Alerts

AD-ttorneys@law – August 2, 2018

Alerts / August 2, 2018

In This Issue:

Subscribe to AD-ttorneys@law >>

ANA’s Media Contracts Get Another Update

The Association of National Advertisers (ANA) recently released an update to its Master Media Buying Services Agreement template for use by advertisers and media agencies in negotiations with one another. The new template attempts to build in new provisions as well as revised definitions that capture and build on the importance of increased transparency, essentially requiring transparent practices in its terms.

Define + Refine

Major changes to the definitions include:

  • The definition of “affiliates” – The template includes a revised definition and encourages the parties to define “holding company” as the highest holding company entity possible rather than relegating such an entity to a mere agency affiliate.
  • The definition of “conflicts of interest” – The template adds new language to ensure that agencies and their affiliates disclose all investments or financial connections maintained with a company that provides services to the advertiser.
  • The addition of “EU data protection and privacy laws” – In light of the recent enactment of the European Union’s General Data Protection Regulation (GDPR), the template agreement now contemplates the GDPR and requires the parties to ensure their practices are in compliance with the law’s terms.
  • Changes to inventory-related definitions – The K2 Intelligence Report that inspired the 2016 version of the template reported that undisclosed markups on principal and inventory sales such as undisclosed services and proprietary media can amount to 30 to 90 percent. The revisions to the definitions attempt to combat agencies’ failure to disclose these types of services. The new template essentially caps the amount of the markup that can be earned by the media inventory seller.
  • The definition of “programmatic media” – The new definition now mirrors that used by the Interactive Advertising Bureau (IAB).
  • New defined terms “transaction data” and “value pots” – These two definitions were added as part of the ANA’s attempts to build in transparent practice requirements. The ANA asserts that advertisers should be given access to transaction data over which any vendor or media owner claims rights that would limit the advertiser’s ability to access or leverage such data. Agencies are also obligated to assist the advertiser in accessing transaction data. Similarly, value pots were previously contemplated in the definition of rebates and incentives; however, the ANA felt it prudent to create a new definition to emphasize that value pots should be completely transparent and advertisers should receive their fair share of this free or discounted media.

Thereby Verify

In addition to encouraging transparency, the ANA has also updated the sections concerning content verification, brand safety and standards to combat ad fraud and ensure that advertiser wishes with regard to where media is placed online are fulfilled. Similarly, updates have been made to better define which entities are responsible for media placement approvals and to refine the approval process.

Audit Plaudit

Changes have also been made to the heavily negotiated audit sections of the agreement, notably with regard to reimbursements and auditor nondisclosure agreements. The revised provisions include language encouraging the advertiser to consult with its auditor to determine the threshold amount of an overcharge that would trigger an agency’s reimbursement obligations. Likewise, advertisers are now encouraged to attach form auditor nondisclosure agreements (NDAs) as an exhibit to the final agreement (the ANA intends to release a sample form for use as a template at a later date) in an effort to cut down on the extensive negotiations that commonly occur in this area.

The Takeaway

The recent updates show that the ANA continues to work on this hot topic and will not settle on the changes introduced in July 2016. “While significant progress has been made in bringing more transparency to the relationships between advertisers and media buying agencies, much more is needed,” said ANA CEO Bob Liodice. “The new contract template is more comprehensive than the original and contains updates that address the current marketplace. We urge all advertisers to review the changes and incorporate them into their current media agency contracts where applicable.” We will continue to monitor the media industry for reactions to the new template.

Subscribe to AD-ttorneys@law >>

New Bill Makes Flag a Domestic Wrap

Requires government agencies to buy American-manufactured and -sourced stars and stripes

Foreign or Domestic?

Patriotism is typically presented as a lofty sentiment, a standard appealed to by wanting to shape (or shame) behavior. But where the rubber meets the road, it can be a messy business.

Consequently, we’ve spent plenty of digital ink writing about how love of country intersects with advertising, specifically as it involves the sometimes complicated, often fraught claims businesses make about where their products are sourced and manufactured.

“Made in the USA” is a big deal.

