Play It Safe with Promotions
How to navigate an increasingly complex regulatory environment
By Dayton Fandray
Ed Chansky, a Las Vegas-based attorney at the law firm Greenberg Tuareg LLP, knows that getting customers to engage with a sales promotion is important, but he is also aware that it's crucial for companies to avoid inadvertently stepping across some unexpected legal or regulatory tripwire.
"[Promotional] techniques, because they are designed to prompt immediate action, to promise something really super-duper and special, tend to be more heavily regulated," Chansky warns.
Adding to the challenge, regulations can vary dramatically from state to state and country to country, and no type of medium is off-limits.
"For example, to send someone in the U.S. an email message to advertise, 'Hey, I have great widgets. You should buy my widgets,' we wouldn't think twice about that, unless a customer replied back and said, 'No, unsubscribe, take me off your list,'" Chansky says. "In Canada, however, you would have violated the law right from the get-go by having sent the message in the first place, unless the person had already opted in or had an existing business relationship with your company."
Even something as seemingly innocuous as sharing customer data within the same company can be surprisingly complicated if the brand has multiple offices overseas, Chansky notes. The European Union (EU), for example, has developed general privacy directives and policies. "If you collect and store data in any one of our countries," Chansky says, referring to the EU, "you can transfer that data only to countries that have substantially equal privacy protection under their laws."
For United States marketers, abiding by international law is tricky. "Our laws are not as restrictive," Chansky says. "So, technically, if you have a European branch of your company that has gathered information from your European customers and you then want to consolidate and transfer that information to [U.S.] headquarters for some global marketing effort, you're violating the EU law." To make transfers to the U.S. possible, the recipient company must comply with voluntary standards agreed upon by the The European Commission and the U.S. Department of Commerce.
As the situation in the EU demonstrates, it's important for marketers to keep in mind that regulatory requirements for promotions are in constant flux. "I've seen the challenge become more complex over the past several years," says Ted Birkhahn, partner and president at the marketing firm Peppercomm, pointing to the speed at which messages travel online. "The speed to market is a lot faster, and brands are having to monitor, react, and respond much quicker than ever before. So when you layer over compliance issues or requirements, it just makes it that much more challenging for the marketer, for the communicator, to not only respond in a timely manner, but respond effectively [and] within the guidelines of the restrictions and regulations."
"[Success] comes from a close and collaborative relationship with the client's technical, legal, and regulatory experts."
— Tom Stein, chairman and chief client officer at
Work Closely with Legal
The complexity of today's regulatory environment inevitably means marketers must work in concert with lawyers — but not just any lawyers, says Joseph J. Lewczak, a partner at the New York-based law firm Davis & Gilbert LLP. "First and foremost, be sure you are working with legal counsel who is licensed to practice in the various jurisdictions you are launching in," he notes. "While legal practitioners can be familiar with the law of other jurisdictions, they will not have the expertise that those on the ground will have."
Legal counsel familiar with regulatory conditions in a particular country can help marketers discover, for example, whether their product or service names, tag lines, and logos are legally available in the jurisdiction in which they are to be used. Insights from legal counsel will also help marketers navigate the maze of privacy laws throughout the world. Failure to understand these laws and policies — which are separate from marketing regulations — could create problems when personal information is collected for promotions such as sweepstakes and contests.
"The restrictions can definitely be challenging," admits Tom Stein, chairman and chief client officer at the marketing and advertising agency Stein IAS, which has its U.S. headquarters in New York City. "But the challenges, in our experience, aren't insurmountable. They require patience and planning, as well as cleverness.
Don't be in a Rush
Stein says agencies can best meet the challenges by keeping the lines of communication open with their clients. As an example, Stein IAS often huddles with the technical team of one of its pharmaceutical clients. "They have a keen understanding of the compliance and regulatory environment, what's doable and not doable, advisable, not advisable," Stein says.
Marketers also need to give themselves enough time to respond to unexpected complications posed by the legal and regulatory environment. "If you don't have enough time, either of two things will happen: One is that you may run an undue risk and two, you may force yourself into an overly restricted and conservative approach because you haven't had time to test the boundaries," Stein says.
Creative teams also need to understand that threading their way through the legal and regulatory maze requires a good working relationship with colleagues who understand the environment. "[Success] comes from a close and collaborative relationship with the client's technical, legal, and regulatory experts," Stein says. "Marketers aren't lawyers. Lawyers aren't copywriters and art directors. But if you kind of do a little bit of a mind meld and then let your creativity loose, I think you can get to a pretty good outcome."
Image credit: tostphoto/Thinkstock.com
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