Mobile Marketer's 2011 Mobile Predictions
Our own Editor-in-Chief, Adam Snukal, was asked by Mobile Marketer to look into this mobile crystal ball and predict what he saw to be the major mobile trends of 2011. Hopefully someone is keeping score!
What the New Consumer Privacy Bill Means for Data Collection
On Monday, May 10th, 2010, the article "What the New Consumer Privacy Bill Means for Data Collection" appeared on Mobile Marketer, a widely read publication within the mobile marketing and advertising community. The article, written by Adam Snukal, summarizes the proposed privacy legislation introduced in the U.S. House of Representatives last week. If you have any questions about the article or the new bill, please contact Adam Snukal or another attorney within Reed Smith.
Four Tips for Mobile Marketing to Kids
This post was written by Shira Simmonds, President, Ping Mobile.
A 2007 study by the Nielsen Company reported that 35 percent of American "tweens" (kids 8‑12) now own mobile phones. How can we reach them via mobile marketing programs without violating any legal or ethical guidelines?
The answer turns out to be remarkably simple. The potential is enormous for mobile marketing to be used as a learning tool and to promote healthy, educational products and services. There is a tremendous opportunity to use mobile in creative ways that actually support good parenting while teaching kids how to be responsible, discerning consumers.
Here's how:
- Implement safety measures, such as parental consent – Smart kids with cell phones can easily respond to a call-to-action on a cereal box or TV commercial, and opt-in to promotions without their parents' knowledge or consent. As such, advertisers will often be required—or at least strongly encouraged—to add legalese that may range from asking respondents to confirm they are of a certain age, to expressly prohibiting the participation of certain groups from a program or promotion. Sometimes the best approach is to add extra precautions on top of the legal requirements, such as sending a confirmation link to a parent or guardian’s e-mail address before anything is activated. Some mobile phone providers, such as Kajeet, offer computer programs that allow parents to monitor activity on the child's cell phone account.
- Market to both parents and kids by creating a marketing message that would be parent-approved and kid-friendly –If a brand's mobile marketing campaign offers healthy, educational products, such as an opportunity to join a book club, discounts on a local art class or coupons for healthy snacks, parents will be happy to opt-in. No matter how tech-savvy a 12-year-old might be, it's the parents who make the purchase. A brand is basically marketing to a parent via the child's cell phone. Promotions should be created with the parent in mind, but should be designed to appeal to the child.
- Follow all legal guidelines – Ad campaigns and programs targeting children should be analyzed on a case-by-case basis to determine both the legal requirements and the potential risks associated with such programs. This is an evolving area, and many issues still sit somewhere within a spectrum of different shades of gray. The laws and regulations governing this area of business can be complex and even conflicting at times. They can range from Federal Trade Commission laws (COPPA – Children’s Online Privacy Protection Act) and various state laws, to self-regulatory principles and best practices, like those promulgated by the Direct Marketing Association, the Children’s Advertising Unit of the Better Business Bureau, and the Mobile Marketing Association. While government regulators and self-regulatory agencies alike understand that no sweepstakes, contest or program is child-proof, they do expect advertisers to do their part to protect the safety of our kids. Along with a whole host of information on-line, sound legal advice in this area is key. Get it and follow it.
- Empower kids by giving them a voice, create a campaign that lets kids voice their opinion – In order to engage kids, create an interactive environment, such as a mobile game, a poll where they can vote for something, or interactive SMS or IVR that enables kids to participate and play. Kids learn through play, and brands will be most remembered when kids have had the opportunity to interact with the brand.
Mobile marketing doesn't have to turn kids into mindless consumers. Instead, it can open up a world of educational and developmental potential that parents can embrace rather than resist. Managing time and texting costs is a great way to teach kids how to budget their resources. Using advertised toys as an incentive for performance is an effective motivational tool. And mobile coupons that encourage kids to read books or participate in physical exercise is an idea that any parent would love.