Anyone who’s been awake the past few years is painfully aware of the hyperpoliticization of American life and culture. The idea of what constitutes an “authentic” American identity isn’t just up for grabs – it’s being wrestled over, sometimes violently. And because politicians, for better or worse, are also brands, the origin and manufacture of the flag itself have become a matter for public dispute.

A recent bill sponsored by Ohio’s Senator Sherrod Brown and Maine’s Senator Susan Collins tackles the issue yet again. (Note: He’s a Democrat, she’s a Republican; will they be able to put aside their differences and carry out their plan?)

The Takeaway

The All-American Flag Act, which has been introduced several times before but failed to pass, would demand that government agencies purchase flags that have been “100 percent manufactured in the United States from articles, materials, or supplies that have been grown or 100 percent produced or manufactured in the United States.” There’s an oddly broad “presidential” exemption that allows the president to waive the requirement “if the President determines that a waiver is necessary to comply with any trade agreement to which the United States is a party.”

Aside from this flag-specific bill, businesses which claim to sell products that are made in the USA should take steps to ensure that the claim is true and consistent with Federal Trade Commission (FTC) guidance. In order to claim that products are made in the USA, “all or virtually all” of the significant parts and processing must be of U.S. origin. Furthermore, businesses need to have competent and reliable evidence to back up this claim. Businesses can find the FTC’s guidance on complying with the Made in the USA standard here and here.

Subscribe to AD-ttorneys@law >>

Dairy Queen Accused of Blizzard Snow Job

Class action alleges company drove foot traffic with trick coupon

Frozen Freebie

Oregon resident Mariel Spencer claims to have downloaded International Dairy Queen’s official smartphone app, which offered her a pleasant surprise – a digital coupon, redeemable at her local DQ, for a free Blizzard shake.

If you don’t know what a Blizzard is, you’re missing out. The signature shake is essentially soft-serve ice cream blended with any number of ingredients, from typical sundae toppings to cookies or candy. Often these flavors are built on established brands; the Oreo and Butterfinger Blizzards are popular standards. (If you’re torn, the Butterfinger Blizzard is delicious.)

But Spencer claims she was left with a bad taste in her mouth when her local DQ in Banks, Oregon, refused to honor the offer.

The Takeaway

Spencer filed a class action complaint in the District Court of Oregon, Portland Division, in July 2018. At the center of the complaint is a list of angry app reviews left by frustrated DQ patrons who had their coupon rejected; as in many comments sections, the invective at times becomes quite heated.

The allegations are fairly consistent, but if they’re true, it remains unclear what prompted the refusal by the local franchisers; did the parent company create the faulty coupon purposefully in order to drive up traffic, as Spencer alleges? Or was it simply an epic corporate communications misfire between the head office and the franchises?

Spencer is charging International Dairy Queen with violations of the Oregon Unlawful Trade Practices Act – specifically for creating confusion about the actual offer as well as the relationship between the parent company and its local stores. She also alleges intentional misrepresentations and false and misleading advertisements. The last ingredient? Willful and reckless behavior; Spencer alleges that DQ refused to fix the problem or rescind the offer even though hundreds of victims fell prey to the coupon and complained about it.

Spencer is suing for each misled consumer to receive “the monetary value of at least five Blizzards per class member.” Best prayer for relief ever.

Companies can learn from this frozen debacle on how best to avoid these lawsuits. The first lesson: Read your reviews. Customer reviews may be a great place to start and may head off many issues before they get out of hand. If problems are addressed early, companies can fix the promotion or advertising so as to not mislead customers. Early intervention could mitigate damages and greatly reduce the number of customers negatively affected by the mistake. The second lesson: Know the promotion. Companies should know how the promotion would actually work in real life. While this example may stem from a miscommunication between the parent company and the franchises, these miscommunications may occur in any business. Companies should confirm beforehand that franchises would either honor a proposed deal or clearly communicate to customers what locations would honor the deal.

Subscribe to AD-ttorneys@law >>

Southern Discomfort for Public Radio Defendants

Estate of “S-Town” subject sues for right-of-publicity violations

Phenom

You had to be living under a rock to avoid hearing about pop-culture phenomenon Serial, the intricate and often exasperating true crime podcast devised by journalist and public radio producer Sarah Koenig. Serial turned the previously nascent podcast medium into a media staple and spawned countless imitators and followers.

