Self-Regulation in the Cross-hairs: In 2010, under pressure from the Federal Trade Commission and Congress, the advertising industry teamed with the Council of Better Business Bureaus and adopted an unprecedented self-regulatory program to address concerns over behavioral targeting in internet marketing. But the year ended with a flurry of criticism from the Hill, pundits and others creating serious doubt if the self-regulatory efforts would be allowed to develop. In 2011, self-regulation will be put to the test with the backbone of digital marketing at stake.
FTC Raises the Ante: As 2010 drew to a close, the FTC's Bureau of Consumer Protection was on a tear with investigations of an increasing number of major marketers. In what some have described as an exceeding its authority, the FTC has required higher standards for substantiation -- raising the bar by requiring human clinical trials where it had not done so in the past. Juice maker POM sued the FTC over the new standard. The commission countered with a suit of its own for deceptive advertising. In 2011, we'll see this battle continue as the FTC finds new ways to flex its muscle.
You Can Bank on It: As 2010 came to a close, Congress established a new federal agency -- the Bureau of Consumer Financial Protection. Among the many powers the new agency has in its oversight of the financial industry is regulation of false, deceptive and abusive acts and practices by financial institutions. With respect to false and deceptive acts and practices, its jurisdiction is shared with the FTC. The FTC does not, however, have jurisdiction over abusive acts and practices. The legislation requires that the two agencies work out an understanding of how they'll share that jurisdiction. Right. Don't hold your breath.
State's rights or wrongs? When Congress reconvenes in January, many observers predict that there will be a stalemate on many policy issues and that the action will move to the federal agencies where politics will reign. Maybe. But that's not the worst of it. As Congress falters, governors and state attorneys general will pick up the slack. This past election saw a major shift in power to states. This will include consumer protection. While we'll see more from the FTC, Food & Drug Authority, Securities & Exchange Commission and other federal agencies, the real action will be in the state houses and courtrooms. Add the fun class action lawyers will have in the frenzy and it may be a perfect storm.
Too Many Friends: By the end of 2010, Facebook members exceeded 500 million. If Facebook were a country, it would be the third-largest in the world behind China and India. The Facebook data banks have more information on consumers than any other source in the world. And with that size comes risk. In 2011 the world will begin to realize the power that lies in the hands of the social-media giants such as Facebook and begin to deal with it. But they may be too late to make many demands as the likes of Facebook, Google and other social-media platforms become subject to no one country's laws.
Up in the Clouds: If we thought privacy rights and data security were a labyrinth of confusing laws and regulations, wait until we rid ourselves in 2011 of local gigabytes and move all our applications and data into the "cloud," where security is untested but the savings are too compelling not to take the ride. The cloud is something no CFO can ignore, with some saying it could reduce technology costs by huge percentages. But remember all those times you outsourced important functions only to regret it? Bring your parachute.
Diversity Takes Center Court: For years, the advertising agency business has been the target of civil rights groups as an industry that has a dismally poor performance in diversity. The raw numbers seem to support that criticism. In 2011, expect it to hit a crescendo and class action attorneys join the fray and push for reform.
Whose idea was this? In 2010 the long and hackneyed debate over creative ownership between advertising agencies and advertisers continued without resolution. Procurement departments continued to be aggressive and demanded ownership of everything an agency produced, including ideas. For the most part, agencies capitulated. But 2011 may be the year agencies draw a line in the sand as advertisers use agency ideas in countless collateral media as the digital revolution continues. What's fair? Is it time for agencies to have a continuing interest in what they create?
Green isn't always green: Green marketing is hot. So are the pundits who think environmental concerns are being exploited by marketers with carbon footprints bigger than those left by Godzilla. In 2010, the FTC finally announced its new Green Guides. Interestingly, the commission did not take the strict stance followed in Europe. But the guides still have teeth and will be taking a bite out of grime in 2011 as they target green impostors in the marketing community. Unfortunately, it's a target rich field of play.
Once again, much ado about nothing: Just as I accurately predicted last year, claims and consternations to the contrary, suits for comparative advertising, copyright infringement, trademark dilution, breach of privacy and publicity and sequential liability will be no more significant than they have been for years. For some lawyers, it may be their bread and butter, but that just isn't where the action is any more. Where is the action? Watch for class actions, attorneys general investigations, and FTC intrusions.
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Douglas Wood is partner, Reed Smith LLP.