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What Marketers Need to Know About FTC Endorsement Guide Penalty Offense Notices and CIDs

By
Richard B. Newman
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0

The FTC continues to issue Notices of Penalty Offenses concerning FTC Endorsement Guide violations  to digital advertisers and marketers, both alone and in conjunction with the issuance of FTC Civil Investigative Demands.

A Notice of Penalty Offenses is a document listing certain types of conduct that the FTC has determined, in one or more litigated administrative cases (not consent orders), to be unfair or deceptive in violation of the FTC Act.  Civil penalties can help the Commission deter conduct that harms consumers.  Because they can exceed what a wrongdoer earned through their misconduct, penalties are intended to send a message that preying on consumers will not be profitable.

Penalty Offense Authority is found in Section 5(m)(1)(B) of the FTC Act, 15 U.S.C. §45(m)(1)(B).  Under this authority, the FTC can seek civil penalties if it proves that (i) the company knew the conduct was unfair or deceptive in violation of the FTC Act, and (ii) the FTC had already issued a written decision that such conduct is unfair or deceptive.

Companies that receive such Notice and nevertheless engage in prohibited practices can face civil penalties of more than $46,000 per violation.

Recent Notices concern, without limitation, endorsements.  The FTC has issued and continues to issue Notices where it has determined that certain acts or practices in the use of endorsements and testimonials are deceptive or unfair and violate the FTC Act.

Per the FTC’s Notice of Penalty Offenses, “[i]t is an unfair or deceptive trade practice to fail to disclose a connection between an endorser and the seller of an advertised product or service, if such a connection might materially affect the weight or credibility of the endorsement and if the connection would not be reasonably expected by consumers.”

In support, the FTC cited Cliffdale Assocs., Inc., 103 F.T.C. 110 (1984), a case where “[n]one of the testimonials used in the respondents’ advertisements and promotional materials indicate that at the time of their writing, the testimonialists personally knew the manufacturers or various marketers…or were connected with them in any way.”

The FTC’s Endorsement Guides contain the same guidance.

Connections that are material to a consumer’s perception of the endorsement and that consumers would not reasonably expect must be “clearly and conspicuously disclosed.”  A “material connection” can include, without limitation, payment, free or discounted products or services, or a family or employee relationship with the advertiser.

Anything that might affect the weight or credibility of the endorsement must be clearly and conspicuously disclosed.  Attention should be paid to the placement of the disclosure in the advertisement and its proximity to the claim it is qualifying; the prominence of the disclosure; whether the disclosure is placed so prominently that a consumer will invariably see it; the extent to which items in other parts of the advertisement might distract attention from the disclosure; whether the disclosure needs to be repeated several times in order to be effectively communicated, or because consumers may enter the site at different locations or travel through the site on paths that cause them to miss the disclosure; whether disclosures in audio messages are presented in an adequate volume and cadence; whether visual disclosures appear for a sufficient duration; and whether the language of the disclosure is understandable to the intended audience.

The FTC actively polices relationships between advertisers and “influencers,” and review placement websites.

FTC attorneys continue to issue warning letters and CIDs, and to initiate enforcement actions against  advertisers, app developers and influencers for purported failure to properly disclose material connections.

The FTC’s Penalty Offense authority is making a comeback because in April 2022 the Supreme Court found that the FTC lacks the authority to seek equitable monetary relief under Section 13(b) in federal court.

For example, the FTC has recently sent notices to over 700 national advertisers and advertising agencies highlighting deceptive endorsements and fake reviews, testimonials that make deceptive performance claims or fail to disclose a material connection between the endorser and the company.

The FTC is now even exploring rulemaking to combat fake reviews and other deceptive endorsements.  This would include practices such as using fake reviews, suppressing negative reviews and paying for positive reviews.

The FTC has recently published an  Advance Notice of Proposed Rulemaking (ANPR) seeking public comment on potential harms stemming from deceptive or unfair review and endorsement practices and whether a rule would help consumers and level the playing field for honest marketers.

“Companies should know by now that fake reviews are illegal, but this scourge persists,” said FTC attorney Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.  “We’re exploring whether a rule that would trigger stiff civil penalties for violators would make the market fairer for consumers and honest businesses.”

The ANPR seeks comment on the costs and benefits of a potential rule, as well as the pervasiveness and potential harms to consumers and competition from certain clearly deceptive or unfair practices involving reviews and endorsements including:

  • Fake reviews: These include reviews and endorsements by people who do not exist or have not used the product or service or who lie about their experiences.
  • Review reuse fraud: Some sellers hijack or repurpose reviews posted about another product or service.
  • Paid reviews: Marketers may pay for positive reviews about their products or negative reviews about competitors’ products.
  • Insider reviews: These include reviews written by a company’s executives or solicited from its employees that don’t mention their connections to the company.
  • Review suppression: Companies might claim that their websites display all reviews submitted by customers when they suppress negative reviews or attempt to suppress reviews on other platforms by threatening the reviewers.
  • Fake review websites: This is when a seller sets up a purportedly independent website or organization to review or endorse its own products.
  • Buying followers: This involves buying or selling followers, subscribers, views, or other indicators of social media influence.

Takeaway:  The FTC will continue to disseminate Notices of Penalty Offenses concerning Endorsement Guide violations.  Digital marketers should consult with an FTC CID lawyer to design and implement best practices in order to minimize potential liability exposure.

Richard B. Newman is an FTC defense lawyer at Hinch Newman LLP.

Informational purposes only. Not legal advice. May be considered attorney advertising.

Acceleration Partners Grows with Two More Huge Acquisitions

By
Pesach Lattin
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0

Acceleration Partners, the leading global partnership and affiliate marketing agency, has announced a merger with Influencer Response and Volt Agency, two industry-leading direct response-focused influencer agencies. The deal makes Acceleration Partners the world’s only agency with the ability to deliver end-to-end affiliate, influencer, and partnership services at scale.

“Influencer and affiliate marketing are converging now more than ever,” said Matt Wool, CEO of Acceleration Partners. “We’re excited to join forces with Acceleration Partners to improve our collective value by offering a full suite of integrated solutions that help brands take their performance-based programs to the next level.”

