New England Biz Law Update
The 47th Super Bowl is now behind us, and — alas — the Baltimore Ravens took home the coveted Vince Lombardi Trophy. As much as that reality may sting here in Patriots Nation, there can be only one Super Bowl champion.
However, the same is not true when it comes to Super Bowl advertising. There is plenty of room at the winner’s podium for advertisers able to pay the nearly $4 million price tag for 30 seconds of air time during the big game, when — for a brief, fleeting moment — viewers actually want to watch commercials.
Some of this year’s best-ranked ads followed a tried-and-true model for attracting attention: the celebrity endorsement. Oprah, the greatest taste-maker of our time, lent her support (if only via voice over) to Jeep brand vehicles in a stirring, patriotic spot, while New England native Amy Poehler of “Parks and Recreation” fame went on a comic romp through Best Buy.
The ads reached not only the fans rapt by the action on the field, but also viewers of network and cable news, Twitter followers and blog readers alike.
Of course, not all businesses have the resources to hire someone like Oprah or Amy Poehler to become the face (or voice) of their brand, much less on a stage as big as the Super Bowl.
Fortunately, celebrity is not an essential ingredient of an effective endorsement; very often, personalized endorsements from real customers can be an equally effective vehicle for connecting with consumers. If a customer is satisfied with a product or service, sharing her story in an advertisement should be good for business and less expensive than hiring a Hollywood star.
While the upside of endorsements can be significant, advertisers should be wary of potential hazards.
The first lies in the composition of an advertisement’s audience. Chances are good that if an advertisement is capturing the attention of consumers, it may also capture the attention of government regulators, competitors and plaintiff-side class action lawyers.
The second hazard is in the somewhat counter-intuitive legal principles that apply to endorsement advertising. Contrary to popular belief, an endorsement can be both true and deceptive.
There is no shortage of watchdogs in the world of advertising. At the national level, the Federal Trade Commission’s Bureau of Consumer Protection is charged with policing the market to prevent public harm arising from false or misleading advertising.
Private industry engages in self-regulation through the National Advertising Division of the Better Business Bureau, which is a popular venue for businesses to challenge their competitors’ advertisements.
Federal and state regulators have broad power to file actions against those they believe have made deceptive advertising claims. The proceedings can result in large financial judgments and injunctions as well as costly damage to reputation and goodwill.
As such, advertisers should ensure that their endorsement-based advertisements are both truthful and not deceptive.
For the unwary, customer testimonials seem like an inherently safe form of advertising. As long as a customer’s testimonial is true (in the sense that the endorser’s statements reflect genuine feelings and experiences), it would seem that the endorsement is not misleading.
That is not always the case. If a consumer endorsement is honest but nonetheless leads to an overall inaccurate impression of the advertiser’s products or services, the endorsement is considered deceptive.
In 2009, the FTC issued its Guides to the Use of Endorsements and Testimonial. The guides make it clear that a consumer testimonial, even if literally true, can nonetheless be deceptive. The FTC will not merely scrutinize the testimonial itself or other individual details in an ad, but will analyze the overall impression an advertisement makes, notwithstanding the literal accuracy of an endorsement claim.
In short, a testimonial or endorsement within an advertisement cannot convey an unqualified, express or implied representation about the product or service offered that the advertiser could not reasonably make on its own behalf.
It is important to note that the FTC guides address not only traditional forms of advertising, such as print, radio and television, but also newer forms such as interactive advertising and digital marketing. For this reason, social media is an important venue for advertisers to consider when assessing the accuracy of their endorsements.
For example, the FTC guides address reviews posted on the Internet. If an online reviewer has received the described product or service for free or in connection with any other incentive, that must be conspicuously disclosed or the review may be considered a deceptive ad.
In addition, any material connection between an advertiser and an endorser must be disclosed. Traditionally, that means the benefits received by a paid spokesperson, but also extends to other connections, such as reviews posted by an employee of the advertiser.
Advertisers must ensure that their Facebook reviews, Twitter endorsements and other online reviews are not coming from undisclosed employees or employees of its public relations or marketing firms.
It may seem as though the FTC guides raise more questions than answers. With that in mind, an advertiser may wonder how to put the guides to practical use. That is somewhat difficult to define, because the FTC employs a “net impression” standard whereby each advertisement is considered on a case-by-case basis. That makes quantifying the overall standards difficult.
Fortunately, the FTC guides include several hypothetical examples that help illustrate when a testimonial or endorsement crosses the line and becomes deceptive.
Consider the fictional case of BeetJuice, Inc., a start-up company advertising its popular beet juice drink “Heart Beet.” BeetJuice’s website contains a running list of tweets from real customers extolling the virtues of the Heart Beet product. One of the tweets scrolling across the website reads: “Feeling great, sleeping like a baby, insomnia gone. #beetjuice.” Another one reads: “Joint pain? GONE. How? Beets me! #beetjuice #amazingstuff.”
The marketing department should think twice about retweeting its customers’ comments. First, there is no doubt that the republished tweets constitute advertisements. Second, even if the reported health benefits were genuine, the company would not be able to make those claims itself without adequate substantiation (i.e., well-designed, blind studies showing that Heart Beat improves sleep and relieves joint pain). If no such studies exist, the claims are at high risk of being found deceptive.
On the other hand, if an endorser’s claims are substantiated, an advertiser need not shy away from using the claims in its advertising.
As the example demonstrates, reliance on customer endorsements can be a risky endeavor. However, there is one tool available to advertisers that can reduce the risks: the disclosure.
With a well-drafted disclosure, an advertiser may highlight its unusual successes along with its more typical ones. In the past, a discreet “results not typical” disclosure proved sufficient and was frequently employed in connection with any number of testimonials. Now, an advertiser has the duty not only to disclose that a testimonial highlights atypical results, but must also state the results achieved by its average customer.
Despite the challenges, advertisers should not be discouraged from using testimonials as part of an overall advertising and marketing strategy. Endorsements can be an effective tool for connecting with consumers, but advertisers should follow some basic guidelines to minimize risk of deception.
First, disclose any and all material connections to an endorser (i.e., if you pay a blogger to review your product, make sure that connection is disclosed).
Second, do not make claims in a testimonial that you could not make directly (i.e., if your product has not been shown in clinical tests to improve sleep, do not run an endorsement in which a customer claims improved sleep).
Third, know the limits of your substantiation and do not make unsupported claims.
Finally, when in doubt, consider whether the risk of deception would be decreased through the use of a disclosure.
Neil Austin is a partner in the litigation department, and Anthony E. Rufo an associate in the intellectual property department, at Foley Hoag in Boston.
