Marketing and Advertising

Are there separate rules governing online marketing and advertising?

The launch of any ecommerce enterprise will employ a variety of strategies for driving traffic to the site. Through a catchy domain name, paid placement on search engines and other forms of search engine optimization, dynamic site design, and direct marketing over the Internet, the new ecommerce venture may entail marketing efforts that are unique to cyberspace and may encounter Internet-specific complications concerns, and restrictions.

Fair Advertising: Disclose Necessary Information Adequately and Conspicuously
State and federal law prohibits unfair or deceptive practices in advertising and marketing. The Federal Trade Commission (the "FTC") enforces a number of consumer protection laws and promulgates regulations to protect consumers against unfair, fraudulent and deceptive business practices.

The laws and regulations promulgated and enforced by the FTC apply to businesses selling goods onlines just as they apply to brick and mortar businesses. Businesses must describe the products they sell online truthfully and accurately and if certain disclosures are required in printed advertisements or product catalogs to make the product claims not misleading, then those disclosures must also be made on websites. However, the presentation techniques that would make a disclosure prominent, conspicuous, or reasonably noticeable on a website may differ from those common in print ads.

When a required disclosure of information or disclaimer accompanies online advertisement, it is important that the information is legible and, on the same web page as the advertisement. Advertisers need to be cautious when using links to get disclaimers or qualifying language to consumers. As a general matter links must be obvious, clearly labeled, and easy to use - - not in small typeface or removed from the relevant material on the web page. Additional precautions to follow with respect to qualifying disclosures and disclaimers are:

  • Make disclosures visible, on or, accessible from the same portion of a page on which the advertisement appears, without the need for scrolling.
  • Use bold or brightly colored typeface to make the disclosure stand out from the text it qualifies.
  • If scrolling is necessary to include all the necessary information, avoid web page formats that might indicate there is no need to scroll. Instead, use text or visual clues to encourage viewers to scroll.
  • If hyperlinks are used, clearly label the hyperlink and use text to indicate the need for clicking on the hyperlink and to encourage the viewer to use the hyperlink.
  • Use the convention of contrasting color and underling to indicate a "live link", use consistent hyperlink styles, and place links near relevant information.
  • The link should take the viewer directly to the disclosure, and the first click-through page should contain the complete disclosure information

The federal trade commission offers useful guidance on fair advertising and marketing practices for ecommerce sites. See the information posted by the FTC at http://www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.html.

Can other business names and marks be used to steer traffic to a site?

Meta tags and "hidden text" are pieces of information that can be inserted into the code of a website or the background "wallpaper" on the site itself. They can be picked up by search engines but are invisible to humans viewing the web pages through browsers. Meta tags and hidden text (which will be treated together here as "metatags") have been used by web developers or the owners of websites to optimize the placement of their pages, in search results and to produce the desired description of the site.

Because meta tags are invisible to the average web user, many ecommerce promoters believe they have free reign to include anything in meta tags to assist in search engine optimization efforts, including misdescribing the content of the site or using a competitor's trademark. Because of the potential for manipulation, some search engines' search result methodologies have been reprogrammed not to rely solely on meta tags.

Courts have held that the unauthorized use of another's trademark within meta tags can constitute trademark infringement, unfair competition, and deceptive trade practices, resulting in damages payable to the trademark owner and injunctions against continued use of such meta tags.Use of another's trademark to drive traffic to your site has been compared by one court to posting a false road sign that lures drivers off at the wrong exit. As in other trademark infringement contexts, liability will depend on a finding of a "likelihood of confusion".

If a metatag consisting of someone else's mark truthfully describes the content of a site, such as a site that contains comparative advertising, or which offers the trademark owners' products, it may, in theory, be a "fair use".However, some courts have been quite strict is prohibiting the use of competitor's trademarks in metatags, if neutral metatags might have worked just as well in getting the message across.

Paid placement and purchase of key words
Advertisers pay search engines to include their sites within search results, typically towards the top or side of the first page displayed. Some search engines guaranty their paying customers that their URLs will be among the first displayed in search results or that their ranking will increase. Other advertising programs allow paying advertisers to control how and where their ads will appear, depending on the search term (called a "key word") entered by the user. This has been referred to as "bidding on a keyword." The terms of a search engine's paid placement programs can generally be accessed on its website.

Critics of paid placement, including Ralph Nader and Gary Ruskin (who managed to get the Federal Trade Commission involved), argued that consumers have no effective way of differentiating between the paying advertisers and those sites which appear because they are relevant to the search. In response to such criticism, prominent search engines started labeling paid placements as "sponsored" or with similar language, to indicate that the owner of the featured site paid for an up-front position.

Purchasing a keyword consisting of someone else's mark carries similar risks to using someone else's mark in metatags. (see "Can other business names and marks be used to steer traffic to a site?") Because of the controversy surrounding bidding on trademark key words, search engines periodically reevaluate their policies in this regard. One major search engine allows the purchase of trademark key words only by resellers of the trademarked product or by sites which provide substantial information about the trademark owner or its products and do not promote any competing products.

Pop-up Ads
An advertising method which is particular to the internet is the use of "pop-up", "pop-under", or "pop-over" advertisements (all considered as "pop-up ads" for purposes of this discussion). Businesses can engage an advertising company to cause the pop-up ad to appear on a user's screen. The pop-up advertisement is triggered when the user executes a search which indicates his or her interest in a subject that corresponds to the ad content.

Pop up advertising has come under legal attack where the ads are triggered by searches using trademarks terms or web addresses, or the pop-up ad alters the user's view of the underlying web page. Such challenges have, thus far, been largely unsuccessful. Pop-up advertising has come under separate scrutiny by the Federal Trade Commission and state agencies, investigating assertions that the software used to deliver the pop-up ads being unwittingly installed by users without their consent. Despite its checkered past, pop-up advertising is still available through a number of providers, with a seemingly equal number of providers offering programs to block such advertising from appearing on a user's screen.

Can I send unsolicited emails?

With the dramatic increase in SPAM crowding everyone's email in-box, recent laws and regulations have tried to put some restrictions on the use of SPAM to promote businesses. The CAN-SPAM Act of 2003 (Controlling the Assault of Non-Solicited Pornography and Marketing Act) became effective January 1, 2004 and requires that those who send commercial email follow a set of guidelines. These include the following requirements:

  • Commercial email headers must contain accurate information.
  • Commercial email subject lines cannot be misleading
  • The transmitter of the email must give recipients a way to request not to receive further emails.
  • The commercial email must be identified as an advertisement.

The Federal Trade Commission publishes a thorough explanation of the CAN-SPAM ACT on the FTC website: www.ftc.gov/bcp/conline/pubs/buspubs/canspam.htm.

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