One of the most successful of these was S-Town, a seven-part podcast hosted by Brian Reed and produced by the team that created Serial. S-Town did its parent-pod proud: Since its release in 2017, it has been downloaded almost 80 million times, won a Peabody award and earned fantastic reviews.

But there was always a dark side to S-Town’s success.

Spoiler Alert

S-Town – a polite abbreviation of the vulgar epithet for the series’ small-town Alabama setting – started as an investigation of a murder. The murder turned out to be nothing but a rumor, but John B. McLemore, an antiquarian horologist, climate-change prophet and garden maze designer who invited Reed to investigate the supposed crime back in 2012, turned out to be a character of Faulknerian dimensions.

McLemore’s vivid personality inspired Reed to hang around and keep recording. The result was an arresting documentary that delved into his relationships, family history and the culture of the eponymous town. The podcast also covered McLemore’s gruesome demise by his own hand in 2015; he passed on without ever hearing the final cut of S-Town or witnessing its exceptional popularity.

He also missed the revelations the show made about his personal life – revelations that were central to the show’s impact.

The Takeaway

While winning praise for its careful observations of McLemore’s complex personality and intellect, the show also revealed details about McLemore’s life – details that his estate says he did not consent to share in a public forum.

The estate is suing Reed and several of the public radio corporate players behind the show, including Serial Productions, This American Life Public Benefit Corporation and Chicago Public Media. The suit claims that Reed revealed details that McLemore expected would remain private, and that McLemore never consented to share information about his depression, his finances or his sexuality.

Moreover, the estate is charging Reed and his co-defendants with violations of his right of publicity. “McLemore never gave consent to Reed or the other defendants to use his indicia of identity for purposes of advertising or selling, or soliciting purchases of, products, goods, merchandise or services,” reads the complaint.

The suit’s concerns echo the press S-Town received, which praised the show as an artistic success but raised questions about its voyeurism. Now the show may be subject to a newly passed right-of-publicity law in Alabama that protects individuals from exploitation of their identity decades after they pass away. The right to publicity is a state-based right. Many states only rely on common law precedent, but an increasing number of states have codified the right. When doing this, many states have modified what is protected by the right. Companies that report on private individuals (living or dead) or otherwise use a person’s persona (such as in merchandise or advertising) should be aware of these state-by-state differences.

Subscribe to AD-ttorneys@law >>

Road Trip! FTC Fans Out in Nationwide Compliance Derby

Commission on the hunt for outdated used-car Buyer’s Guides

Cannonball Run

A rag-tag gang of investigators from the FTC and 12 partner agencies swept across car dealerships in seven states between April and June 2018.

Their mission: compliance.

The teams were checking used cars for the latest version of the “Buyer’s Guide” window stickers that are required under the commission’s Used Car Rule. When filled out, the Buyer’s Guide provides helpful information for consumers on their possible used car purchase.

According to the commission, the sweep encompassed 20 cities, 94 dealerships and more than 2,300 used cars.

The Takeaway

How did the dealerships fare? Meh. Seventy percent of the used cars on sale had Buyer’s Guides attached. Of that 70 percent, only half used properly updated Buyer’s Guides. And only 14 of the 94 dealers used the revised version on every used car they were selling.

The dealers had plenty of notice; The Used Car Rule was last revised in late 2016 and added several features to the Buyer’s Guide intended to clarify warranty and service information, specify vehicle defects and recalls, and provide Spanish-language support. Dealers were also provided with an extensive FAQ sheet from the commission in September 2017; the deadline for moving to the updated guide was January 2018. It may be just a sticker, but the fines for failing to comply are nothing to sneeze at: $41,000 in fines for each violation. It is unreported at this time whether Burt Reynolds, Jamie Farr or Adrienne Barbeau assisted in the FTC compliance sweep.

Businesses should be aware of regulatory developments that affect them, and they should create plans and processes to ensure compliance with new changes. These dealerships should have been well aware of the upcoming changes and been prepared to implement them in a timely manner. Companies should also be aware that regulators might be checking on their compliance.

Subscribe to AD-ttorneys@law >>

Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you written information about our qualifications and experience.