The depth of the newly combined offerings is unmatched in the industry. Beyond the immediate enhancements to the nfluencer practice, this acquisition significantly increases AP’s capacity to support new and existing customers with a full range of outcome-driven marketing opportunities.

Are Streaming Services Doomed?

By
Pesach Lattin
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0

Launching an online streaming video service to compete with Netflix was once thought of by investors as having a huge potential upside. However, the tide has turned as the market has become so competitive that making money can take years and in the meantime you could burn through billions in cash.

Even if you do find success in this space, it will take years before you see any meaningful earnings and during that time you’ll need significant amounts of capital just to stay afloat. And if things don’t go well, you could end up losing even more money than what you invested upfront.

So how do we measure success in the streaming world? Is having subscribers enough, or do we have to see actual revenue and growth sooner than later?

When it comes to raw numbers, the differences in the companies is stark.

Disney+ has nearly reached the 100 million subscriber mark but Peacock is at 18 million subscribers only. Netflix is at 223 million subscribers, and Amazon Prime following close at 200 million or so. This is a huge difference to make up.

Peacock does have a strong hold on its users, however. A recent study by Nielsen showed that Peacock viewers watch an average of six hours more than Netflix viewers per week.

Paramount+ has capped what Paramount Global CEO Bob Bakish describes as it biggest quarter in its history with launches in Germany, Switzerland and Austria.

The latest expansion, which brings its total reach to 45 markets, comes just a week after the streaming platform’s launch in France. The company has been on a tear since Bakish took over as CEO, acquiring Starz in 2018.And with Netflix and Amazon Prime already established market leaders in many of these territories, Paramount+ will have to work hard to make an impression on international audiences.

It’s clear that there is some room for growth in the industry, and competition can make waves.

The billions of dollars that streaming companies have spent on content far exceeds what they’ve earned. No profit is bad, especially when the competition is fierce.

“Starting a direct-to-consumer service takes an incredibly strong stomach for losses,” said BTIG analyst Rich Greenfield. “If you want to win, it’s very expensive.”

The new leaders of the major film studios, re-focused on financial concerns and other priorities. For Disney under newly returned CEO Bob Iger—perhaps because it is his home studio—this seems to mean shoring up another business: theme parks. Streaming might still be a priority, but first? Maybe not anymore

One of the victims of this massive spending to compete in the streaming video market has been Warner Bros. Discovery, whose stock has fallen over 50% under CEO David Zaslav’s watch

During a recent conference, he revealed that HBO had spent $2.5 billion in 2019 and made a profit of $2.5 billion—a stark contrast to its 2021 numbers where it lost over 3 billion dollars on content licenses alone when compared with the previous year’s total spending of 7 billion (prior to restructuring costs). “We are rightsizing HBO Max,” they said.

The business is now a mature one, with its growth potential greatly reduced. Where can streaming companies be successful in the future? The typical household now has multiple TV subscriptions, but how many hours of television can anyone watch per day?

I also have a question about the relationship between content creation and profits. According to Variety, Peter Jackson’s Lord of the Rings spinoff series had an estimated budget per episode of $60—PER EPISODE – although this number could be lower. For comparison, Game of Thrones cost around $10 million per episode, and started with less than $6 million when it launched.

It’s possible that the high cost of production could explain why HBO Max didn’t have a lot of original content available at launch.

Streaming services are spending more money to build up their libraries of content, but they aren’t benefiting as much from adding new subscribers because the streaming landscape has matured—most people have locked themselves into one service or another.

According to Kantar data, as of December 2021, 85 percent of American households subscribed to a streaming service. However over-the-top video services have grown at only a 2 percent annual rate—making it difficult for new companies enter the market.

Despite adding 9 million subscribers in the US over the past several months, Disney Plus lost $1.5 billion in direct-to-consumer revenue due to an “increase in programming and production costs” as well as a lack of straight-to streaming releases from its namesake studio.

Recently, Ben Affleck characterized the Netflix approach to making movies as a “assembly line” that prioritizes quantity over quality. If this is correct, then they are making worse productions for more, perhaps because they are emphasizing special effects and CGI over content?

He asked Netflix a question. “How is [Netflix] going to make 50 great movies in one year? It’s impossible! … You just can’t do it.

Streaming television services have raised their prices more often than not for the past year, and it’s beginning to feel like there’s something systemic about that.

Many streaming TV services have raised their prices in recent years, most recently Netflix, even as they added a free model. YouTube TV also made waves for price hikes—but are these companies being greedy or can we understand why they’re making this move?

It’s a lose-lose situation. While some streamers are losing money by paying to get content on their platforms, others are also losing money—but for different reasons: distributing it themselves instead of having someone else do so. The result? Price hikes across the board.

In an interview with the Financial Times, media mogul John Malone said that “As far as streaming video goes…Let’s face it. Everyone went for this mad Oklahoma land rush of streaming…That was a fool’s errand.”

However, we’ve seen the success of companies that offer unlimited free streaming. Tubi and Pluto are two such services—Plex, Samsung TV+, and Roku Channel among others—that provide consumers with ad-supported video on demand (AVOD) or through free ad-supported TV channels (FAST).

Netflix, for example, has proven itself to be a lose-lose situation.

It started a simple pay base prices—and then getting smacked by repeated price increases. Their “free model” has been an attempt to deal with this, but if this can be successful is up in the air for at least the next few years. Then came low-quality shows, such as original series that weren’t very popular and competition programs with little entertainment value.

It was always part of these companies’ business models to gradually increase prices over time (especially Disney), but as rates continue to climb, many consumers are likely to opt-out of the entire system because they are plain fed up.

Bria Bryant Joins Assembly as Chief Marketing Officer

By
Pesach Lattin
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0
Bria Bryant

Assembly, the global marketing agency, today announced the appointment of advertising super-star Bria Bryant as its Global Chief Marketing Officer. Bryant will accelerate market growth initiatives and lead the agency’s global marketing strategy.

