ReactS : Advertising Lawyers & Attorneys : Reed Smith Law Firm : Marketing Regulations, Product Placement

Unlike in the United Kingdom, online gambling activities are not permitted in the United States. The regulator has historically held any online gambling activity to be illegal, until now. On December 23, 2011 the US Department of Justice reversed its decade long position on the applicability of the US Wire Act to online gambling that does not involve sports betting. This may well clear the way for individual States to become more aggressive in legislatively enabling intra-State online gaming and could potentially allow the Federal Government to permit licensing and regulating of online gambling. This is not simply big news for the US. Gaming and gambling operators around the world may now be able to establish a foothold and ultimately a major presence in the US with Uncle Sam's online casinos. For more information, read the Client Alert prepared by lawyers in our New York Office.

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Directly impacting the operations of European companies, the prospect of new TLDs being authorized by Internet Corporation for Assigned Names and Numbers (ICANN) is being challenged. Today, in a letter to Mr. Rod Beckstrom, ICANN President, the ANA (Association of National Advertisers), the U.S. based trade association that represents over 400 international brands, detailed major flaws in the proposed ICANN program that could give rise to virtually any word, generic or branded, becoming Internet top-level domains (TLDs). By ICANN's own estimates, its program could mean 300 new TLDs in the first year alone with authorization for up to 1,000 in each following year. The ANA argues that the program is economically unsupportable and likely to cause irreparable harm and damage to the Internet business community in general. By means of this letter, the ANA with the assistance of Reed Smith, kick starts a serious effort to prevent billions of dollars of harm to brand owners around the world and return ICANN back to the negotiating table by any means necessary.

To learn more about generic top-level domains, read Reed Smith's Client Alert.

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Last year, Rimmel London was criticised for its “1-2-3 Looks Mascara” television and magazine ads when the Advertising Standards Authority deemed in its adjudication that the use of lash inserts on model Georgia Jagger exaggerated the effect achievable from the use of the product alone and the disclaimer “Shot with last inserts” was insufficiently clear in providing information.

In response to similar complaints about use of eyelash inserts, hair extensions and airbrushing in cosmetic advertising the Committee of Advertising Practice and the Broadcast Committee of Advertising Practice have published new guidance designed to educate advertisers in the cosmetics sector and prevent misleading and exaggerated claims about the effect a product is capable of achieving.

The CAP Help Note, "The Use Of Production Techniques in Cosmetics Advertising", draws a distinction between the use of obvious exaggeration that is not likely to be taken literally, the effect actually achievable by the product, and the exaggeration which consumers interpret as begin indicative of a product’s capabilities. Consequently, forthcoming ads for mascara may use eyelash inserts to fill in natural gaps in the lash line but not to create a lengthening or volumising effect beyond what can be achieved by the mascara on natural lashes.

Post-production airbrushing will also be scruintised to avoid misleading consumers on the apparent performance of the product, and advertisers may no longer be able to remove or reduce the appearance of lines and wrinkles, add highlights and shine or remove ‘fly-away’ hair. The Help Note further reiterates the importance of advertisers continuing to document and retain appropriate evidence to demonstrate any research, styling and re-touching, as required under the Codes, and also clarifies that the use of qualifications and disclaimers will not excuse otherwise disallowed activities. Disclaimers and qualifying statements should only be used for adding clarity and must be legible and appropriately placed. This comes at a time when the cosmetic industry is possibly already turning a marketing corner. In the US last month, French cosmetics brand Make Up For Ever launched the world’s first unretouched make-up ad campaign and in the UK both Maybelline’s and Maxfactor’s TV ads have taken a deliberate move towards a more natural setting. As our industry becomes more and more transparent, it remains to be seen whether this new guidance will initiate a decline in highly stylised ad campaigns in favour for the natural look. Please contact a member of the ReACTS team for further information and assistance with your advertising.

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The wait is finally over... Hot on the heels of yesterday's launch of product placement onto UK television, today marks another dawn of a new age in UK advertising. As of today, Tuesday 1st March 2011, the regulatory remit of the ASA is extended to cover online non-paid for space and pages under the control of advertisers. This means that the CAP Code for non-broadcast advertising, which previously only applied, in an online context, to advertising in paid-for space, such as pop-ups and banner ads, will now regulate promotional activities on companies' own websites and on sites such as a brand's official Facebook page, Twitter feed or YouTube channel.

It remains to be seen how the ASA will manage, if at all, to police its new regime, considering the enormity of this task and the limited funding available. But the controversial new sanctions it has the power to impose on infringing advertisers should not be sniffed at.  

