Advertising & Marketing 2022

Advertising and Marketing: 2022 in Review

Although the COVID-19 pandemic continues to affect many parts of the globe, for the most part, it is gradually being left in the past. As consumers and advertisers return to pre-pandemic life, there has been a shift in priorities for advertising regulators around the world. Where attention was, for a time, focused on combatting practices that arose as consequences of COVID-19, regulators have returned their primary attention to broader areas of interest, with the pandemic only accelerating a renewed focus on the digital economy.

In the last year, there has been an explosion in novel uses of advertising through the introduction of new technologies like augmented reality, virtual reality (the precursor to the metaverse), non-fungible tokens (NFTs) and cryptocurrency. Around the world, advertisers’ interest in the digital economy shows no signs of waning.

So, while general marketing and advertising concepts continue to dominate the contents of this guide as they continue to apply to new technologies, this year’s guide will also explore new emerging themes of the digital economy, such as the regulation of dark patterns and growth marketing, and how new technologies are fundamentally changing marketing and advertising concepts and practices. The guide will also address developing sub-areas of advertising and marketing law, such as greenwashing regulation and the restriction of disinformation and misinformation.

NFTs

The prevalence of NFTs ‒ the unique digital assets that connect ownership to digitalised items such as works of art, real estate, music or video ‒ continued to rise throughout the pandemic, particularly as advertisers embraced NFTs as a new means of increasing brand visibility and secondary revenue streams. However, increased use of NFTs has uncovered new legal challenges. For instance, the pervasive use of NFTs as prizes in contests and sweepstakes brought to light new challenges and considerations, such as the question of how to determine the approximate retail value of an NFT, which may significantly increase or decrease during the contest or sweepstakes period, as a result of the volatile nature of NFT prices. It has been common for intellectual property issues to arise as to whether copyrights and/or trade marks associated with an NFT have been adequately transferred.

Cryptocurrency

Cryptocurrency, digital currency in which transactions are processed through a decentralised system rather than by a centralised authority, gained popularity during the pandemic. In light of its potential for astronomical returns, regulators around the world have sought to crack down on false and misleading claims, such as those that resulted in pyramid schemes that promised large returns for a small cryptocurrency payment, as well the promotion of cryptocurrency by influencers and celebrities.

Unlike most other forms of new digital technologies, non-advertising authorities have been heavily involved in trying to regulate the advertising and marketing of cryptocurrency. Earlier this year, the UK’s Financial Conduct Authority unveiled plans to regulate the advertising and marketing of cryptocurrencies by making them subject to the same regulations as marketing for other financial products such as shares and insurance. In Canada, provincial securities regulators have indicated their intention to regulate in this space, while the Canadian Securities Administrators and the Investment Industry Regulatory Organization of Canada (IIROC) have published guidance on the application of securities legislation and IIROC rules to the advertising, marketing and social media activities of crypto trading platforms and cryptocurrency service providers (CSPs).

Other jurisdictions have taken an even stricter approach. In early 2022, Singapore’s financial regulator issued guidance prohibiting CSPs from advertising their services through any public channel, including television, billboards and social media, permitting them only to advertise and market cryptocurrencies through their own social media accounts or corporate websites.

Augmented reality and virtual reality

Augmented reality, the integration of digital information and assets within a user’s environment in real time, and virtual reality (home of the metaverse), provide new and original opportunities for marketers. While existing legal principles continue to apply to these new technologies, they bring about novel issues.

An influx of computer-generated influencers and avatars in consumers’ augmented reality, and even more commonly in the metaverse, has reached prominent levels. Unlike human influencers, these virtual influencers are fully controllable and can subtly but persuasively communicate an advertiser’s messaging, leading to challenges in ensuring adequate disclosure of material connections.

As these novel practices become more widely known and used, courts and regulators are beginning to address the resulting legal issues in varying ways. In Europe, the fact that virtual influencers are generally not considered “persons” brings into question whether transparency rules apply, and even whether general advertising rules apply. In the United States, the Federal Trade Commission recently proposed an update to the influencer guidance to expand the definition of influencers to expressly include virtual influencers, in order to avoid this ambiguity.

Big tech regulation

Big tech organisations, as the creators of some of these new technologies, continue to have strong involvement in the advertising and marketing on their platforms. In the recent past, there has been an increasing trend of regulators seeking to crack down on perceived self-preferencing.

In the EU, lawmakers have passed sweeping legislation aimed at curbing big tech’s influence in the form of the Digital Services Act (DSA) and the Digital Markets Act (DMA), which would further regulate marketing and advertising, including by limiting the industry’s ability to favour its products and services through positive rankings. Under the reforms, big tech gatekeepers, which are broadly defined and include large search engines, social networks and video-sharing platforms, would be subject to various transparency obligations (such as making the internal workings of their advertising and ranking algorithms more transparent), ostensibly to level the playing field for competitors who also use the platform to advertise competing products and/or services.

US legislators have made a similar move with the introduction of the American Innovation and Choice Online Act, which would take a similar stance. Although the legislation has cleared the Senate Judiciary Committee, the bill continues to be highly debated in advance of the country’s approaching 2022 midterm elections.

Dark patterns

Dark patterns refer to user interfaces or design elements that have been carefully crafted to obscure, mislead, coerce and/or deceive users into making unintended and potentially harmful decisions. As these tactics rise in popularity in certain areas of marketing and advertising, regulators across the globe have begun to prioritise addressing the potential negative effects of dark patterns.

In the EU, the DSA will ban dark patterns and misleading practices aimed at manipulating users’ choices and capitalising on those choices through advertising and marketing. In the US, the Federal Trade Commission released an enforcement policy statement warning companies against the deployment of illegal dark patterns, and it more recently launched a public consultation aimed at developing guidance on the use of dark patterns.

Growth marketing

While growth marketing as a concept has been around for more than a decade, it has only surged in popularity in the past few years with the rise of the digital economy, and it is now often referred to as the next frontier of marketing. Although growth marketing can be defined in various ways, it is ultimately a marketing strategy focused on sustainably and profitably growing a business line by attracting, engaging, and/or retaining customers, typically achieved through merging data analytics with rapid experimentation across various channels (eg, email, websites and social media).

Despite the benefits to marketers and advertisers associated with growth marketing strategies, there are various intricate legal risks to consider, such as misleading representations, as they relate to the collection and use of personal data, dynamic and pricing discrimination, and the proper presentation and qualification of refer-a-friend programmes with monetary incentives.

Disinformation and misinformation

The use of disinformation and misinformation in advertising and marketing grew exponentially during the course of the pandemic, as the world shifted online. While the rise of misinformation online and on social media was first notably linked to COVID-19, misinformation has been tied to all elements of life, such as local politics, geo-politics and social injustice. As a result of rising misinformation, regulators around the world are trying to tackle this issue. For example, EU legislators, through the DSA, have created rules for big tech against manipulation that may result in fake news and content. These rules create new expectations for conventional advertisers and marketers, particularly those that leverage influencers and consumer- or user-generated materials as part of advertising campaigns.

Greenwashing and environmental claims

As consumers become more sustainability conscious, advertisers and marketers have increasingly focused on advertising the sustainability of their products. While this is not a new phenomenon, nor one that is yet to receive enforcement attention from regulators, the environmental claims today are increasingly viewed through a real-time lens of climate change and global consequences of environmental decisions.

The advent of a new level of environmental and sustainable claims has increasingly become the subject of regulators’ renewed scrutiny and focus across the globe, with a sharp increase in attention on representations about the environmental impacts of products and their life cycle.