Stay on the right side of the marketing law

Traditionally, marketing has been a self-regulated discipline largely free from the interference of legislation – or so most marketers think. Yet marketing is subject to common law – ie. decisions made in courts over the years – as well as statutes enacted by parliament and EU directives, and the relevant body of case law stretches back at least 200 years. The somewhat laissez-faire attitude stems from the fact that few laws regulate marketing directly, but many more touch on marketing activities in certain areas.

From the legislation point of view, the control of marketing has developed haphazardly, and certain areas are far more constrained than others. The law governing marketing activity depends on the product (for example tobacco and medicines), the sectors (such as gaming and finance) and even the method of marketing (on-pack, via SMS, email etc.).

Emarketing in particular is tightly controlled by the Data Protection Act 1988 and the Privacy & Electronic Communications Regulations 2003 (see B2BM, June 2005, page 40-42). James Milligan, solicitor, legal and public affairs adviser at the Direct Marketing Association, (DMA) comments: “Marketers need to apply different rules depending on whether the business is a sole trader, partnership or limited company.”

Comparative advertising is also fraught with pitfalls and must adhere to the EU Directive on Comparative Advertising, implemented in 2000. Nick Johnson, partner at Osborne Clarke, says: “Marketers need to be very sure that they can justify both the express and implied meaning behind comparison claims, particularly when such claims become technical. Comparative advertising regulations include statements that the information provided must be relevant, verifiable and in context.” Lewis Cohen, senior solicitor, intellectual property and commercial at McGrigors, adds: “There can also be trademark and copyright problems in the manner in which the competitors’ trademark is used and their product recreated.”

Other types of marketing can also cause legal problems if not handled correctly. Most marketers are aware of the problems with prize draws and their interpretation as illegal lotteries, unless the correct safeguards are in place. But fewer know of the possible problems with incentive schemes. Johnson of Osborne Clarke, explains, “Companies promoting to employees of other companies must have the consent of the target audience’s employer, or they could fall foul of legislation covering bribery and corruption. There may also be tax implications for the individuals which need to be disclosed at the time of the promotion.”

Cohen at McGrigors adds, “Product placement is also problematic at the moment, but new rules allowing it appear to be on the way.”

Apart from legislation concerning products, sectors and methods, laws also exist which govern whether marketing is permissible in the first place. Marketing can be affected by laws relating to contract, food advertising, libel and defamation, negligence, intellectual laws such as those concerning trademarks, piracy and copyright, and the Trade Description Act 1968. Certain industries are also restricted by professional codes; the Law Society, for example, governs how lawyers can market their services.

Over the last few years, legislation has certainly been introduced to curb the excesses of marketers who ignore the guidelines, but much more has stemmed from the need to incorporate EU directives within the body of English law. The Chartered Institute of Marketing (CIM) Insights Team found, for example, that in 2005, 21 new acts, regulations or amendments affecting marketers were passed, with another 10 bills to be put before parliament in 2006.

Some of the proposed legislation is extremely constrictive. The recent CIM paper ‘No Marketer is an Island; Marketing and the Law’ states: “The Olympic Bill makes it illegal to combine words like ‘games’, ‘medals’, ‘gold’, ‘2012’, ‘sponsor’ or ‘summer’ in any form of advertising.”

Thus marketing suntan lotion with the slogan ‘Get bronze in London’ could become illegal if the Olympic Bill is passed in its current form.

Despite the CIM’s findings, most B2B marketers and specialist lawyers expect little new legislation. Milligan of the DMA says: “There are no signs that we’re heading for a lot more legislation. None of the existing legislation is currently due for review and no significant new legislation is planned.”

Johnson of Osborne Clarke, comments, “The new laws planned are more often aimed at the B2C arena. The Unfair Commercial Practices Directive (which is to be implemented by December 2007) for example, and The Gambling Act (which comes into force in September 2007) and which abolishes the ‘no purchase necessary’ clause, are both examples of legislation aimed at B2C trading and only touch on B2B.”

Edwin Mutton, director general for the Institute of Sales Promotion (ISP), agrees that B2B marketing is not about to be swamped by new legislation but is still concerned that there is tremendous pressure on the voluntary codes: “The DTI wants to go the criminal route and introduce laws similar to those which exist in other parts of Europe,” says Mutton.