She will be based in New York and report to James Townsend, Global CEO of Assembly and the Brand Performance Network.

Bryant replaces former CMO Mary Beth Keelty, who will move into an elevated leadership role at the recently rebranded Brand Performance Network at Stagwell, the challenger network built to transform marketing.

“We are delighted to welcome Bria to Assembly,” said James Townsend, Global CEO of Assembly and the Brand Performance Network. “She brings expertise at the intersection of PR, comms, and marketing with an eye for impact-driven work that will help us create meaningful change for our people, clients, partners, and surrounding communities.”

Bryant’s appointment comes as Assembly’s network has seen impressive momentum this year, with client wins including Lenovo, amika, Elevance Health (NASDAQ: VSHC), Emaar (BHD.AE), Warner Music Group and Aesop. Following its win as Ad Age’s first-ever Purpose Led Agency of the Year on the 2022 A-List, Bryant’s arrival sets the stage for larger-scaled purpose-led work and marketing.

Is Digital Scarcity the Key to the Metaverse?

By
Pesach Lattin
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0

For years the dream of a persistent virtual world has been touted as a unique future form of human experience.

Since Facebook rebranded to Meta and doubled down on early billion-dollar investments into virtual reality, such as headset manufacturer Oculus, has the vision been hyped as a unique future form of human experience.

The economic and business promise of a persistent virtual world – so far only basic and disconnected virtual spaces exist – is in part based on the concept of digital scarcity,

In the physical world, items derive their value from scarcity and they are scarce because there is a cost to producing them.

In the digital world, items are made up of information that can be copied and distributed easily. As we’ve seen, copyright protections don’t matter a lot in the Internet where hundreds of different Country’s laws make it almost impossible to enforce.

Before blockchain technology was invented, creating scarcity in goods—making them unique or hard to duplicate and allowing for transfer of ownership without an intermediary such as a bank—was necessary if they were going to have value.

Computer games, like Second Life, created their own unique intra-game economy almost two decades ago. Software company Linden Labs insisted that Second Life is not a game, but a place of role-play escapism for users that control their own unique destiny.

However, this really wasn’t a “metaverse” since Linden controlled all the assets and there was no way to remove them.

In 2009, Bitcoin was the first application of this concept, where for the first time in history, you had a digital commodity with natural scarcity.

After Bitcoin, the next huge innovation was in 2018: the creation of a standard for non-fungible tokens. This took the concept of scarcity to the next level.

As an extension to that concept, there are important ideas that will underpin the metaverse economy and non-fungible tokens (NFTs) play a key role.

The first is that in future metaverses, digital worlds will be interoperable and digital assets or representations—like avatars—can be taken from one world to another.

NFTs are unique digital identifiers that are encoded on blockchain and cannot be altered. As such, they can be used to demonstrate property ownership and provenance—or ownership history—of digital assets. That makes them easily tradeable and allows them to be transported from one digital world environment to another.

The digital tokens known as non-fungible tokens (NFTs) would allow people to efficiently and reliably display their value in the metaverse. This is similar to how an object’s specialness underlies its value on Earth, but signaling will be more important than ever before in a virtual world where everyone can create anything they want

This is even more important in the artwork world, which was almost destroyed by images of everything being copied onto the internet. Anyone could have their work copied from a website and then “stolen” overnight.

Digital artwork is a digital object. It’s not the same thing as a physical painting, because it doesn’t exist in the real world. But it is still something that can be owned, and can be sold or traded for money or other goods.

When someone makes a digital artwork, they don’t have to worry about whether or not their work will be stolen or lost—because it isn’t really something that can be stolen or lost. Digital art doesn’t have to be stored in a vault somewhere; it exists on the internet and can be accessed from anywhere with an internet connection.

NFTs are a solution to digital scarcity. By tying ownership of natively digital artwork to an entry in a public, immutable ledger, the artwork becomes collectable. There is now a clear, verifiable way to distinguish the actual owner from those right-clickers who happen to have a copy on their hard drive. 

The philosophical debates over whether this is a significant distinction – equivalent to that between Kenneth Grffin and those with a saved jpeg of Interchange, for instance – are ongoing. But for digital artists, the practical consequences have been immediate and transformative.  Since NFTs allow the artist to track who owns their work, as well as enable them to assign ownership of it at any time.

Yet, there are some issues with this. Artificial scarcity is when a resource is limited in an effort to drive up demand and value. It’s the idea that if you make something hard to find, it will be more valuable. But what happens when that becomes reality

Real estate, like all assets, is a reflection of the opportunities and constraints it faces.

When real estate is located near infrastructure, services, and other people, it becomes more valuable because these urban things create efficiencies that make your property more valuable.

Investors balance out the higher cost of land by increasing density and building tall buildings. Tall buildings are costly and expensive to maintain, so there are limits on how many can be built in an area.

However, arrtificially scarce assets are likely to behave in a way that is different from genuinely scarce assets. For truly scarce assets, prices are likely to be set by a market mechanism driven by the value of access. For artificially scarce assets, however, prices may be limited because there is an infinite supply of “scarce” assets available.

As the price of an artificially scarce resource increases, demand for that resource will also increase. Prices for artificially scarce resources are generally set by supply and demand, but this can lead to unexpected consequences.

For example, a company may discover that it can create more artificial scarcity by lowering its price on a limited-edition product. This forces other companies to do the same thing in order to stay competitive, which drives down prices even further. As this happens, consumers are less likely to feel like they need to purchase the limited edition product because there is no way they will be able to afford it at its original price point.

Let’s take a simple case example: imagine a world with about one million passionate gardeners. A virtual land system or NFT membership tokens that only support 100,000 members is likely to leave a lot of people on the outside.

Currently, the end state of many different online communities built around virtual land or non-fungible tokens (NFTs) doesn’t appear to be very different from how the internet functions now.

We have millions of websites and online communities. Many of them use membership fees or other tools like participation metrics to sort and filter genuine contributors from lurkers and freeloaders. Do NFTs solve this problem better than any of these other methods? Not everyone thinks they do.