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Ping Mobile is a full-service mobile marketing and technology company providing a complete range of mobile marketing services, including SMS, MMS, IVR, WAP applications and Bluetooth. With an industry-leading focus on consultancy, reporting, data analysis and client services packages, Ping Mobile is the mobile marketing agency of choice for clients that have included Warner Brothers, Ford Motor Company, Days Inn, Disney's Soap Channel, Kentucky Fried Chicken, Arby's, Pizza Hut and Hawaiian Airlines.
Ping Mobile is headquartered in Englewood Cliffs, NJ with offices in Los Angeles, CA, Atlanta and Tel Aviv, Israel. For more information please visit www.PingMobile.com
The Show Must Go On - But First Get Consent
…another important development in the area of mobile marketing and advertising.
Last week, the U.S. District Court for the Northern District of Illinois’ Eastern Division found that a 20th Century Fox SMS campaign violated the Telephone Consumer Protection Act (the “TCPA”). While these cases provide extremely important guidance as mobile marketing continues to evolve into legitimate and effective marketing medium, equally noteworthy is the fact that the SMS campaign in question took place five years ago.
On Oct. 1, 2005, 20th Century Fox sent text messages to various consumers advertising the release of its “Robots” movie on DVD. Victor Lozano was one of many individuals who received these text messages without having signed up for, or otherwise consented to, receiving them. Over the next several months, Mr. Lozano asserted that he received additional unsolicited text message advertisements from 20th Century Fox concerning “Robots” and other properties that were being marketed. As a result, he filed a lawsuit alleging that that text-message campaign was unlawful.
As we’ve written here in the past, the TCPA generally prohibits the use of an automatic telephone dialing system (“ATDS”) to place calls to a mobile number without the prior express consent of the recipient. Moreover, this court, like others before it, found that it is not necessary to prove that the sender actually used the equipment’s ATDS capacity, only that the equipment had that capacity. Although section 227 of the TCPA places certain restrictions on the making of an unsolicited “call,” the FCC has taken the position that sending SMS is the equivalent of making a call, at least when it comes to marketing communications.
Despite 20th Century Fox’s argument to the contrary, the court found the FCC’s interpretation to be reasonable and held that the 20th Century Fox text-message campaign was subject to the TCPA. Additionally, the court rejected the defendant’s notion that the TCPA only prohibits calls that result in a charge to the recipient.
Along with the case presented above, a class action lawsuit was filed very recently in Chicago against Selling Source, a web development, hosting and Internet marketing company, for sending “unsolicited” SMS messages via an ATDS, which the plaintiffs claim is a direct violation of TCPA laws. The defendant in the case filed a motion to have the case dismissed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, which states that lawsuits with insufficient legal theories underlying their cause of action is grounds for dismissal in court. Despite Selling Source’s defense as to why SMS marketing messages should not fall under the terms of the TCPA, the FCC had already ruled that SMS was in fact covered under TCPA laws and were considered “calls” just like phone solicitations, and, as such, are subject to the same regulations set forth by the TCPA.
Why This Is Important: Consent is absolutely essential for SMS marketing and, as the recent string of cases in this area strongly support, an argument that text messages aren't subject to the TCPA is likely to fail. In addition, marketers should be cognizant that they are being regulated by yet another governing body (the FCC), thereby adding to the complication and worry on behalf of marketers who must apply, and make sure they adhere, to strict opt-in and deliverability standards, while being subject to lawsuits such as the one described above, where clear-cut laws under the TCPA are still not fully in place.
Challenges Mount for Google / AdMob Acquisition
Earlier this year, AdLaw By Request wrote on the merits, concerns and overall likelihood of success of the Google / AdMob transaction that closed toward the latter part of 2009, pending the Federal Trade Commission’s (FTC) sign-off. Predicting (or perhaps foreshadowing) that the FTC would raise antitrust concerns over the pending transaction, Google went as far as creating a website entirely devoted to educating and explaining (i.e., swaying) to both the FTC and the public at-large why the acquisition of AdMob by Google should not be construed as anti-competitive.
