August 9, 2012

Facebook's Embattled Ad Platform Takes Another Shot: Ad Standards Board's New Ruling — Which Now Holds Both Facebook and Companies With Brand Pages Responsible for Content of User Comments — Could Threaten To Further Undermine Ad Sales

Advertising on Facebook — already a challenge for many companies — just got a whole lot more complicated, thanks to a new Advertising Standards Board ruling. The board's ruling this week carries a hefty onus for both Facebook and the businesses that run brand pages on the social giant — those businesses are now responsible for the language that turns up in page comments. Essentially, user comments are now akin to company advertising — and are now subject to the same rules as what is otherwise allowable in advertising. The board's ruling comes as a reaction in Australia to some comments on the brand page of vodka maker Smirnoff, and threatens to impact Facebook's already fragile advertising platform globally, the UK's Telegraph reports. Posts on Smirnoff's Facebook page are "effectively advertising, regardless of whether they were made by the company or a member of the public, and should therefore comply with advertising laws," the board ruled. So now, companies not only have to calculate the gamble of advertising on Facebook in the wake of the experiences of companies like General Motors, but they must also factor in the cost of hands-on monitoring — which they should be doing anyway, but for clearly different reasons. "There used to be no downside to advertising on Facebook," said Chris Watson, a partner at law firm CMS Cameron McKenna. "Now the free lunch is over and reality has intervened. Companies have to take responsibility," he added, Forbes reports.

Any posts that make false claims about a product, or include racist or sexist language, will leave companies vulnerable to being sued unless they are removed. If, for example, a user claimed that Smirnoff vodka was the purest Russian vodka or it could lead to success with women, the company would be liable on multiple counts, John Swinson, a partner at King & Wood Mallesons said. "Smirnoff is Australian not Russian. So that is false. It may not be the purest so that could also be misleading. And to imply that you would have greater success with girls would contravene the advertising codes," Swinson said, the Telegraph reports in an article by Katherine Rushton.

But the situation is even more complicated than that — different countries have different libel laws, as they do different laws about what is allowable in advertising. And a Web page, which is visible in multiple jurisdictions, is subject to the laws of all those jurisdictions which it is visible in. This could cause serious problems for some businesses. For example, it is legal to market certain prescription drugs to consumers in the U.S. It is not legal to do so in many other countries, Forbes reports in an article by Tim Worstall.