Our own Marina Palomba shares her thoughts on this groundbreaking new development in MediaWeek today.

Please see our Ad Guide for further information about how this will affect our industry, or contact a member of the ReACTS team.

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115 million viewers. $3 million for 30 seconds of airtime. $210 million total advertising spend. Forget the Green Bay Packers and the Pittsburgh Steelers slugging it out for the Vince Lombardi trophy, the real game was being played in the Super Bowl’s commercial breaks.

Super Bowl XLV, like its predecessors, produced some very well received ads. An ad for the Chevrolet Camaro became the most viewed ad of all time according to Nielson, whilst Volkswagen’s Darth Vader “The Force” introduced the new Passat to a worldwide audience. Nielson's research showed it to be consumer’s favourite Super bowl advert. An extended cut of the VW ad has been watched by over 20 million viewers on YouTube, and has generated over 18,000 comments. Chrysler’s Detroit ad for the Chrysler 200 featuring Eminem, has had over 3 million hits on YouTube and has generated over 10,000 comments.

However, one of the pitfalls of such prominent advertising campaigns is the damage caused if a promotional message fails to hit the mark. Not every advertiser scored a touchdown at the Superbowl. Groupon’s Tibet ad has faced criticism from China and the Free Tibet movement. The ad features an actor speaking over landscape shots of Tibet: “The people of Tibet are in trouble, their very culture is in jeopardy.” Then the camera cuts to a Chicago restaurant: “But they still whip up an amazing fish curry. And since 200 of us bought at Groupon.com, we’re each getting $30 worth of Tibetan food for just $15 at Himalayan restaurant in Chicago.” This arguably poor taste advert appeared during the Super Bowl along with two Groupon ads featuring comparisons between deforestation and half price bikini waxes and whaling and half-price whale watching.

Groupon’s ads highlight how brands are keen to explore new ideas and concepts in order to establish a unique brand identity. But pushing the boundaries can be a risky practice. In the UK, a controversial ad similar to that run by Groupon, may fall foul of the advertising codes. Rule 4.2 of the BCAP Code states “Advertisements must not cause serious or widespread offence against generally accepted moral, social or cultural standards.” Advertisers are therefore urged to tread carefully before employing such shock tactics to promote their brands.

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The news that Prince William is to marry Kate Middleton has caused huge media excitement in the UK and across the world. Like all celebrities, Will and Kate attract huge interest and brands want to benefit from association with a major event, a royal wedding between the future King of England and a commoner being possibly the most important national celebrations in many years.

Many people will have no interest in the nuptials at all. Equally an overly extravagant ceremony and festivities, in what will be an inevitably difficult financial year for many in UK , may be unpopular. For the Royal family there will be a fine line between staging a show to boost morale amongst many Royal supporters, while not being seen to be spending too much money in a year when even the Queen has been forced to make financial cuts to her budget. Nevertheless, thousands are expected to want to join the celebrations of this fairytale romance and there is undeniable benefit to advertisers associating themselves with the story. The media frenzy will continue in the lead up the wedding and focus not only on the wedding day itself, but on all elements surrounding future Princess Catherine's life, what she wears, where she goes, what she likes to buy.

Advertisers and ad agencies beware however, there are a few important legal issues that restrict the use of Royalty and royal emblems and insignia, uniforms and private buildings in advertising.

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The Advertising Standards Authority, ASA, announced on the 1st September 2010 an extension of its regulatory remit, from March 2011, which will give the Regulator jurisdiction over all marketing communications on the Internet including those on corporate websites and social media networks such as Twitter and Facebook, as well as over advergames and user generated content.

This controversial move has been introduced without any public consultation, and includes new serious sanctions for advertisers. Exemptions to the new regulation include "heritage advertising", 'investor relations', and marketing communications promoting "causes and ideas". Nearly all other marketing promotions on-line will need to comply with the CAP Code. Some areas of concern include how the ASA will deal with the fine line between editorial and promotional material; how the extended remit will be adequately funded; how sanctions can be effectively enforced against companies with sites based overseas or indeed against those thousands of smaller on line advertisers who are blissfully unaware and ignorant of the CAP Code and whose advertising can change in seconds in this fast paced media environment.

All this comes into effect on the 1^st March 2011, which does not give businesses long to review their on line promotions and marketing plans. The changes to the CAP Code ironically comes literally days after printed versions of the revised CAP and BCAP Codes were sent out to purchasers, and only a few months after a public consultation, which excluded these latest provisions.