The Committee of Advertising Practice (CAP) and other voluntary codes allow creativity but, because they can evolve more quickly than legislation, are also able to regulate new circumstances quickly, which the legislative process struggles to do. Mutton of the ISP adds, “Legislation kills creativity. However, if marketers flout the voluntary codes – as some do – then legislation will probably become inevitable.”

In spite of concerns that legislation would be the proverbial sledgehammer to crack a nut, marketing is still largely self-regulating. Johnson of Osborne Clarke comments, “Self-regulation has not been eroded by statutory requirement; quite the contrary. The Advertising Standards Authority (ASA), for example, has become larger, better funded and organised and has taken on broadcast advertising, which had not previously been part of its remit.” Johnson agrees that there is inevitably some overlap between the law and voluntary guidelines, but states that bodies such as the ASA appear to be taking more enforcement action than official government organisations, such as the Office of the Information Commissioner. As he says, “Some of this is down to the various organisations’ increased activity, plus a better budget and some to good PR!”

Increasingly B2B marketers have to make sense of a tangle of different regulations and many trade associations can help with legal advice. CIM has a legal helpline for members, for example, and the ISP runs a legal advice service which makes sure that particular promotions are cleared for use within the UK law. The service costs £250 per promotion for non-members – it’s cheaper for members – and comes with the assurance that representatives from the institute are prepared to stand up in court to defend any promotion thus cleared. Websites such as Osborne Clarke’s www.marketinglaw.co.uk are also helpful; subscription is free and the information is regularly updated with subscribers notified by email of new developments.

B2B marketing is a further ramification of an already specialised branch of law, therefore companies looking for a lawyer will need to look further than the high street. The Law Society recommends two commercially-published directories: Legal 500, published by the International Chamber of Commerce (ICC), and Chambers Directory of the Legal Profession, published by Chambers & Partners, each of which has subject-specific listings of legal specialists. Such lawyers are expensive – £390 per hour is not unusual – but can frequently answer legal questions immediately. As Johnson of Osborne Clarke, says: “A 10 minute conversation is not that expensive if it saves firms both time and money.”

Checking whether a campaign is street legal is not the most gripping part of a marketer’s job, but has to be done. “The level of legal knowledge and the importance given to it among marketers is worryingly low,” says Christine Cryne, chief executive of the Chartered Institute of Marketing (CIM). The institute runs a one-day course on marketing and the law which it is revising in an effort to increase awareness of the role of marketing compliance officer. Milligan of the DMA says: “DMA and IDM run training courses which provide marketers with a comprehensive legal training,” while Mutton, of the ISP, adds: “The Diploma in Sales Promotion covers all areas of code compliance, plus full coverage of the law affecting marketers.”

Marketers need to be aware of laws and guidelines but it’s easy to get lost in the multiplicity of different regulations. Nevertheless, until marketers put greater emphasis on checking new or amended regulations and making sure that marketing activity stays within voluntary or legal limits, they encourage new legislation and risk having their activities circumscribed in ways they would not choose. The responsibility for remaining within the law must rest with the marketing department.

A Marketing Compliance Officer (MCO) is to marketing what the data controller is to information. The MCO makes sure that marketing activities stay within the law just as a data controller ensures that data handling remains legal. The Chartered Institute of Marketing envisages the MCO being a chartered marketer and prominent member of the marketing department. Larger companies may make it a separate post – to whom other members of the marketing team can go for accurate, up-to-date advice on both self-regulatory codes and the law. It is the MCO’s job to guard their company against inadvertently breaching codes or laws. As Rafi Azim-Khan, partner and head of marketing law at Wragge & Co, says: “Legal clearance is often thought of as a nuisance. However, get it wrong and, aside from convincing the legislators that more law is needed, you could end up with a damages claim, product recall and hefty costs – not to mention the related brand damage.”

Related content

Thought leadership is widely recognised as a powerful (if complex!) tool to differentiate your B2B brand and engage audiences. But its deployment has typically been focused at top or mid-funnel, and opportunities to leverage its

Access full article

B2B strategies. B2B skills.
B2B growth.

Propolis helps B2B marketers confidently build the right strategies and skills to drive growth and prove their impact.