Issues in Online and Social media Advertising

• Pages: 155-180

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CHAPTER VIII

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.

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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

doubt.”3

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 statements—press releases, letters to newspaper editors, and

letters to university officers defending its labor practices—constituted

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.