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Direct Response Marketing

Facing the Regulatory Music

1 Nov, 2008 By: Thomas Haire Response

Leading legal and industry association experts discuss the current regulatory landscape in direct response marketing.

Goldstein: ERA's self-regulatory program (ERSP) has certainly had a positive impact on the relationship between the FTC and the DRTV industry. While the FTC will always remain vigilant in monitoring false advertising claims and deceptive marketing practices, and has continued to bring a significant number of cases against members of the DRTV industry, the presence of ERSP certainly seems to have had an impact on the number of cases being brought based on substantiation of "product claims." It must be remembered, however, that ERSP does not have jurisdiction at this point over marketing practices, such as telemarketing, E-mail marketing and data sharing practices. Many of the cases that the FTC has brought against DRTV industry members have involved these types of marketing practices.

McClellan: The self-regulation program is one of the proudest things that I've been a part of, and it's a positive reflection on our industry and the people in it that it's been so successful. When we first put it out there, there was a lot of fear and some who thought it was going to be an intrusive thing. It's turned out to be anything but. Peter Marinello, who oversees the program from New York, has done a great job of working with the industry and helping clean it up. From a government affairs standpoint, when we meet with other industries, or go up on the Hill, or meet with the FTC, it's a completely different conversation than we had before the program. I am most proud of how the membership and the industry have received the program. It's never fun to have a policeman out there, but the consensus is that it's been a really good thing. It's pushed the relationship with the FTC to a new level. When I first came to ERA, there were lawsuits flying back and forth. It's a calmer atmosphere now.

Is the industry well prepared for a number of new issues coming down the line shortly, including the digital TV transition in February 2009, proposed new product placement rules from the FCC, and changes to the CAN-SPAM law?

Goldstein: The changes to the CAN-SPAM law or the proposed new product placement rules will not have a significant impact upon the industry. The FTC's recent clarifications to the CAN-SPAM rule have actually worked to eliminate some of the ambiguities that have plagued marketers attempting to comply with this law. For example, the FTC recently clarified the issue of who would be considered the "sender" of an E-mail where there are multiple advertisers featured. The clarification gives much needed guidance to marketers as to how these campaigns can be structured to ensure that only one advertiser on the E-mail is considered the sender. Clarifications like these should help marketers conduct their E-mail campaigns with greater certainty. The FCC's proposed rules on product placement present an interesting issue on which many DR marketers are split. The FCC is considering whether to require more prominent disclosure on TV programs whenever a product placement or embedded advertisement appears. Some believe that additional disclosures for product placement should be required, noting that long-form infomercials must disclose multiple times that the show is a paid advertisement. What is interesting, however, is that just as traditional brand advertisers have turned to product placement and brand integration as a way of combating the declining value of the 30-second commercial, we are seeing more members of our industry turn to product placement and branded entertainment as well. Thus, increased regulation of product placement and the imposition of additional disclosure requirements may not ultimately be in the best interests of our industry.

Knowles: The industry is always adapting to regulatory changes, good or bad. Some might view the digital television transition as having diminishing effects on the DRTV industry. However, digital television may provide new opportunities for marketers to embrace the convergence of DRTV with online and other media. The FCC's proposed product placement rules could pose interesting difficulties for marketers who have been able to benefit from product exposure in popular television shows. It is also problematic for the industry to adjust to drastic changes in regulatory policy, such as the FTC's continued onslaught of telemarketing regulations and its latest rules regarding prerecorded messages. In contrast, the FTC's new CAN-SPAM rules have actually helped joint marketers that send promotional E-mail with multiple advertising messages.

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