Either way, blockchains and the metaverse will be here for a while, but it seems some more brainstorming is needed for the digital scarcity ideas to work beyond a few niche collectors. While people are naturally collectors, there is still nothing preventing people from making copies of these products using screen shots, recording software or even making similar items for other worlds. When it comes to “land” in the metaverse, there needs to be also more of a value proposition than just owning something cool or new, because that will wear off after the 100th or so metaverse colony is created with land for sale.

The Metaverse should be an immersive experience where users can do anything they want. If you want to own land, you should be able to buy it and build whatever you want on it—but that shouldn’t create a new problem where only the rich can afford it. The goal should be making things as accessible as possible so everyone can have fun without worrying about money or time constraints.

Anya Libova join Apester as UK Managing Director

By
Pesach Lattin
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0

Apester has announced the appointment of Anya Libova as UK Managing Director, hot on the heels of hiring Itay Gissin as CEO.

These appointments illustrate Apester’s continued investment and further growth in the EMEA region. Anya will focus on growing the company’s sales, partnerships and operations in the UK, helping clients to optimise data strategies and drive new revenue streams.

Most recently, Anya held a position of a publisher sales director for the UK & Nordics at Taboola, helping publisher clients make the most of their content recommendation engine’s technology to drive revenue, grow engagement and attract new audiences. She is also an active supporter of a number of initiatives aimed at improving DEI (diversity and inclusion) in the media industry, including as a member of Bloom UK (a mentorship programme for female leaders), The Women in Programmatic Network (an organization that supports female leaders and professionals working in digital media) and as a mentor with Beleve (a mentorship programme supporting women in digital).

“Apester’s technology supports media owners across the three key pillars – audience engagement, data and revenue, and I can’t wait to bring its market leading offer to more clients,” she says. “The team is empowering publishers with the tools they need to understand their audiences better, whilst reducing reliance on third party cookies and providing interactive and highly engaging experiences which put control back in the hands of publishers.”

Anthony Toklo hired as CMO of Davis-Standard

By
Pesach Lattin
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0
Davis-Standard has appointed Anthony Toklo as the company's chief marketing officer.

Davis-Standard has appointed Anthony Toklo as the company’s chief marketing officer. His new position will see him oversee the company’s global marketing and communications strategies.

Previously, Toklo was the product marketing manager at GE, where he led strategic plans and market positions for their packaging business. He also holds degrees in both mechanical and chemical engineering, as well as an MBA from Miami University.

“His technical and commercial background coupled with more than 20 years of experience make him uniquely qualified for this position,” said Giovanni Spitale, Davis-Standard CEO. “His industry knowledge, leadership ability, and success in implementing market growth strategies will be advantageous to our organization.”

Davis-Standard is a global leader in the design, development and distribution of extrusion and converting technology. Our systems encompass over 14 product lines to support manufacturing applications and customers in a wide variety of industries, including automotive, building & construction, consumer products, medical, and packaging. 

How Luxury Brands Are Embracing Immersive Content (UPDATED)

By
Pesach Lattin
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0

As any fashionista knows, luxury brands are always one step ahead of the competition. They have to be, to maintain their high-end image. So, what can we expect from luxury brands in 2022?  

Luxury goods are all about branding. It’s not just enough to have a well-made product – it also has to look the part. That’s why luxury brands have been spending big bucks on digital marketing, to make their online presence as sleek and polished as possible.

Website enhancements, content marketing, and influencer marketing are all important priorities for luxury companies in 2022. But at the end of the day, it all comes down to creating an image of opulence and exclusivity that will appeal to the richest of the rich.

As any luxury brand knows, it’s all about the experience. these days, consumers are more interested in spending money on experiences than on things. That’s why brands have to work harder to keep up.

They need to provide more immersive, engaging experiences that will hold customers’ attention. That’s why high-quality content production is so important. Luxury brands need to embrace the latest digital trends and incorporate rich media into their marketing strategies.

Rich media is much more engaging than traditional media like text or images. It’s interactive and can include features like video, audio, animation, and more. By using rich media, brands can create a more immersive experience that will appeal to modern consumers.

For example, Swiss watchmaker IWC Schaffhausen has partnered with Google to release an interactive Virtual Reality movie to engage with the brand’s audience. The movie allows consumers to embark on a motorbike ride with award-winning actor Bradley Cooper. The decisions the viewers make along the ride influence the outcome of the story. According to the brand, the key was to make the experience accessible to everyone, whether a collector of luxury timepieces or a tech enthusiast excited about the latest in VR innovation.

Some of the most effective rich media formats are immersive technologies like 3D imagery, AR, and VR. These turn customers’ journeys into a memorable experiences and bridge the gap between online and offline. They help high-end retailers replicate the in-store experience, allowing consumers to “feel” luxury items without actually visiting brick-and-mortar stores.

However, these technologies can also be used to create funny, entertaining experiences that will make customers laugh and engage with your brand on a deeper level. For example, you could create a virtual reality game that allows customers to try on different outfits and see how they look in them.

Or you could create an augmented reality app that superimposes humorous images onto real-world objects. By harnessing the power of immersive content, you can create truly engaging experiences that will delight and amuse your customers.

Quality imagery is important for all digital commerce, but especially for luxury brands and retailers.

Scott Anderson, the senior consultant at FitForCommerce, Short Hills, NJ, said that shoppers want to feel and touch items, particularly those with a higher price tag. “Visualization technologies can help them get closer to delivering that experience online,” he said. Anderson noted that some luxury brands are already using augmented reality (AR) and virtual reality (VR) to give shoppers a more immersive experience.

For example, L’Oreal has launched an AR app that allows users to see how products would look on them before making a purchase. While these technologies are still in their early stages of development, Anderson believes they have great potential for the future of luxury eCommerce.

It is clear that companies are valuing AR experiences and are focused on continuing to develop these technologies. However, immersive experiences are still in their infancy.

Most of the experiences related to space have been AR try-on, and almost none incorporate VR and MR in substantial ways. In efforts to create more holistic customer experiences, it will be important for brands to continue exploring how these technologies can be integrated into their marketing plans.

