Monday, 27th February, 2012

The rules of social engagement

I'm told that people buy stuff based on what their peers recommend online. If you want to sell stuff you need to be part of that online peer group or influence the "influencers" within it. As a result, everyone wants to be in "social media".

The key to using social media legally is to use it fairly and honestly. But there are also issues around ownership of social media accounts, and control of trade mark use that both courts and businesses are grappling with around the world. Below I touch on a case in the United States about ownership of a Twitter account which is being watched closely by many, comment on one form of unfair marketing cropping up in social media - astroturfing, and make some observations about brand control in social media.

Ownership

The issues here are who owns a social media account and how much is a "follower" worth? The case to watch is PhoneDog v Kravitz.

PhoneDog is an online review/news site in the US who is suing an ex-employer (Noah Kravitz) who took his Twitter account with him when he left PhoneDog. The account name was @PhoneDog_Noah at the time Kravitz left, but was subsequently changed to @noahkravitz. The account had 17,000 followers when Kravitz left PhoneDog.

PhoneDog is claiming that the account password and the account are its property, which Mr Kravitz has (essentially) stolen. PhoneDog are asserting that each follower is worth US$2.50 a month, and claiming US$340,000 for the eight months Kravitz has used the account since leaving PhoneDog.

I predict there are going to be more of these ownership cases this year. The outcome of each of which will turn on the facts of the particular case. But I suggest you should:

  • have clear terms of ownership of social media accounts in your employment contracts with relevant employees
  • consider how you can best control and monitor your social media accounts and passwords
  • have a plan in place that ensures such accounts can continue to operate smoothly if an employee leaves.

Astroturfing

I'm using this term loosely, but what I am referring to is planting positive reviews, testimonials and the like to falsely promote a product or service.

There are numerous examples of cases of this type overseas, but none here in recent times. In Australia last year, for example, Citymove Pty Ltd, the operator of a review site, was fined A$6,600 by the ACCC (the equivalent of our Commerce Commission) for publishing false testimonials on its website.

In New Zealand, this kind of behaviour breaches the Fair Trading Act as conduct in trade likely to mislead or deceive. In most cases the provisions of the Fair Trading Act which will be breached carry criminal penalties and substantial fines (up to $60,000 per offence for an individual and $200,000 for a company).

I wouldn't be at all surprised if we see a case brought by the Commerce Commission for astroturfing this year. I suggest:

You don't go down this path.

Trade marks/brand control

Social media and social media account names present a control issue for trade mark owners. The issues range from people pretending to be the trade mark owner or pretending to be affiliated with the trade mark owner to simply not liking how the conversation about your brand is going or the lack of control inherent in social media.

My observation is that companies that have taken the time to consider, at least at a high level, what use of their trade marks they will and won't accept, deal with misuse quickly and effectively.

As a rule of thumb I suggest:

  • if someone is pretending to be you then take action quickly and firmly
  • if someone is pretending to be affiliated with you assess what, if any risk this creates (and any potential benefits) first
  • if someone is talking about you think about talking back rather than getting a lawyer involved
  • before talking back always run the DomPost/NZ Herald test to your post - how would this look on the front page?

Conclusion

With online recommendations being a driver for purchasing decisions,social media issues around account ownership, false advertising and brand control are only going to increase.

Companies that take the time to establish internal rules around social media will have more fun joining in the conversation, and I suspect be more successful, than those that don't.

Make it clear upfront who owns what, have a contingency plan for if things go pear-shaped, and use social media fairly and honestly, and all will be well in the world.

An edited version of this article was published in Marketing Magazine, Mar/Apr 2012 edition