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The first television commercial for post conception advice by Maris Stopes led to the Advertising Standards Authority receiving almost 5,000 complaints, fueled by attacks from anti-abortion groups. Apparently the ASA also received a petition against the advertisement from the Society for the Protection of Unborn Children.

Despite the fierce objections however the ASA did not uphold the complaints, indeed it may well be argued that no other outcome was feasible since the advertisement did not breach any of the Code rules, as we stated in our blog of 24 May 2010 . The ASA concluded that the advertisement would not cause widespread offence and was not harmful in that it would not encourage promiscuity or overly appeal to young people.

It is interesting nevertheless to consider the grounds that were used by complainants to object to the advertisement.  Arguments against the commercials were wide ranging and included: that the commercial was a political message; the ad promoted abortion; offended the religious beliefs of some viewers; trivialised the decision to choose abortion; did not take into account the views of the father; was sexist in that it portrayed pregnancy as a woman's responsibility; and that it would encourage promiscuity among young people and that it equated decisions about the life of an unborn child with decisions about consumer goods.

None of these views were accepted and the ASA adjudication states:

We considered that it was clear that the ad was promoting the Advice Line as a source of information for ..women, and noted that it did not advocate one option over another.

Unsurprisingly anti-abortion groups are upset at the decision, with the ProLife Alliance claiming the ASA has ignored clear breaches of the Code.  The commercials were though carefully and sensitively produced and there is little doubt the advertisements are compliant with the BCAP Code.  As I commented in May this year in Campaign Magazine, given this is a highly sensitive area, there will always be those who object to the right to advertise such services.   

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Companies directly marketing to customers must not use the Internet to gather data about children. That's according to a new code of practice published by the Direct Marketing Association (DMA), which says companies must seek parental consent for children under 12 years old, The Register reports. The code must be adhered to by members of the DMA.

"Even if your site is not primarily aimed at young people, if there is a possibility that it would be attractive to them...you have a responsibility," a DMA spokeswoman said.

The revision brings the code into compliance with the new CAP Code, which sets the rules governing advertising in the UK, the report states, and includes a whole new annex containing the rules on marketing to children. The new code has also been updated to take account of changes in legislation including the new Consumer Protection Regulations 2008 and the Gambling Act 2005, and also features a new section on key environmental responsibilities.

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The new coalition government has stated that one of its priorities is the protection of children from excessive commercialisation. This policy aim reflects a general perception in the UK among the governing and chattering classes that advertising is at the root of both this problem and the problem of obesity among children. Eyes are therefore turned to the advertising industry to see what they have done and what they are doing to protect children.

It is helpful therefore that Ofcom have recently released a review showing that since the rules concerning the advertising of foods that are high in fat, sugar and salt (HFSS) came into force in 2007, advertising for HFSS products seen by children had dropped by 37%, and the fall was greater for younger children (a 55% decline).

There are already a number of rules and safeguards in place to protect children, and these are probably set to increase if the proposed extension of the CAP Code into all promotional messages on the internet goes ahead. Our new Ad Guide on advertising to children goes into greater detail on all these areas.

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The new Health Secretary under the coalition government, Andrew Lansley, has recently announced the axing of the previous government's £75 million advertising campaign to promote healthy living, which was introduced in an attempt to reduce the record levels of obesity in the UK. As Mark Sweney from the Guardian notes, the new administration is instead encouraging the food and drinks industry to get behind a social media campaign.

The Government has a huge deficit to cut, and it was always known that their marketing budget would be at the forefront of these cuts, but it is interesting that the government is highlighting the important effects of social media as a (inevitably cheaper) resource to combat obesity, rather than relying on traditional media, such as poster and television campaigns. Lansley says this will be "less a government campaign, more a social movement" and he encourages charities, local authorities and the commercial sector to all get involved. In return, he hinted that the Government would not seek stricter regulation of food and drink advertising.

This latter comment will no doubt be the cause of some great delight to the beleaguered food and drink industry which has been vilified by so-called consumer groups, and indeed by the previous administration, for, in their words, promoting unhealthy food and drinks, in particular to children, and thus in effect for causing the obesity crisis engulfing the country. As a result of this vilification, the industry has seen substantial and significant advertising content and scheduling restrictions imposed upon them. Any suggestion from the present government that this view now no longer holds sway will cause the food and drinks industry to breathe a sign of relief, although it will no doubt anger the health lobbies, and we can expect to see some criticism from them in the coming days and weeks.

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Ofcom has today, 28 June, opened two consultations on changes to the Ofcom Broadcasting Code (one for television and one for radio) to allow for product placement in UK television programming. The consultations close on 17 September 2010, and we encourage interested parties to respond.

