Web 2.0 Marketing and the Law

By Eric Goldman

Today I participated in the Pike & Fischer teleconference on Web 2.0 legal issues (” Best Practices for Businesses Exploring…Exploiting…and Expanding in Web 2.0″). Among other things, I was asked, in 8 minutes or less, to provide some insightful best practices about using social networking sites for marketing purposes. The irony is that we as professors struggle all of our lives to say anything insightful ever, so being asked to do so in 8 minutes was quite a stretch for me. Here are the notes I prepped for my big moment in the sun:


1) I’m not sure how much Web 2.0 marketing differs legally from Web 1.0 marketing. The same basic rules apply:

• The marketing content has to be true

• If required, the marketing needs the appropriate metadata

• The marketing must comply with media-specific rules for its dissemination

2) The main innovation of Web 2.0 marketing is leveraging off customers’ social networks.

The idea is that friends are more likely to find friends’ recommendations more influential than advertiser-supplied marketing.

Pimping out friendships isn’t entirely new. It’s the basic premise of multi-level marketing and in-home sales parties such as Amway and Tupperware.

Two examples of social network-based marketing.

First, word-of-mouth/buzz marketing, which increases awareness of a brand by getting bloggers and other consumers to start talking about the brand. Second, Facebook’s Beacon program, where a person’s purchases were disclosed to his/her friends as a type of implicit recommendation (i.e., if my friend is interested in X, maybe I should be too).

Social network-based marketing is surprisingly unregulated. There may be sponsorship disclosure rules or rules against trying to pass off marketing as editorial content. There may be privacy laws that govern the movement of consumer data in a Beacon-type situation. But in general, this area is lightly regulated.

Even if legal regulation doesn’t stand in the way of social network-based marketing, adverse consumer reactions might. People aren’t foolish, and they don’t like feeling deceived. When a marketer gets its hand caught in the cookie jar, the bad publicity and loss of consumer trust can put the marketer in a worse position. For example, I predict that Beacon, combined with some other missteps by Facebook, will suffer a long-term hit to their brand.

3) Although not unique to Web 2.0, three examples of ways that Web 2.0 marketing has created legal friction:

• If you’re dealing with kids, COPPA may apply. Xanga.com found this out the hard way when it was busted under COPPA for $1M because it allowed kids to self-report their age.

• Harvesting data from social networking sites can lead to trouble. ConnectU got into trouble by automatically collecting data from Facebook—even though Facebook users gave ConnectU their credentials to log in.

• Spamming is never good. theglobe.com basically got put out of business for using MySpace’s internal messaging tool to send spam.