A Legal Guide to the Commercial Risks and Rewards ... - Reed Smith

Network Interference: A Legal Guide to the Commercial Risks and Rewards of the Social Media Phenomenon— CHAPTER 1 —Advertising & MarketingChapter Authors 13United StatesDouglas J. Wood, Partner – dwood@reedsmith.comStacy K. Marcus, Associate – smarcus@reedsmith.comUnited KingdomHuw Morris, Associate – hmorris@reedsmith.comGermanyStephan K. Rippert, Partner – srippert@reedsmith.comKatharina Weimer, Associate – kweimer@reedsmith.comIntroductionThis chapter looks at the relationship between social media and advertising and marketing practices, and how to protect brands.As an emerging technology with nearly limitless boundaries and possibilities, social media gives consumers unprecedentedengagement with a brand. Consumers are empowered. However, this brings with it risks as well as gains. Consumers aren’t justbuying a product or service online, they are discussing, reviewing, endorsing, lampooning, comparing and parodying companiesand their brands. They aren’t simply being targeted for advertising; in many cases, they are participants in the creation anddistribution of advertising. Companies can better enable, influence, monitor, react to and, hopefully, monetise the consumerconversations taking place in social media, and can better engage and interact with the consumer directly with their brands—butit’s critical to understand and navigate the legal minefields that are both dynamic and evolving as the media evolves.Why are advertisers and marketing professionals drawn to social media? Because more than 1.8 billion people use the Internetevery day 14 , and, according to Nielsen, consumer activity on social networking and blogging sites accounted for 17 percent of alltime on the Internet in August 2009, up from 6 percent the previous year. 15 The Internet audience is larger than any mediaaudience in history, and it is growing every day. It’s those eyeballs that marketers want.In the UK alone, spending on online advertising grew by almost 5 percent in the first six months of 2009, while televisionspending fell by 16 percent (see IAB UK News, “Internet advertising spend grows by 4.6 per cent”). It was also reported that UKonline advertising spend overtook TV advertising spend for the first time. 16 Almost two-thirds of businesses say they intend tospend more on onsite social media, while 64 percent are looking to boost search engine optimisation efforts and 56 percent wantto invest more in mobile marketing. Looking forward, new global research by Econsultancy and ExactTarget has revealed that66 percent of company marketers in the UK intend to spend more on Internet advertising this year compared with 2009. TotalInternet advertising spending will surpass £3.5 billion in the UK this year, according to a forecast from eMarketer.Advertising and Marketing 4