There was a definite buzz in the air at the ERA Government Affairs Fly-In 2016, which took place on May 25 in Washington, D.C. Not only were attendees ready to hear the latest on Operation Choke Point and FTC policy surrounding digital media, but they were also excited about discussing this year’s Presidential race and what the outcome might mean for our industry.
ERA Board Chairman Greg Sater of Venable LLP began by welcoming everyone to the Fly-In. “For the past 26 years, ERA has led the fight to advance the direct response cause on Capitol Hill,” he told the audience. “In fact, protecting your interests is the primary reason that the ERA was formed in the first place many years ago.”
Sater also thanked this year’s sponsors, including Gold-Level sponsors Beachbody, LLC, Manatt, Phelps & Phillips, LLP, Mountain Valley Integrated Solutions, and Venable LLP; Silver-Level sponsors EvTech Media, Invictus Law, Locke Lord LLP; and strategic partner Merchant Acquirers’ Committee (MAC).
He then introduced the first session, “The Future in 9 Minutes or Less,” along with panelists Bill Knowlton (Invictus Law), Ed Glynn (Locke Lord LLP), Jeff Knowles (Venable LLP), and Harold Hance (Mountain Valley Integrated Solutions). As the moderator, Sater asked each panelist to share their insights into what the future holds for direct response marketers and identify what they foresee as the most disruptive forces looming.
Starting off the discussion, Glynn expressed his concerns about the merging of messages and messengers as the result of social media. “The main thing that the FTC is concerned about in this space is making sure that consumers know two things when they’re on the Internet. First, is the message that the consumer is hearing commercial in nature? Is somebody trying to sell you something? Secondly, who is the speaker that’s talking about the product or service in question?” Glynn said.
He added that the FTC requires the speaker to identify him or herself or for the marketer—if there is an affiliation with the speaker—to identify the connection with the speaker. “The problem that the Commission is going to have [moving] forward is the situation where you have somebody that is not clearly affiliated with the marketer through free goods or payment or something of that sort, but…has been recruited by a third party…” he explained. As an example, Glynn cited those who used to be known as testimonial wranglers back in the early days of direct response marketing.
How will the Presidential race affect DR? According to Knowles, the election will have a tremendous impact in the short term on what’s going to happen with the industry. Considering that Donald Trump has a particular view of the federal government shaped in part by years of litigation, a Trump Presidency, as Knowles put it, could possibly make a difference in how regulation and consumer protection are handled in the future. However, he said it’s really difficult to know for certain.
“On the flip side of that, if Hillary Clinton is elected, you can assume the Democrats will remain in control of the Federal Trade Commission, will have three Democratic commissioners, will maybe or maybe not [have] a new chairman, and Republicans will still be the minority with two commissioners. Consumer protection will remain an incredibly important issue.”
What keeps Hance up at night? The impending increase in minimum wage and its impact on small businesses. “As call center owners, we have not seen our ability to increase what we charge for our services as we go along because margins are slimmer and slimmer all the way around,” he pointed out. The Affordable Care Act is another piece of legislation that, according to Hance, impedes his company’s ability to operate from day to day and creates more obstacles.
Rounding out the panel of experts was Knowlton, who discussed privacy with regard to big data.
“Data breaches occur both on the federal government side and the private industry side. The unfortunate thing is that when it happens on the private side, you have government regulators breathing down your neck and trying to shut you down,” said Knowlton. “When it happens with the IRS or NSA, someone goes to jail. Questions we need to ask ourselves as marketers and legal advisers: How is this data being used? Who’s safeguarding it? How can it be monetized in a way that’s legal?”
For the next session entitled, “What’s Hot & What’s Not – Policy & Marketing Strategies for Digital Media,” moderator Linda Goldstein of Manatt, Phelps & Phillips, LLP, and her panel framed the discussion around regulatory action at the FTC and State Attorneys General coupled with other policy initiatives that are vital to today’s digital business. Joining Goldstein were panelists Mary Engle (FTC), Jonathan Gelfand (Beachbody), and Richard Lawson (Manatt).
A key topic that Goldstein touched on was social media as it applies to testimonials and endorsements.
“One case that is interesting to highlight is the case that the FTC brought about two years ago against Cole Haan,” said Goldstein. “Cole Haan ran a sweepstakes in which they basically asked people to pin five images—pictures of Cole Haan shoes to a Pinterest board, along with five images of places they would like to travel, and in exchange for that the consumers received an entry into a sweepstakes. They weren’t paid to do this; they weren’t even guaranteed any money. All they received was an entry into a sweepstakes.”
She said the FTC viewed pinning of an image of the advertiser’s shoe as an endorsement and the opportunity to win the sweepstakes was a material connection that required that the advertiser disclose to consumers who pinned images and participated in this promotion that they were doing so and were going to enter a sweepstakes.
Goldstein then asked Engle to explain the Commission’s stance on social media campaigns and consumer engagement. Is there a broadening of what might constitute an endorsement on social media?
“First I would like to say I don’t think there [is] actually a broadening of what constitutes an endorsement,” Engle stated. “The opportunity for companies to engage with consumers and gaining their endorsements have expanded considerably with social media over the years. The pinning of the Cole Haan shoes was because they like them. That’s an endorsement.”
Engle then added, “Consumers should know whether this endorsement, this expression of an opinion, is actually organic and instigated on the consumer’s own—or was it paid or was it incentivized by a brand?”
Two of the most anticipated sessions focused on the race to the White House. First, ERA welcomed Kyle Trygstad, editor of The National Journal’s Hotline publication. During his presentation entitled, “The Hottest 2016 Election Analysis in D.C.,” Trygstad shared interesting polling data about presumptive Republican nominee Trump and likely Democratic nominee Clinton.
For example, according to the New York Times poll question: Does he/she share your values? both Trump and Clinton had percentages in the 30s. They both polled in the 50s on their leadership qualities. And they were both in the 30s on the question of whether they were honest and trustworthy.
So where’s the gap? “Trump’s temperament,” said Trygstad. “Seventy percent said he didn’t have the right temperament to be President. Hillary was split 48 percent yes, 49 percent no.”
The Presidential talk continued with the session, “Washington 2016: Congress & the Election – What to Expect.” Mike Robinson and David Castagnetti of Mehlman Castagnetti Rosen & Thomas offered both the Republican and Democrat perspective on who will win the election, and how this race will ultimately affect the Congress, the FTC, and other regulators.
One of the most fascinating aspects of the Presidential election, which Castagnetti and Robinson pointed out, is how people consume their information. “Today, if we’re a Republican, we watch Fox news. If we’re a Democrat, we watch MSNBC,” Castagnetti noted. “If we deal with social media, we only want to deal with our friends and people who have our beliefs. There’s nobody who’s delivering us impartial news, nor is it the way we want to consumer news anymore.”
Following a lunch break, attendees headed to the Hill for a special keynote presentation by Pete Sessions, chairman of the House Rules Committee (R-TX). The Congressman enlightened our DR professionals about legislation to curb the scope of the Department of Justice’s “Operation Choke Point” efforts.
Afterwards, ERA member companies divided into separate groups to meet with their state representatives to share information about Operation Choke Point and advocate for this legislation.
Meetings were followed by an Operation Choke Point briefing with key staffers from the offices of Senators Ted Cruz (R-TX) and Mike Lee (R-UT).
The Fly-In finally concluded with a closing reception overlooking the U.S. Capitol Dome.