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EXPERT WITNESS: CEO of CMP.LY Talks Social Media Disclosure

Nextpoint Guest Post

EXPERT WITNESS: Tom Chernaik

Tom Chernaik is CEO of CMP.LY. The company’s unique disclosure solution is built on a foundation of Tom’s experience and insights in marketing, law, social media and entrepreneurship. Tom is Co-Chair of the Members Ethics Advisory Panel of the Word of Mouth Marketing Association (WOMMA) and is a frequent speaker at events on social media ethics and disclosure.

 

Nextpoint: Why can social media disclosure be such a headache when it comes to regulatory compliance?

Tom Chernaik: There are three sources of headaches: Understanding of the appropriate regulations and guidelines; developing a social media policy aligned with business objectives; and assuring adherence to that policy.

Depending on industry sector, US companies may need to address the requirements of the Federal Trade Commission (FTC), the Securities Exchange Commission (SEC), the Financial Industries Regulatory Authority (FINRA) and/or the Food and Drug Administration (FDA). While the policies of each agency continue to evolve, sufficient guidance has been provided for companies to develop compliant processes for social media communications.

Many companies see the regulations as reasons to significantly limit their social media activities. While marketers are beginning to realize social media as an effective means to build customer relationships, increase awareness for their brands and boost sales, a lack of clarity on how to implement compliant social media programs often holds companies back or exposes them to unnecessary risk or liability. The companies that don’t resolve these conflicts are facing competitive disadvantages that will become more significant in the near future.

Monitoring and enforcement of social media compliance policies can be seen as a significant administrative burden. Ad-Hoc solutions, manual review and human resources are not scalable and become unmanageable in programs of even modest sizes. Integration into existing workflow processes is becoming easier with the availability of purpose-built disclosure and compliance tools.

Relief from the headaches of conducting compliant social media programs is within the means of those companies that choose to apply them. More significantly, the benefits of addressing compliance needs appropriately far outweigh the alternatives and companies can reap the full benefits of transparent social media marketing, keeping the trust of their customers and better monitoring, optimizing and measuring the performance of their social efforts.

What industries are most affected or interested in this kind of service right now?

TC: Without minimizing the distress of regulated industries as they struggle to develop compliant social media programs, let’s focus on consumer brands whose social media presence is most visible to consumers.

The unprecedented growth of social media has motivated brands to leverage the power of Facebook, Twitter, Pinterest and other networks in order to listen to and engage consumers, gain insights about their products and services, and ultimately drive traffic and revenue.

Increasingly, sponsored content and marketing messages are more seamlessly integrated with advocate pages and profiles, videos, Tweets, blog posts and other content on the social web.

Do you see a lot of lawyers interested in social media disclosure? Should they be more concerned? What are the emerging regulatory issues or challenged?

TC: We see increasing discourse on social media disclosure in legal communities. As mentioned above, concern has led some to overly restrict the social media activities of the companies with which or in which they work.

The good news is that the regulatory issues are becoming clearer. In early June, the FTC held a daylong workshop on the topic and is expected to issue additional guidance for Dot-Com Disclosures later this year. That document was last updated in 2000, when Mark Zuckerberg was a sophomore in high school and before Facebook, Twitter or Pinterest were even an idea.

In advance of the FTC guidance, the Word of Mouth Marketing Association (WOMMA) issued an updated draft of their Social Media Disclosure Guidelines this week. (Disclosure: I am Co-Chair of the Members Ethics Advisory Panel of WOMMA.) The previous version is referenced throughout the FTC’s 2009 update and in the social media policies of countless organizations. The WOMMA guidelines address the concerns of both the compliance and marketing stakeholders at companies to help them move forward with effective and responsible social media marketing programs.

What makes policies work? Is it a matter of training? Enforcement?

TC: Policies need to respect existing corporate objectives and culture. There are several keys to successful compliance. First and foremost, make sure that disclosure requirements are clearly communicated to employees, agencies and brand advocates. Next, keep records of your disclosure policy and your communications informing those within your company and external advocates about those policies. Your disclosure policy should be easy to understand and should provide actionable disclosure methods. Note that you are responsible for monitoring the communications of your influencers to ensure that they are including proper disclosures.

Lastly, make sure that posts without proper disclosure are identified and flagged for removal. Communications with your employees and advocates informing them of posts that are out of compliance should be documented, and those who do not comply with policies are subject to consequences spelled-out in your policy.

Do you have any tips or advice for firms? Should companies limit the number of people producing social media content?

TC: With proper policies in place, there is little reason to limit presence of employees on social media. Just as with any other corporate or marketing communications, particular messages and campaigns are more relevant to some employees than others. That said, guardrails are better than handcuffs in this regard, and employees that are both empowered and informed can be your best advocates.

Most companies want their employees to be positive brand ambassadors at their kitchen tables, friends’ cookouts and corner coffee shop. A well-developed social media policy can extend this advocacy.

What are the consequences of not having a disclosure strategy in place?

TC: Regulators are serious about ensuring that advertising is not deceptive and that sponsorship or other relationships between brands and their advocates are clearly disclosed. Most recently, on June 20, the Advertising Standards Authority (ASA) in the UK ruled against Nike and banned a campaign they were running leading up to the Olympics due to Tweets from sponsored athletes about the brand because they lacked the required disclosures. They followed that decision with another action banning Toni & Guy, a chain of UK hair salons, concerning two from Gemma Collins, one of the stars of a popular UK reality series.

Your reputation is probably the most important reason to properly disclose. There is a growing sense of mistrust by consumers of digital and social content. Being transparent can go a long way to establishing yourself as credible. You can earn more trust with your customers and brand advocates by being transparent.

Michael Beumer

A creative communicator and chief marketer at the world's most innovative litigation technology company. Connect with Michael on Google Plus.

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