Give Google props for a nose that knows… The FTC appears to be laying the groundwork for an antitrust challenge. Between assembling its A-Team of FTC litigators and asking several of AdMob’s competitors to testify under oath about the impact this prospective consolidation would have on the mobile advertising market, the FTC seems ready for the challenge.
The concern, again, is the potential dominance Google would have over both web and mobile advertising. AdMob is a leading supplier of graphic ads (essentially, an ad network) that run across more than 150,000 different mobile sites and applications within its network. AdMob was also among the first companies to sell ads that appear in mobile applications, such as games. By folding the AdMob mobile ad market share into Google’s existing business, the FTC is clearly concerned that Google would capture another front on the digital advertising landscape.
Earlier this week, Sen. Herb Kohl (D-Wis.), Chairman of the Senate Subcommittee on antitrust, wrote to the FTC, urging the agency to closely scrutinize the deal as it “raised important competition issues.” In contrast, Google continues to assert that the mobile advertising space is still in its infancy, and no one can predict if any single company will dominate it. In addition, Google points to Apple’s somewhat recent acquisition of Quattro Wireless, as evidence that the mobile advertising market has many players of varying sizes.
In an interesting twist to this developing story, the CEO of 4Info, Zaw Thet, sent a letter to the FTC claiming Google’s acquisition of AdMob would not impact his company’s ability to compete in the mobile space. 4Info is a direct competitor of AdMob, and considered by many to be the largest, or among the largest, mobile ad networks in the United States. Mr. Thet wrote in his letter to the FTC that he has “no concerns about my [4Info’s] ability to continue to compete effectively after the transaction closes.” He further comments that it will be “easy for me [4Info] to partner with large brand advertisers who wish to advertise on mobile devices and publishers who wish to monetize their mobile content.”
Why This Is Important: While mobile advertising is still relatively small ($416 million spent on mobile advertising in 2009, as compared with approximately $24 billion for online advertising during that same period, according to eMarketer), many believe mobile advertising will explode over the next several years. In fact, many analysts predict that more people will run searches on their mobile devices than PCs in the not-too-distant future, and that ad revenues from mobile advertising will similarly surpass those of PCs. Hence, the decisions made today by the FTC, Congress, and even the mobile advertising industry-at-large, will likely have long-standing implications in the not-to-distant future.
Déjà Google
Give Google credit that when it announced its acquisition of AdMob, a leading provider of mobile advertising services and technology, in November 2009, it proactively addressed the likelihood of a Federal Trade Commission (FTC) investigation into the transaction. Google even went as far as posting a web page that the media, regulators and other interested parties alike could access that explained why it believed the deal did not pose any “competitive” (note: antitrust) concerns. Whether it was a self-fulfilling prophesy or just an inevitable step whenever Google makes an acquisition in the digital advertising space, Google last week announced it received a second request for information from the FTC on the AdMob acquisition. This, however, is familiar territory for Google, which has been the target of government scrutiny over previous deals. The FTC held an eight-month investigation into Google's plan to buy DoubleClick Inc. in 2007 before approving that transaction, and last year Google walked away from a search deal with Yahoo after the U.S. Justice Department indicated that it would consider blocking the agreement and strategic alliance.
What Google may not have expected is the data privacy and consumer protection industry group backlash that has taken up the not-yet-completed transaction as a struggle to protect consumer data and the mobile advertising market. At least two prominent consumer groups reportedly approached the FTC, asking it to block the acquisition, arguing that a Google/AdMob combination would put “significant amounts of data for tracking, profiling and targeting” of U.S. mobile consumers into the hands of a single advertising network. Google and AdMob combined will form the largest mobile-advertising company, with 30 to 40 percent of the market, according to Karsten Weide, an analyst with researcher IDC in San Mateo, California. These groups want the FTC to consider whether Google's access to AdMob's technology will give it an unfair advantage in selling mobile advertising.