As we look to 2022 and beyond, expect to see more luxury brands investing in digital technologies such as augmented reality, virtual reality, artificial intelligence, computer vision (face, gesture and/or emotional recognition software), gaming, cryptocurrencies, and the Internet of Things (IoT) to deliver exceptional and immersive consumer experiences that not only evoke deeper connections to the brand, but also provide a sense of exclusivity. By finding the right balance of online and offline content and experience, brands will be able to differentiate, engage new audiences and deliver impeccable customer service.

The reason for this is simple: The luxury market is becoming more dynamic than ever before. Consumers are no longer willing to settle for anything less than what they want—and that includes their shopping experience. It’s no longer about “having a product” or “having a store”; it’s about delivering a complete experience that meets their needs wherever they happen to be at any given moment throughout their day.

The digital world is a new world. It requires us to re-evaluate our entire way of doing business and understand where the new, often hidden sources of value are. We have to be open to rethinking everything: who we want to be, what consumers most value from us, what our unique advantage in the marketplace is, how our brand heritage translates into modern, digitally enhanced experiences.

We need to establish commonalities in our values and passions with those of our brand and our ideal customers, and consider opportunities for enhancing, cultivating and building on these areas of synergy. 

We also need to become a critical part of providing integrated experiences that customers value—and shape them productively. And lastly: engage and collaborate with the consumer throughout the journey of discovery—and strategic planning.

What do you think about this trend? How could your brand use AR, VR, or MR to enhance the customer experience?

Are Your Ads Funding Terrorism?

By
Pesach Lattin
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0

While brands are rightly concerned about their advertising showing on sites that promote white supremacy and terrorism, they may be surprised to learn that many fraudulent ad activities go toward funding such causes.

Across the pond in Great Britain, The UK Stop Ad Fraud Coalition (UKSAFC) has been set up by a group of advertising professionals, policymakers, technology providers, and agencies to tackle the problem of ad-funded crime in the United Kingdom.

The ad industry is plagued by fraud. Fraudsters use automated systems to generate fake views and clicks from sophisticated bot networks, which eat into advertisers’ revenue while misplaced ads, revenue fraud, and malvertising thrive online.

Much of this fraud is orchestrated by organized criminal gangs, foreign adversaries, and even extremist groups. With advertising money being used to fund a range of malicious activities (including terrorism), there’s evidence that foreign adversaries are benefitting—in some cases using ads for recruiting purposes.

Drug cartels in Mexico are increasingly turning to the internet and bitcoin as a way of laundering money and selling drugs, according to the United Nations Office on Drugs and Crime. The report said Mexican cartels are believed to launder about $25 billion a year in Mexico through various methods, including laundering through “advertising companies” and bitcoin-based money laundering. 

The report said that “the internet has become a key tool in the hands of drug traffickers and other organized crime groups, who use it to facilitate their activities and expand their reach.” 

The report added that Mexican cartels are also using social media advertising to sell drugs and recruit new members, as well as spread disinformation about law enforcement operations.

My friend and fraud expert Dr. Augustine Fou calls it the “Laundromat of Digital Advertising and he often observed that “digital advertising is the most scalable, versatile, cost-efficient, and safe washing of funds you can find anywhere at any time. But that’s only the tip of the iceberg — now add in international tax evasion, organized crime, funding of terrorists and hate groups—and you begin to glimpse a world where digital advertising is concerned.”

After splitting drug proceeds into small payments to avoid controls, the cartels “then use those accounts to buy a series of small amounts of bitcoin online, obscuring the origin of the money and allowing them to pay associates elsewhere in the world.”

According to a  friend at the US Department of Justice who wasn’t authorized to speak to the press, ” There are more than a few terror finance campaigns that relied on the use of low-tech tools, such as cash and courier services, in addition to high-tech ones like digital currency donations from around the world. This is a growing issue and while the US is at the forefront of fighting this, often criminals are way ahead of the curve.”

Why is it so scalable? Since everything happens online, it’s easy for big numbers to be manipulated and reported—there are no physical products or activities (like smuggling) where the value could easily be verified. “Because of its scalability and the fact that it is often invisible to consumers, digital advertising offers a low-cost laundry for those wishing to conduct illegal activities,” says Fou.

Chris Morgan, Founder of MAP comments:‘It’s already a huge leap forwards that clients and agencies alike have got on board with the coalition; sharing their expertise and showing a willingness to take action. By talking to government and enforcement agencies, building up research, and sharing expertise and knowledge, we will deliver a world-leading initiative that drives action.”

The UKSAFC will serve as a forum for sharing information on the problem and coordinating efforts to address it.

The goal is to create a template that other countries can use as they tackle the problem of advertising fraud. Once the UK identifies and publicizes its scale, it will show others what’s at stake so people know how big this issue really is. That should help coordinate efforts by multiple stakeholders towards solving it

On the advisory team is policy, regulation and Government Affairs specialist – former CEO of Radiocentre and Senior Civil Servant  – Ian Moss. He explains: “As an industry, we still haven’t managed to crack this issue. Yet there is a huge appetite out there and so we are seeking to get the whole value chain together. We are also ruthlessly following the money – looking at who is committing the fraud.

This is a serious step in the right direction of treating advertising fraud like a major crime, not just a “problem” that the industry can’t deal with.

Ringless Voicemail Classified as Calls Under TCPA

By
Pesach Lattin
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0

Ringless voicemails have always been a thorn in our sides, but now they’re also a thorn in the FCC’s side. The Federal Communications Commission has determined that these silent voicemails are covered by the same Telephone Consumer Protection Act (TCPA) rules that forbid robocalls without consent. Companies need your permission to leave these junk messages as they’re still considered calls, the FCC says.

The ruling takes effect today. The finding comes five years after marketers first asked for exemptions to the regulations surrounding ringless voicemails, the FCC says.

The requests, from All About the Message and two other petitioners, reportedly drew “overwhelming” negative feedback from public commenters.

The Commission added that it receives “dozens” of complaints about these voicemails each year. FCC chair Jessica Rosenworcel proposed extending the TCPA to this spam in February.