In the television consultation, Ofcom has made a few sensible suggestions and clarifications to the Regulations that came into force in March (see our separate Ad Guide), including allowing single dramas to carry product placement, prohibiting thematic placement and signalling the placement to viewers by way of a universal neutral logo (both visual and audio).

Furthermore, Ofcom has suggested amending the sponsorship rules, to allow programme sponsor's products or services to be referred to in the programme. In essence, this would allow broadcasters to offer full packages to sponsors, prevents conflicts between sponsorship and placement and makes much commercial sense for both broadcasters and advertisers. Ofcom also states that, as a result of the changes to EU law under the Audio Visual Services DIrective which the Product Placement Regulations implement, there is no need for advertising and editorial to be separated, but only that they are distinct from each other: some changes are therefore proposed to this section of the Broadcasting Code.

Notable by its absence, however, is any clarification of what it meant by "undue prominence": under the Regulations, programmes must not give undue prominence to placed products. However, Ofcom has said it intends to issue Guidance as well, so we hope that these address this crucial element.

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Several ASA adjudications in recent months have highlighted the difficulties for advertisers in making any health claims about their products. The ASA have come down hard on those that fall foul of the CAP and BCAP Codes which require that, in relation specifically to health claims, advertisers must have evidentiary substantiation of any health claims made in advertisements, by way of documented scientific trials or otherwise. See our Ad Guide to Making Health Claims in Advertising for more detail.

The adjudications demonstrate that, despite the potential profitability in making health claims about their products, it is most probably not worth doing so if advertisers are unable to substantiate such claims when questioned.

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In the battle of the coffee chains, Costa has edged one step ahead of its biggest rival, Starbucks. The ASA has dismissed complaints from Starbucks over a series of press and outdoor ads run by Costa stating that coffee lovers preferred Costa to Starbucks. The ads, featuring body copy such as "Sorry Starbucks: the people have voted" and "Seven out of 10 coffee lovers prefer Costa", were challenged by Starbucks, who said the ads were misleading and the claims were unsubstantiated. The ads carried small print to the body copy stating that in blind taste tests of 174 self-titled coffee lovers comparing Costa’s cappuccino against those of Starbucks and Caffe Nero, 70% of respondents who identified themselves as ‘Coffee Lovers’ preferred Costa cappuccino. Costa was advised by the CAP Copy Advice Team that, although the taste tests were based solely on cappuccino comparisons, it was fine to make the headline a general claim, provided that this was clarified in the bodycopy text to refer only to cappuccino. Somewhat amazingly, the ASA agreed.

The ASA's decision highlights the important of using effective small print in press/outdoor and indeed TV ads to qualify any claims made. At the end of 2009, Ofcom banned a radio sponsorship ident which used the same "7 out of 10 coffee lovers" wording as the press ads, but failed to qualify the claim in the voiceover. Under the Advertising Codes, any claim made in an ad must be capable of substantiation, and the advertiser making the claim must hold documentary evidence on file to prove the claim and send this to the ASA on request.

New versions of the Codes are being launched this year and amongst other things, provide further detail on making claims in ads. Please see our ReACTS Guide on the new advertising codes for more detail.

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45% of complaints to the ASA, The Advertising Standards Authority, are about misleading claims.  One latest advertiser to fall foul of the rules, is Louis Vuitton. The ASA upheld complaints that two press ads were misleading. One featured a photograph of a woman stitching the handle of a handbag with the words " A needle, linen thread, beeswax and infinite patience protect each overstitch from humidity and the passage of time. One could say that a Louis Vuitton bag is a collection of details. But with so much attention lavished on every one, should we only call them details?"  

Three complainants complained  the ads misleadingly implied that Louis Vuitton products were made by hand when they are not. The ASA upheld the complaints because there was insufficient evidence to substantiate the implied claims that they were.

Louis Vuitton is one of many advertisers who fail to have prepared  the necessary evidence to prove any implied or explicit claims in advertising.  Why does this matter? Because an adverse ASA adjudication that upholds complaints for misleading can be hugely damaging to brand reputation, and often for fairly small infringements of the advertising codes.

