach utilizes a standardized system of layered notices to provide the most effective method of delivering disclosures and important information to consumers in social and digital channels. You can use any of our disclosure URLs to link directly to a detailed disclosure page providing the full legal language or, instead, to a page of content (such as an article or a video), which will then be framed with a summary of your disclosure—from which the reader can then view the full disclosure page. With tweet-friendly character counts, our Plain Language disclosures provide notice of disclosures, disclaimers, warnings and other fine print in simple, recognizable words. These URLs provide clear notice to the reader that they link to important legal information, without distracting from the message content or taking up too many characters. Key Aspects and Benefits of Using CMP.LY’S Disclosure Solutions

• Simple Disclosure Standard: The value of consistency to the consumer is underscored in the .Com Disclosures report. Broad use of the CMP.LY disclosure framework can contribute greatly to the collective consumer experience.

• Structured Disclosure Method: Our solution ensures businesses can implement consistent disclosure policies and methods across their organizations, communications, campaigns and channels.

• Clear and Conspicuous: With CMP.LY you can use plain and understandable language to communicate disclosure information.

• Robust and Flexible Framework: We make it easy to address a broad range of disclosure and compliance needs. With CMP.LY’s solutions, businesses can chose from a broad range of notice and display options that can be used to present disclosures clearly within the text of a message, in proximity to a claim and even at the top of a webpage.

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• Universal Accessibility: Our disclosure framework is optimized for use across platforms as well as mobile screens and operating environments, ensuring your disclosures are not compromised by technology add-ons or other limitations.

• The Power of Layered Notices: CMP.LY was designed to address disclosure needs in space-constrained environments. Our framework provides the ability to combine multiple disclosures, lengthy disclosures, additional context and supporting information, without detracting from the consumer experience.

o Make clear, in-message disclosures and notices using our plain language disclosure URLs with immediate access to additional information.

o Present additional disclosure content and context that is easily accessible by consumers across any platform or device.

• Unavoidable Presentation: Implement CMP.LY technology to provide consumers with important disclosures in unavoidable frames and interstitial pages when promoting content in social channels.

• Documented Process: Using CMP.LY ensures that you have a complete audit trail to show compliance and demonstrate best practices.

• Centralized Recordkeeping: CMP.LY provides you with a consolidated repository of your social and digital disclosure and compliance documentation across all programs and platforms.

• Automated Compliance Monitoring: When disclosure monitoring is required—as with FTC testimonial and endorsement guidelines—simply incorporate our automated monitoring for the inclusion and omission of disclosure information through advertiser owned channels as well as third-party advocate channels.

• Valuable Disclosure Measurement: Using CMP.LY disclosures not only helps in addressing your compliance needs, it also provides you with a way to measure click-through data and other consumer engagement with your disclosures.

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How Do the Updated .Com Disclosure Guides Impact CMP.LY? Enabling transparency with consumers is at the heart of what we do. We are constantly incorporating feedback from consumers, marketers and regulators to improve the effectiveness of our solutions. In response to the updated guidelines we are expanding the CMP.LY Disclosure Standard to include more plain language disclosure options to provide a wide selection of disclosure URLs that address a broad range of needs and preferences. Additionally, we will be revising our disclosure badges to incorporate more text and disclosure content in conjunction with the disclosure icon itself to ensure the standards outlined in the guidelines can be met when this disclosure method is used. Where Can I Learn More? The FTC provides businesses with resources, insights and access to closed investigations and actions at www.ftc.gov. The Word of Mouth Marketing Association (WOMMA) has been on the forefront of the issues of disclosure, transparency and ethics in WOM marketing since 2004. There are a number of resources available at www.womma.org/ethics and a recently updated Social Media Disclosure Guide can be found at www.womma.org/disclosure. Please note that the WOMMA Members Ethics Advisory Panel (disclosure: Tom Chernaik, CEO of CMP.LY, is the Co-Chair of the WOMMA MEAP) will be updating the Social Media Disclosure Guide in the coming weeks to account for this revised guidance. In addition, WOMMA offers a daily SmartBrief, available at http://www.smartbrief.com/news/WOMMA/index.jsp. CMP.LY offers the only comprehensive and purpose-built social media disclosure solution. For more than three years, CMP.LY has worked with leading brands and agencies to address disclosure challenges and demonstrate best practices. For more information about CMP.LY solutions, and to stay abreast of industry updates, please visit www.cmp.ly. For the complete white paper and additional analysis of the .Com Disclosures report, please visit www.cmp.ly/dcdreport or sign up for our email newsletter.