As with other robocall crackdowns, there’s no guarantee the voicemails will stop. Spammers may find alternate avenues to deliver these messages, and the FCC can only do so much to limit spam originating outside.

“Ringless voicemail can be annoying, invasive, and can lead to fraud like other robocalls so it should face the same consumer protection rules,” said Federal Communications Commission Chairwoman Jessica Rosenworcel. “No one wants to wade through voicemail spam, or miss important messages because their mailbox is full. This FCC action would continue to empower consumers to choose which parties they give permission to contact them.”

The FCC based its ringless voicemail decision on precedent; specifically, on the fact that it had previously found that computer-generated text messages are calls for purposes of the TCPA. Similarly, the ruling explains that ringless voicemails are calls despite the fact that they are “not traditional handset-to-handset communications.”

In arriving at its decision, the FCC reasons that ringless voicemails function identically to Internet-to-phone text messaging that is already subject to the TCPA. With both ringless voicemail and Internet-to-phone texts, a number assigned to each consumer is “necessary” and serve as a “unique identifier,” the FCC detailed. Additionally, the steps involved in sending ringless voicemail are substantially the same as the steps involved in sending mass texts and text-to-email address texts.

Holding that a ringless voicemail message is a call subject to the TCPA is also consistent with the ordinary meaning of the word “call,” which Webster’s Dictionary defines as “to communicate with or try to get into communication with a person by a telephone.” In addition, the FCC cited the Ninth Circuit’s decision in Satterfield, held that the TCPA is triggered by the act of placing a call not by whether a party answers a call.

The FCC noted that its finding is consistent with the legislative history and purpose of the TCPA. In adopting the TCPA, Congress specifically found that “automated or prerecorded calls are a nuisance and an invasion of privacy, regardless of the type of call.”

This is just further proof that RVM cannot be used to contact a cell phone without express consent. While there may be arguments to the contrary, don’t believe any phonies who tell you RVM technology is safe and/or TCPA compliant.

Kari Shimmel Promoted to CEO of Campbell Ewald

By
Pesach Lattin
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0

In a move that’s sure to make history, Interpublic Group’s Campbell Ewald has promoted Kari Shimmel, making her the first female CEO in their 112-year history.

Shimmel was previously Chief Strategy Officer at the agency, and will now oversee operations in New York and Los Angeles as well as being based out of Detroit. She will remain in this role through the first quarter of 2023, when Kevin Wertz will be leaving his position as CEO after a successful 24 years at CE.

As CEO, Shimmel will oversee CE’s three offices while remaining based at its Detroit headquarters. The agency currently works with General Motors/Chevrolet/OnStar, ASICS, Dole, Harley-Davidson, Mutual of Omaha, Alliance for Lifetime Income and Travelocity clients.

In addition to his many other successes, Shimmel is credited with leading teams across the agency’s three offices to win more than 20 new clients in the last three years. She has developed the agency’s customer experience consulting practice and is chair of both the 4A’s Customer Experience Committee and its Brand + CX Council.

She posted on LinkedIn that she was “Excited to start this new chapter at Campbell Ewald with an incredible team Silmo Bonomi Al Benoit Jari Auger Barb Rozman-Stokes (She/Her) Jonathan Lange with special congrats to Colin Padden and Jamil Buie on their new roles.”

5 Reasons You Didn’t Earn Money With an Affiliate Program

By
Adam Riemer
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4

One thing that more Affiliates should consider before they join an Affiliate program is what their chances of making revenue with one program over a competing program, or a new program in general would be.  Many Affiliates look at Network stats like EPC, conversion rate, reversal rates, etc…  Those numbers are there for a reason, but in my opinion they are almost all bullsh*t.  Reversal rates are great for seeing if a Merchant is legit, but at the same time they may have a trademark bidder and are just reversing those sales which could increase the rate.  EPC’s and other sites are easy to fake and modify and conversion rates fluctuate depending on the types of Affiliates that are allowed in their program.  Here are 5 easy to check things that will help you to determine if a program has the potential to be profitable for you, if it can be more profitable than a competitors’ program and if it is even worth joining and putting effort into it.

1.  Coupon and trademark bidding losses
The first thing I do when looking at a program before I join it is to see if there is a coupon code box anywhere on the site and then if the Merchant is doing anything to prevent people from leaving for a Coupon Affiliate’s site.  The next thing I do is type in domain +coupon or trademark + coupon and then I go through the top ten results.  If they are coupon sites that have active affiliate links I instantly count a good percentage of sales stolen from my sites.   If the top results are from the Merchant then I click my own link first and then the Merchant’s link and see if they overwrite my cookie with their own.  I also look at the results in the search engines and see if they have trademark bidders bidding on these terms.  If they do, you can almost guarantee that you’ll be losing your sales if you were the original referrer to someone else who didn’t actually add value to close the sale.  This has become a major decision maker for me in the last couple of years on if I join a program or not.  One other thing you should think about and look for if there aren’t active network links is other monetization links through sub affiliate networks and through automatic monetization tools.  These can let these Affiliates in without having to show the network link until later in the server redirects.  You’ll need to erase all cookies before you click the links on those sites and then check for Affiliate and sub network cookies after.

2.  Lead programs and what makes a lead
I’m going to use my client Viewbix.com who is on Share a Sale exclusively for this example.  (I also use their tool and encourage you to sign up for their free option to test it out.  Viewbix is a seriously amazing way to use videos from your website, YouTube, etc… to make money, build your newsletter list and increase readership.)

If you are going to work with lead programs, you have to figure out if there are any catches to it.   Some programs won’t pay you if the person you refer says no to an answer.  Others may sell your information to third parties which creates a horrible user experience for your readers and can cause them to lose trust in your site and your referrals.   Some require information like social security numbers or utility bills which people may not have on hand or want to place online.  (My client Viewbix does not do this and never sells customer or lead data.)  This can also cause you to lose their loyalty and your readership.  You also need to find out what a lead actually is from the Merchant and what is required to complete the lead.