Understandably, Google has asserted that the economic/market impact of such an acquisition would be almost impossible to measure against the dozens of other mobile ad networks that compete with AdMob on a daily basis. Moreover, a spokesperson for Google has suggested the deal will provide users with more free mobile applications, in some cases as an alternative to pay-to-download apps, since it will allow developers to subsidize their products through better and more targeted mobile advertising.
One interesting issue that has arisen from this and other similar transactions over the past couple of years is whether and how consumer privacy fits into an FTC antitrust analysis. It is well documented that the FTC primarily rests its antitrust analysis on two categories: (i) agreements that are per se illegal, and (ii) agreements that are analyzed under the Rule of Reason. Types of agreements that have been held per se illegal include agreements among competitors to fix prices or output, rig bids, or share or divide markets by allocating customers, suppliers, territories, or lines of commerce. On the other hand, agreements not challenged as per se illegal are analyzed under the Rule of Reason to determine their overall competitive effect. A Rule of Reason analysis entails a flexible inquiry and varies in focus and detail, depending on the nature of the agreement and market circumstances. While this analysis still begins with a review of the primary agreement (e.g., merger, joint venture, license, etc.) driving the FTC’s analysis, it will then extend to other external factors.
Largely until 2007 and the Google/DoubleClick transaction, the issues and types of analysis described above were primarily centered on consolidations and combinations of goods and services, and not privacy or consumer information. During the FTC’s review of Google’s acquisition of DoubleClick, however, all five FTC commissioners who reviewed that transaction agreed that data privacy can constitute a form of non-price competition under a Rule of Reason analysis and, where/when appropriate, should be considered as one of many pieces in their study and review of a prospective transaction. In fact, the FTC, in its decision approving the Google/DoubleClick transaction, provided, “We investigated the possibility that this transaction could adversely affect non-price attributes of competition, such as consumer privacy.” At the core of the FTC’s review was whether, given the nature and economics of online and digital advertising, the concentration of user information that results from a Google/DoubleClick combination meant that no other company would be able to buy, target and optimize ads as profitably, thereby substantially reducing the ability of other ad networks to compete.
On what basis, then, is consumer privacy evaluated? Proponents have successfully argued that privacy harms can reduce consumer welfare, which is a principal goal of modern antitrust analysis. In addition, these same groups have argued that privacy harms can lead to a reduction in the quality of a good or service, which is a standard category of harm that results from excessive market power. On the other hand, those who oppose the incorporation of a privacy review in any antitrust analysis generally rest their argument on two points: (i) they disagree that privacy is a competition-related issue and point to precedents in which non-competition issues (like pollution) have not been traditionally factored into an antitrust analysis, and (ii) these transactions have proved themselves to create market efficiencies and improved offering/technology that ultimately benefit consumers with a more personalized online experience. This latter opinion may best be summarized in a Yahoo statement from 2008: “The advertising model has made Internet content and services available to millions of people in the United States and around the world—for free. The business model of relying on advertising revenue to fund websites has meant that vast amounts of information on the Internet has been fully accessible to people of all ages and income levels.”
Why this Matters:
Those who ignore history are doomed to repeat it. Our economy today is flush with companies that have been created to essentially trade in almost every aspect of behavioral advertising and consumer data. In fact, one might argue that consumer data has become a currency of sorts in the digital advertising and media industries. As consumer privacy becomes, on the one hand, increasingly protected by both legislation and self-regulatory initiatives (leaving aside the even more complex discussion of the implications of cross-border transactions and acquisitions where the same piece of consumer data may be subject to varying laws), and also a valuable commodity that is highly sought after, companies should be more aware of the legal implications associated therewith in all spheres of their business – including the arena of mergers and acquisitions. Whether one agrees that consumer privacy should be factored into an FTC antitrust analysis or not, it seems unlikely that the FTC will shift from the position it seems to have taken (as evidenced by the Google/AdMob transaction) over the past couple years, and therefore, companies that are contemplating mergers or acquisitions in the digital media and advertising arenas should at least consider the implications that consumer privacy may have on their deals.