The UK's advertising codes for broadcast and non broadcast advertising are unambiguous:

"Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove all claims, whether direct or implied, that are capable of objective substantiation. Relevant evidence should be sent without delay if requested by the ASA or CAP.  The adequacy of evidence will be judged on whether it supports both the detailed claims and the overall impression created by the marketing communication. " (Clause 3.1 CAP Code)

Often marketers simply get carried away with belief in the brilliance of their products and creatively simplified slogans simply sound better. There is however a genuine risk that exaggerated statements can lead to damaging adverse publicity and with the imminent extension of regulation to promotional messages on the Internet advertisers must think carefully about claims in marketing communications of all types. Other marketers do not take an ASA letter demanding substantiation seriously. This is a mistake as many have discovered. A quiet week in the news means the press will focus on any major brand caught out breaching the Codes. John Reynolds in Campaign, publicises one of many such advertisers in his article about British Gas' efficiency claims. Media Guardian's Mark Sweney will swoop on any important transgressor. Only recently he reported the ASA's decision to ban Eurotunnel email promotion which claimed its service took vehicles to France by train in just 35 minutes and ran "whatever the weather". 

Its not just about brand damage either. Having a press ad or TV commercial banned can mean a massive waste of money. So don't waste a good campaign, an expensive TV commercial or lose pre purchased media space. Know your regulations and have robust evidence to substantiate your claims.

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 The ASA, in conjunction with the Code-writing body CAP, has today published its Annual Review for 2009. The Review includes a list of ads which received the most complaints in 2009. Topping the list was an ad from the Christian party, which ran with the strapline "There definitely is a God" on London buses. The ads were in response to the British Humanist Association's campaign, also on London buses, stating "There is probably no God. Now relax and enjoy your life". The Christian Party's ad received 1,204 complaints, making it the most complained-about ad in 2009 and the third highest of all time. It was not investigated by the ASA, however, as ads for political parties are not covered by the Codes and are therefore outside the remit of the ASA. The Humanist Association's ad came in at position 6 on the list with 392 complaints, but it was not investigated by the ASA as the claim was deemed to be an expression of the advertiser's opinion and not capable of substantiation anyway.

Other notable entries in the list were an ad for the Volkswagen Golf featuring graphic fight sequences in the style of The Matrix, which received 1,070 complaints and was banned before the 9pm watershed, an ad for Home Pride Oven Cleaner with the strapline "So easy even a man can do it", which received 804 complaints, but was not deemed by the ASA to be offensive, and an ad for Crunchy Nut Cornflakes spoofing the famous baby in a pram scene from The Untouchables, which received 323 complaints but was not deemed by the ASA to cause widespread offence or encourage harm to children.

The Review also details some significant rulings and investigations carried out by the ASA into areas such as advertising financial products, making health claims in ads for food and drink products, the use of airbrushing in health and beauty ads, and specifically focuses on alcohol advertising and advertising directed at children.

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For many years, UK audiences, while watching episodes of American Idol, have been treated to images of Simon Cowell and the other judges sitting behind large red cups with pixellation over the Coca Cola logo. This is because, until now, product placement has been prohibited in UK television programming, but all that is set to change - no doubt to the relief of the technicians who had to spend their days pixellating the logos….

Under new Regulations, UK broadcasters and production companies will soon be allowed to commission and make programmes featuring paid for products. There are some restrictions, such as the fact that the advertiser cannot influence editorial control and that no placement can be given “undue prominence”. This is nonetheless a potentially revolutionary change for viewers and, perhaps, a new source of limited income for broadcasters.

Ofcom has yet to publish detailed guidance on how it will judge what is meant by “undue prominence” and how notification of product placement within the programme will be communicated to viewers. However, you can get up to date with the current changes by reading our Ad Guide.

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Ad agency M&C Saatchi were back, appointed by the Conservative Part to steer the party’s and David Cameron’s advertising campaign. The old Saatchi and Saatchi team are of course famous for the advertisement for Margaret Thatcher’s 1979 Conservative Party campaign, “Labour isn’t working” which some argue won the Tories the election. In the 1987 election it is alleged that Thatcher spent £3 million in the last four days of the campaign.

Did the 2010 campaign produce any memorable advertising though? Both the Tories and Labour resorted to spoofs and old clichés. Did anyone notice the Liberal Democrat campaign? No one could ever have envisaged the resulting Lib –Con alliance, but how far can the parties go in the advertising battle to win the voters? The advertising codes of practice (known as the CAP and BCAP rules enforced by the ASA, Advertising Standards Agency) require all advertisements to be legal, decent, honest, and truthful but MPs argued that the Codes ought not to apply to political advertising for elections.

The argument is that it is inappropriate for the ASA, as a non-elected body, to intervene in the democratic process; that ASA rulings would have little practical value because the complex issues involved meant that rulings would probably be made after election day; that ASA adjudications would come within the arena of political debate; and that party political advertisements are always subject to a disproportionate amount of media scrutiny.

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