With the Viewbix Affiliate program we pay commissions on a verified lead and a sale.  For our program a lead is just a simple form for a free account for your lead.  The catch is that it has to be verified which in our program means the person has to use a valid email address and click the verification link to give you credit.  We also check how many of the leads turn into actual sales and we have a ton of fraud measures in place.  If the leads turn out to be bad and they don’t convert into sales, we do reverse the remainder and remove you from the program, but we do give you warnings first and try to work with you.  Lead programs can be tricky so you want to make sure you don’t incentivize your traffic without the Merchant knowing the risks of poor quality of the traffic and that the traffic may not convert into sales.  If they don’t respond or want your quality of traffic, then you could be out of a ton of work on SEO, etc… get bad reviews and feedback left on your affiliate account and have your ID posted in different private affiliate management groups which essentially blacklists you from numerous programs.

Evaluate the quality of your traffic and also talk to the Merchant before you join their program.  Find out what their requirements are for leads, if they sell data and contacts, what they consider legit and if they will help you increase the quality of the leads coming through.  The quality can be increased on their end by placing in extra fraud controls which means you be paid for less leads, but you won’t lose the Merchant which means more money and less work for you in the long run.

3.  Adware and Theft
You have to teach yourself about Adware Affiliates and how to find them.  In the archives on ABestWeb or by hiring someone like Kellie Stevens you can discover some of the people who have/had and use/used to use adware applications in the form of Toolbars, BHOs, Couponware, Loyaltyware, Pop Ups, CPV, PPV, etc…  The first thing to do is to see if these types of applications are in the program and then to test one or two of them to know for sure if they are active.  Then you should contact the Affiliate Manager and ask them about which types of adware they are monitoring and if they can name a few of the adware applications they are testing and watching for.  If the Manager can’t name 5 instantly or if they are monitoring toolbars that exist in their program, don’t work with them.  They either don’t understand the dangers of it, aren’t knowledgeable about affiliate marketing and affiliate management and if toolbars are active or they have other applications they allow in their program, you have a good chance of loosing your commissions depending on the applications.  It isn’t worth working with these Merchants as there are plenty that don’t work with them…you just have to do your research and look for them.

4.  Leaks
A leak is something that leads a visitor off of a website.  It could be a link to another site, a banner ad, Google AdSense or anything else.  If the Merchant site has leaks on it, it could take your visitor away and prevent them from finishing the shopping process.  Other Affiliates can target these placements and your cookies can be overwritten.  If the leak is to another Affiliate’s site, that site will replace your cookie and you’ll lose the sale if your referral clicks on their Affiliate link while on their site.  If a Merchant has leaks, you can expect to lose some of your sales and you should know that they don’t understand the Affiliate channel and don’t actually care about you since they are happy to leak your traffic for a few PPC clicks and minimal revenue.   Even if the Affiliate Manager is a good one, the company could care less and doesn’t have any regard for you or your income since they are willing to give your referrals to someone else.  Send your traffic to a Merchant who cares about their Affiliates and one who will keep your traffic on their site and try to convert it into sales.

5.  Responsive Merchants
This is one of the most important things.  If the Merchant isn’t responsive with you, you shouldn’t work with them.  There are always other options to monetize your site and competitors of theirs.  If you have a problem, if you aren’t paid on time, if your links break or if something happens with your creatives, you need to have it fixed or know what is going on with the program and their site.  If the Merchant doesn’t respond to you when nothing is wrong, they probably won’t even think about responding if they mess up  or something is wrong.  If they aren’t available on weekends, weeknights and especially during the day, look for a different program.  You’re work schedule isn’t a 9 to 5 job and by them taking on a role as an Affiliate Manager, they should know what that means and be around off hours as well to help you when you have a question or need help.

There are a ton of things which you should think about when you’re joining a new Affiliate program.  You can look at Network stats, but those are mostly a joke in my opinion.  Anyone can inflate numbers or mess with a Networks stats and there could be a ton of reasons why a conversion rate is low or high as well as if the program is actually a good one.  Think about what could cause you to lose money and then evaluate the program on the potential loss as well as the sales path and what your conversion rates on similar sites are.   By thinking about your potential losses to things Networks don’t want you to think about you can figure out the estimated potential revenue from partnering with a Merchant, a competitors’ program or if you should use a different way to monetize your site.

Half of Americans Agree with Brands Quitting Twitter

By
Pesach Lattin
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0

According to a survey of 500 American adults fielded by Pollfish on Tuesday, more than half—49%—agree with the decisions made by big brands to halt their Twitter ad spending. A quarter said they do not agree with these companies’ choice and another 24% aren’t sure if the move is wise or unwise for those organizations.

Following meetings with advertisers, a live public Twitter Q&A to address their concerns, and a reported meeting and deal with “activist” groups putting pressure on big brands to pause their ad buys on the platform, Musk has sent a series of mixed signals about how he actually plans to address their concerns.

After initially stating that he had addressed concerns by agreeing to form a “moderation council” that would help guide what content is permissible on the platform, Musk reportedly reneged, leaving the issue of content moderation — as well as brand safety concerns — in limbo.

Musk said he would personally review all ads for the platform to make sure they were “appropriate.” Then he backtracked, saying that instead of doing this himself, he would leave it up to Twitter’s advertising team. But then he tweeted again later in the day, saying that Twitter’s ad review team was too slow and inefficient and that they were not doing a good job. He then fired most of them.

When Musk announced his plans to buy Twitter in April, actor and activist Jameela Jamil tweeted that she would leave Twitter if the deal went through: “I fear this free speech bid is going to help this hell platform reach its final form of totally lawless hate, bigotry, and misogyny. Best of luck.” Jamil has not tweeted since Musk acquired the company.

NAACP President Derrick Johnson called on all companies to pull their ads from Twitter, arguing that it is “destructive to our democracy” for any business owner whose ad appears next an incendiary tweet or conspiracy theory not only funds the platform but also spreads the message.

In November, Volkswagen told its brands to stop advertising on Twitter until further notice. In a recent development, a spokesperson for the German auto giant said that all of its brands had followed the advice given to them by social media managers. Audi had opted to halt organic activities—such as direct posts on Facebook or Twitter responses from customers—and would only use their official pages in order respond with questions brought up be potential clients.

