Issues in Online and Social media Advertising

A. Social Media
As the use of social media by advertisers continues to grow,
legislators, regulators, self-regulators, and class action attorneys have
kept pace, which has resulted in a number of legislative, regulatory, and
self-regulatory actions relating to social media advertising. Despite the
relative novelty and unique formats of popular social media outlets,
advertising through social media is subject to the same basic legal
standards that apply to advertising and marketing through traditional
media, including standards for substantiation of claims made on social
media. Social media advertising can raise legal issues in a distinct
manner, however, because social media platforms give rise to
opportunities for exchanges between companies and the public in an
unscripted, viral, and virtually real-time communication.
In addition to the relevant federal and state laws and regulations,
social media providers may impose their own terms and conditions on all
users of and/or advertisers on their platforms. Marketers that do not
comply with these terms and conditions when advertising through a
third-party social media platform risk warnings and/or termination from
use of the platform, and possible heightened attention from regulators
and class action attorneys.
1. Social Media as Advertising/Commercial Speech
To determine whether compliance with advertising laws is required
for specific claims, images, comments or other materials on social media,
one must first determine whether the materials in question are, in fact.
advertising. The same advertising laws generally apply to all types of
marketing materials, regardless of the medium. Because commercial
speech is regulated differently than noncommercial speech, however,
whether viral advertising campaigns, branded entertainment, corporate
communications, and online materials posted by online bloggers and
other “influencers” are commercial speech subject to ordinary
advertising laws is important and unsettled.
Advertising Claim Substantiation Handbook
While all or nearly all non-commercial speech is protected under the
First Amendment to the U.S. Constitution, for commercial speech to be
shielded from regulation, it must be truthful and not misleading.1
Drawing the line between unshielded commercial and shielded non-
commercial speech is not always easy, especially where the speech in
question serves multiple purposes, some of them commercial and others
non-commercial. While at its core, commercial speech is “speech
proposing a commercial transaction,”2 beyond this core, “the precise
bounds of the category of . . . commercial speech” are “subject to
The California Supreme Court’s decision in Nike v. Kasky provid es
some insight into how the courts could draw the line between
commercial and noncommercial speech. In that case, a divided court held
that Nike’s statementspress releases, letters to newspaper editors, and
letters to university officers defending its labor practicesconstituted
commercial speech, explaining that “categorizing a particular statement
as commercial or non-commercial speech requires consideration of three
elements: the speaker, the intended audience, and the content of the
message.”4 Even if the speaker has a “secondary purpose to influence
lenders, investors, or lawmakers,” the court held, the speech is
nevertheless commercial so long as it is “primarily intended to reach
consumers and to influence them to buy the speaker’s products.”5
The uncertainty over whether particular speech or content is
commercial or non-commercial is exacerbated on social media, where
some or all of the content discussing a commercial product on a specific
social media site may be generated by consumers or even “off-duty”
employees, while other content may be sponsored or wholly generated
by the advertiser. The courts and self-regulatory organizations such as
the National Advertising Division (NAD) have increasingly been called
upon to weigh in on cases that have a social media component and
address the myriad of advertising-related issues that may be raised by
1. See Central Hudson Gas & Elec. Co. v. Public Serv. Comm’n, 447 U.S.
557, 566 (1980) (for commercial speech to come within First Amendment
protection “it … must … not be misleading”); see also Bolger v. Youngs
Drug Prods., 463 U.S. 60 (1983).
2. Central Hudson Gas & Elec., 477 U.S. at 562.
3. Nike v. Kasky, 27 Cal. 4th 939 (2002), cert. granted, 537 U.S. 1099, and
cert. dismissed, 539 U.S. 654, (2003).
4. Id. at 960.
5. Id. at 968.

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