Marketing in Augmented Reality

March 28, 2017

Marketers are grabbing hold of new technologies to engage and entertain their customers. But what are the potential minefields? In this panel, industry experts examined a hypothetical augmented reality (AR) game scenario and discussed potential privacy, promotions, and intellectual property issues that are inherent in the AR experience.

Hypothetical Scenario: Bottle-Flipping Virtual Concert Promotion

The marketing department of an energy beverage company has an idea for a new promotion involving a virtual concert with cross-branding opportunities. The marketers speak with their legal department to assess potential liability and compliance risks relating to marketing, promotions, and privacy laws and standards. The target audience is teenage males, and the promotion is open to individuals in the U.S., U.K., France, Australia, and Russia. Participants will compete for the best bottle flip.

The winners will make a guest appearance on YouTube with a famous YouTuber/bottle-flipper and a year’s supply of the energy beverage. Individual participants will be required to enter through the beverage company’s existing mobile app. Participants will record themselves flipping a bottle at the virtual concert venue and submit the video. Organizers of the concert will notify finalists through the app that they should appear at the stage of the virtual venue to compete in the last round where they will record and submit more bottle flips in real time. There will be co-branding opportunities for other companies, including a telecommunications company, to brand props in the virtual world.

Panel Discussion of Potential Questions to Ask Your Legal Department

Is the promotion a contest or a sweepstakes?

The answer to this question depends on whether or not a skill is required. Sweepstakes are chance-based promotions with entries and random selections that will decide who the actual winners are. Contests are skill-based promotions with judging criteria that will be used to analyze each entry to determine who the winners are. With this particular hypothetical, there is an argument that bottle-flipping requires some amount of skill. However, if you do determine that the promotion is skill-based, you have to ask how you’re going to make it a contest. How are you judging each entry? Is there a point-based system for technique? When the participant flips a bottle in the real world and it lands in the virtual world, it may not be controlled by their degree of skill. All of these questions are going to help the legal team determine whether or not you have a real skill-based promotion.

If the promotion is a sweepstakes, is there a consideration?

With respect to consideration, there’s a big difference between contests and sweepstakes. If you have a chance-based promotion, you have to think about consideration. Will participants have to pay anything to download the app or play the game? You might also care which bottle participants are throwing. Are they throwing a branded bottle? Are you going to have a requirement that participants must purchase a branded bottle? This may be a consideration issue.

Can the promotion be structured as a “surprise-and-delight?

Surprise-and-delight is another term for gifting. There’s no pre-promotion, call to action, or incentive with surprise-and-delight. If you do structure the promotion as a surprise-and-delight, because you’re not promoting it, you don’t have official rules or the same consideration issues that you would with a sweepstakes. However, if you start doing post-promotion for surprise-and-delights that occur every day, you’ll essentially be back to promoting it and back in sweepstakes territory. You might want to propose layering surprise-and-delights throughout the promotion.

Is it possible to embed an offer?

You can’t have chance with an offer. The idea is that participants will take an action and get something in return. There are two issues that could come up with offers. The first one is making sure that you have the material terms that are necessary to disclose to participants so they understand exactly what they need to do to get the offer. The second issue is the idea of supply and demand. It’s important to spend time thinking about your supply-to-demand ratio. If you only have enough supply for 50 consumers and you think the demand is going to be 500 consumers, you’ve essentially created a sweepstakes situation.

Who is going to be responsible for compliance if co-branded elements are incorporated in the promotion?

Since the beverage company is running the promotion, they are responsible for compliance.

Are there any celebrity endorsement issues?

If the promotion is created so that the virtual bottle lands in the hand of a famous person, you would want to make sure that there is a talent agreement in place. If you want the celebrity to act as an influencer and get people to come to the game, you have to make sure that they disclose their material connection.

Are there any user-generated content issues?

The hypothetical scenario calls for participants to upload videos in real time. There may be a gallery where all videos submitted can be viewed. In this case, you’ll want to talk to your legal department.

What are the privacy legal issues to consider?

The main privacy issues center around the target audience. The Children’s Online Privacy Protection Act in the U.S. does not allow the collection of personal information from children under 13 years of age. You could solve this by having age ranges or having a cookie in place to require participants to indicate that they are over 13. We mentioned in this hypothetical that the app would be offered in other countries. Under European privacy laws, the provision for privacy corresponds to children ages 16 and under. Russia has a data localization law that states that you have to process collected data in Russia. You don’t have to host the data there, but you do need a data transfer mechanism. Most of the responses to these privacy questions will change when the GDPR goes into effect in May 2018.

Audience Q&A with Panel

Q. When encouraging people to submit user-generated content for a contest, would you recommend having the content go to the company first so it can be vetted?

Seligman: It really depends on the nature of the content that people are submitting. I’ve seen programs where the content is relatively safe, so it’s appropriate to have post-submission moderation. For something like the scenario we discussed today, you may actually want to have a process in place where the video content is pre-moderated.


"Marketing in Augmented Reality." Tanya Forsheit, Partner at Frankfurt Kurnit Klein & Selz PC; Terri Seligman, Partner at Frankfurt Kurnit Klein & Selz PC; Tori Chami, VP and Senior Counsel at American Express Co.; David Viscovich, Counsel at Sprint. 2017 ANA Advertising Law & Public Policy Conference, 3/28/17.

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