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The Role of Legal in “Architecting a Connected Enterprise”

December 19th, 2011
in Advertising & Marketing, Expert Guest Blog Entries |

Expert Article by Kyle-Beth Hilfer 

In September, I met web strategist Jeremiah Owyang, Industry Analyst at Altimeter at FSMU 2011. Jeremiah and I recently discussed his KMWorld speech “Social Readiness: Architecting a Connected Enterprise.” I share five areas for questions and thoughts here.

1. SOCIAL MEDIA CRISES ON THE RISE. HAS THERE BEEN LEGAL VETTING? Jeremiah rightly points out at slide 10 that social media crises are on the rise. Slide 14 offers possible causes for the social media crises over a ten-year period and states that more than one cause may apply. I wonder about the overlap between violation of legal guidelines and the other root causes. I also question whether appropriate legal vetting by a specialized attorney, rather than general counsel, may have helped dilute some of the other causes, such as rogue employees, lack of fact checking, or inappropriate online responses. If we look at slide 16 on “Readiness Requirements” or slide 35 that describes the “Average Composition of Social Media Team,” we see that there is no legal personnel on the slides. While the social media team slide covers only full time employees, it underscores a deficit in the organization of many social media teams.

2. SOME SOCIAL MEDIA CRISES ARE INEVITABLE. OR ARE THEY? Jeremiah’s report points out at slide 11 that one-quarter of social media crises were inevitable. It would be interesting to look at these closely and see if something from a legal perspective distinguishes them from the rest. Are the crises legal or pr? Was legal review implemented sufficiently early in the process to avoid a crisis down the line? Were the lawyers not being creative enough from the start? Social media legal vetting requires not just specialized legal judgment but also business acumen from the reviewing attorney.

3. WHAT IS SPECIAL ABOUT CONSUMER GOODS COMPANIES? Jeremiah notes at slide 12 that consumer goods companies experience most social media crises. This is a fascinating point. Is this because consumer products lend themselves more to social media marketing so they are just in the social space more than other types of businesses? Or is there something about consumer goods that creates an increased likelihood of something going wrong? Certainly, from a lawyer’s perspective, I see consistent innovation in the consumer goods companies’ development of promotion and marketing tools.

4. WHY ARE COMPANIES STILL IGNORANT OF OR IGNORING THE FTC ENDORSEMENT & TESTIMONIAL GUIDELINES? Slide 8 of Jermiahs’s powerpoint reminds viewers of the case in which a Belkin employee paid for positive Amazon reviews. Jeremiah approached this as a public relations disaster but I would like to remind companies that the legal implications are real for this kind of activity. The FTC has been vigorously enforcing its 2009 revisions to the Endorsement and Testimonial Guidelines. In March, 2009, Legacy Learning Systems, Inc. and its individual owner settled with the FTC for $250,000 over similar deceptive advertising. (See a description of that case here.) If companies want to avoid this legal exposure, they need to work with legal to develop policies and procedures for identifying and disclosing the material connections between endorsers and the products/services they are touting.

5. WHAT ARE COMPANIES DOING TO PROTECT SOCIAL MEDIA DATA? At slide 62, Jeremiah explains the most crucial advantage of social media, namely integrating social data into customer databases. Consumer data is the currency of social media, but the cost to companies is that they are responsible for safeguarding the data and maintaining its confidentiality. In November, 2011, the Online Internet-Based Advertising Accountability Program of NARC and the BBB released its first six compliance cases relating to behavioral advertising. In addition, the FTC and state Attorneys General continuously express their interest in protecting the privacy of consumers, and a multitude of federal bills are pending for “Do Not Track” and other privacy issues. Before companies start integrating social media data into their databases, they need to undergo a full legal and IT review of their privacy systems.

If you want to read the official report that was the basis for Jeremiah’s KM World speech, click here.



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