Speakers Say Govt. Always Eyeing Companies’ Online Marketing

Many merchants blithely assume their sites come under no regulation -- when in fact FTC rules cover many businesses and sales techniques. and it closely monitors some, said Liana Evans, Commerce360 senior mktg. mgr. FTC rules on dozens of subjects, under 6 U.S. laws, apply to the Internet as well as older media, she said. For example, e-mail comes under rules on direct-mail solicitation, Evans said.

The FTC scrutinizes Internet marketing of weight-loss products and dietary supplements, Evans said. An agency web page -- www.ftc.gov/redflag -- even tells visitors how to spot and report bogus weight-loss claims. Substantiation of claims must appear prominently on Web pages, she said.

But less prominent products are regulated online, too, Evans said, citing: (1) Clothing, whose fiber content and country of origin must be disclosed. (2) Food, whose ingredients must be disclosed and health claims backed up. (3) Jewelry, in which the identity and quality of materials get scrutiny. (4) Tobacco products are regulated in many ways and great detail, especially via a 1998 “master settlement” between the industry and state attorneys gen. (5) Even electrical appliances must make disclosures about how much energy they use. The FTC specifies labeling requirements for TV set dimensions.

Across the board, terms of “free” offers must be provided clearly and prominently, Evans said. The agency regulates use of the phrase “made in the U.S.A.,” as well as testimonials and endorsements, she said.

More than sellers that are on the hook, Evans said. Ad agencies and website designers may be liable if they know a claim is false, misleading or deceptive or help prepare or distribute ads containing such statements, she said.

FDA online marketing policies must be divined from studying its warning letters, posted publicly, because the agency hasn’t issued specific Internet rules, said Ward Tongen, senior online mktg. analyst at medical device maker Medtronic. Without “explicit rules or guidelines… how are we going to know what’s going to float?” he asked. The main challenge is that the FDA considers all, or nearly all, ads to be “labeling… a highly regulated area,” Tongen said. He said pitfalls include unverified claims and promotion of “off-label use” -- taking a drug for a condition other than what it’s approved for. Drugs are regulated nationally, so online marketing must say prominently where a product has been approved, Tongen said.

The safest course is posting contents of brochures that already have been cleared, a tack company regulatory affairs officials sometimes push, Tongen said: “Of course, brochure copy is just not right for the Web.” Notably, brochures are not designed with keyword queries and search-engine results in mind, he said, so “you end up with poor search performance.”

Medtronic has taken a bold step with the first known blog in its industry, Tongen said. The company, which makes spinal implants, surgical systems and other medical devices, posts InsideSpine.com, covering chronic back pain and back surgery. Reader comments aren’t posted until screened by company legal and regulatory affairs officials, he said. It would be hard for other companies to take inspiration from Medtronic’s move, Tongen said, noting that blog author and Medtronic global communications Vp Jill Serbousek has close ties to the legal and regulatory units and first-hand experience as a patient.

Tongen spoke for other panelists in mourning the internal red tape regulation creates: “When you to get something approved… it can be a huge deal and drain.”

The U.S. Fair Balance Prescription Drug Advertisement Act -- specifying when statements describing side effects must run -- complicates manufacturers’ marketing online, said Heather Frahm. Co-founder of Catalyst on-line, which does search engine marketing for drug makers, Frahm said these notices won’t fit in the brief text of paid search results. That means they must be prominently displayed on the landing page -- the page directly linked from an ad, she said. That’s not what a marketer would consider putting a product’s best foot forward, Fram said.

Novartis tried to finesse the problem by buying domain “understandingparkinsons.com” for drug Stalevo, but it’s a move that can produce “destination disappointment” among Web users not expecting a commercial site, she said. Manufacturers lack the comfort of firm guidelines that enable them to make the best of the regulatory constraints, Frahm said: “The FDA has not approved any one approach.”

Regulation constrains everything from site links to organic search marketing -- unpaid efforts to get a site high in search results for relevant queries, Frahm said. Keying Web page content to promising searches for “high blood pressure symptoms” has been nixed inside a pharmaceuticals maker on grounds that medicine says such symptoms aren’t evident, she said. Links to outside sites must avoid those making extravagant claims of cures and be limited to those dealing with the same country, to avoid tripping over rules and reviews that vary by country, Frahm said. Caution even leads companies to link product news releases to corporate home pages rather than the brands’ pages -- again contrary to marketing principles, she said.

Rules on Internet marketing of liquor and beer have been codified by organizations including alcoholic-beverage makers and by Google, said Martin Murray, CEO of Interactive Return, which does search marketing for Diageo, one of the world’s largest liquor companies. The main such body in the U.S. is the Century Council, with representatives of law enforcement and health care along with distillers, he said. Others are the industry’s Distilled Spirits Council of the U.S. and counterpart Portman Group in the U.K. and the European Forum for Responsible Drinking, Murray said.

Murray said the codes all ban: (1) Making alcohol strength an ad’s thrust. (2) Encouraging excessive drinking. (3) Showing people who are or look under 25. (4) Associating alcohol with antisocial behavior, illegal drugs, social or sexual success, or increases in mental or physical prowess. The codes don’t mention the Internet but do apply to it, Murray said.

The rules hamper marketing, Murray said. Verifying ages on a liquor brand’s homepage prevents search engine spiders from reaching inside pages, meaning they don’t get indexed to end up in search results, he said. Murray said he offered to tune a homepage to recognize spiders and let them inside the site, but a Google executive rejected the offer as violating company policy against sites presenting the search engine an experience different from the one for users.

Google doesn’t accept ads promoting beer or hard alcohol, Murray said. It does accept wine ads. Competitors Yahoo, MSN and Ask don’t have rules against alcohol ads, he said.