For their part, some other counterparts of Elon Musk have left the platform. These include Mary Barra—CEO of General Motors and RJ Scaringe—CEO at Rivian; they haven’t tweeted since the takeover by billionaire. Henrik Fisker also announced his immediate departure to Instagram.

Jaguar Land Rover has announced that it will hire many of the employees who lost their jobs on Twitter’s earnings release day, and will do so by selecting among those laid off.

In a series of tweets criticizing Musk, long-time marketing exec Lou Paskalis noted the move also contradicted what Musk promised some of Twitter’s biggest advertisers during his meeting with the Twitter Influence Council on Nov. 4. It seems that the industry is noticing and taking action in light of Musk’s obvious deceptiveness. 

However, it gets much worse for Twitter. The controversies surrounding Twitter have been many, but this latest news is generating much discussion.


A new report shows that more than 5 million users on the digital platform have had their data compromised. Their information is now being sold and traded publicly or privately through API vulnerabilities—and it contains some sensitive personal details such as phone numbers, emails and even birth dates.

One security researcher discovered a flaw in Google’s systems and raised the alarm about how it could be abused by threat actors. His research included public information that had been scraped from public info—including phone numbers, email addresses, etc.—that wasn’t meant to be made available.

Here is a running list of brands that have told ADOTAT that they have quit twitter completely.  

It should be noted that several agencies including OMD/OMG have expressed that they have no intention of working with Twitter as long as Musk is in charge, as most of their brands have a serious issue with the way he is running things.

Abbott Laboratories
Allstate Corporation
AMC Networks
American Express Company
AT&T
Big Heart Petcare
BlackRock, Inc.
BlueTriton Brands, Inc.
Boston Beer Company
CA Lottery (California State Lottery)
CenturyLink (Lumen Technologies, Inc.)
Chanel
Chevrolet
Chipotle Mexican Grill, Inc.
Citigroup, Inc.
CNN
Dell
Diageo
DirecTV
Discover Financial Services
Fidelity
First National Realty Partners
Ford
Heineken N.V.
Hewlett-Packard (HP)
Hilton Worldwide
Inspire Brands, Inc.
Jeep
Kellogg Company
Kohl’s Department Stores, Inc.
Kyndryl
LinkedIn Corporation
MailChimp (The Rocket Science Group)
Marriott International, Inc.
Mars Petcare
Mars, Incorporated
Merck & Co. (Merck Sharp & Dohme MSD)
Meta Platforms, Inc. (formerly Facebook, Inc.)
MoneyWise (Wise Publishing, Inc.)
Nestle
Novartis AG
Pernod Ricard
PlayPass
The Coca-Cola Company
The Kraft Heinz Company
Tire Rack
Verizon
Wells Fargo
Whole Foods Market IP
Yum! Brands

AdBlockers: New Threat or Boon?

By
Pesach Lattin
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0

We know that ad blockers are good for you. They’re like your favorite health food: they’re full of fiber and antioxidants, but they taste so good that you forget they’re good for you. 

But what if the people who use ad blockers are actually reading more content? What if this isn’t bad for publishers?

That’s what a recent study in the Journal of Marketing Research found. They found that users who have adblockers installed read 21%–43% more articles than those who don’t.

They also spend between 13% and 29% more time per day consuming content than their non-adblocking counterparts.

The researchers also found that female and high-income users were less likely to adopt ad blockers than male and low-income users—a finding that may present publishers with segmentation opportunities based on whether or not a reader is using an ad blocker.

It’s interesting to note that another study found that ad blocker adoption increases the amount of time you spend reading news. That’s because ad blockers have a cognitive effect on consumers, regardless of whether consumers pay attention to them (Vakratsas and Ambler 1999). The reason is that the human brain processes information both consciously and subconsciously (Kahneman 1973).

Why? The theory is that by blocking ads, ad blockers may free up cognitive resources that enable users to read more articles.

But if you don’t have Ads, how do you make money? Well, we know that t ad blocker users are more likely to subscribe to news websites than nonusers of ad blockers.

In fact, readers who use ad blockers subscribe at a higher rate than non-ad blocker users according to the same study. This means that lighter users were more likely to subscribe after installing an ad blocker than heavier ones. In addition, the study found that the readership was more likely to visit more pages per visit, and they spent more time on each page than their non-ad blocking counterparts. This suggests that people using ad blockers are not only loyal but also engaged with the content.

Increased engagement with ad blockers could help news publishers, who rely on subscriptions for revenue.  Also by focusing on the differences between ad blocker adopters and non-adopters, in terms of demographic characteristics and other traits, there is possible new revenue streams.

Because female and high-income users were less likely to adopt ad blockers than male and low-income ones, the remaining exposed users had a more valuable demographic profile. Ad blocking is also associated with an increased likelihood of purchasing products online and in stores.

Publishers may exploit the fact that people who do not use ad blockers are likely to be more willing than adopters of ad-blocking technology to endure exposure to ads.  

A publisher could, for instance, sell subscriptions to users of ad blockers at a higher price than nonusers and show more ads to people who have not installed the software. This would increase revenue from advertising.

One interesting part of the study was the idea that perhaps news sites should stop paid advertising altogether. 

But even if they do offer an ad-free version of their site, readers may still see ads while browsing articles. 

The study found that many people find this experience annoying—especially when it slows down their web browsing and interrupts them as they’re trying to read an article. Does this mean some would pay more for no ads?

Why is this important to us? Because it allows us to think outside the box. We’ve assumed that ad-blockers are just a bad thing since it blocks revenue, but we never looked at why consumers are doing this, and how we can monetize their decisions.

Maybe we not going to try to stop people from using ad blockers. Instead, perhaps some need to look into providing a premium experience that gives them what they want—an ad-free experience. 

It also raises some questions about the difference between consuming streaming video, where more and more people are okay with ads, and reading, where it seems to be more of an issue.

Out-of-the-box thinking will help grow the industry, even during these times. We must examine our notions about advertising, placements, and much more if we are going to grow.

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