June 3 - 6, 2024
Commentary
Brakes Let You Drive Fast: Lawyers' Expanded Role In Advertising
- by Christopher Wlach , April 10, 2024
“Let the lawyers sort out the details.”
It’s an oft-heard quip when parties close a deal. And in the ad world, it captures a longstanding truth about the lawyer’s role. Advertisers and agencies don’t expect attorneys to draft creative or spearhead a marketing strategy. Lawyers instead handle the backend, ensuring that clients’ marketing dreams get executed without undue legal risk.
But the industry’s recent repositioning around data, and now AI, has pushed the industry into an ever-growing web of legal restrictions. So laws and lawyers have now become critical to both the day-to-day operations and big-picture strategy of agencies and advertisers.
Lawyers’ Traditional Role
“Advertising law” describes the various federal and state laws and regulations governing how goods and services are advertised. The Federal Trade Commission Act, for instance, requires that advertising be truthful and not misleading. Other state and federal laws likewise restrict how advertisers market their products.
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Ads inevitably involve other legal issues too, including copyright, trademark, and related rights. And advertisers in highly regulated spaces — healthcare organizations and banks, for instance — face other restrictions.
Still, the ad business has historically kept its lawyers to narrow roles and responsibilities.
A Changing Landscape
Not so anymore.
The past decade has seen the law nose its way into the ad world. Perhaps the biggest driver is the industry’s embrace of digital and data-based advertising, which has led advertisers and agencies into a tangle of privacy laws, including the GDPR and CCPA. Increasing a company’s online presence has also meant more website accessibility claims. And social media marketing has placed countless advertisers in the sights of the FTC.
Now comes AI. While some AI laws already sit on the books, more are coming. President Biden’s October 2023 Executive Order, for instance, charges several federal agencies with proposing AI-related regulations and guidance. And companies in the EU are buckling up for the AI Act, a comprehensive law on AI.
As a result, laws and regulations are no longer mere “details” to iron out later. Instead, if advertisers or agencies want to draw value from new technologies, they need to understand — at the outset — the complex and evolving legal framework around them.
Why Brakes Mean Speed
Lawyers’ growing role may seem like just more bureaucracy. But that’s the wrong way to see it.
In 1942, economist Joseph Schumpeter observed that “[m]otorcars are traveling faster than they otherwise would because they are provided with brakes.” If that seems like a paradox, it isn’t. Drivers hit the gas only when they know that brakes are nearby.
It’s no different in marketing. If advertisers and agencies want to keep pace with developing technologies and commercial practices, they need mechanisms to do so safely. And that means addressing legal considerations upfront. Not surprisingly, lawyers sit in organizations’ C-Suites now more than ever, responsible for not just mitigating risks but also furthering business strategy.
Like it or not, today’s advertising industry operates in a regulated space. And in that world, lawyers are enablers — not enemies — of velocity.
Interesting, Christopher.
Tied in with this is the degree to which advertising media are---or are not---regulated by the Feds and state or local governments. In the case of broadcast radio and TV the Feds issue licenses to stations which can be revoked if they engage in dishonest or anti -public interest activities. So this has always been a huge check on the baddies. The broadcast networks, recognizing this, have made sure to keep themselves as clean as possible---including scrutinizing commercials to see if their claims have any factual backing---before allowing them on the air. In contrast, cable was not regulated---however, most programmers had the good sense not to stir up the Fed's interest--so, they too, have kept it pretty straight.
Enter, digital and as with cable there was no overt regulation, but unlike the broadast TV networks and the cable channels, it seems that many digital media ad sellers have been either directly fleecing advertisers or otherwise acting irresponsibly regarding ad placements, and the nature of their content.
It's looking as if the slumberiing giant---the Feds, including Congress ----has finally awoken about digital media's ethical and other issues and is grinding its way towards partial or full regulation. This may be done in the usual heavy-handed manner and is something for advertisers to watch closely---as the effectiveness of their digital media campaigns may be in question.