Advertising standards and Groupon

Earlier this year, in response to the changing nature of online marketing, the Committee of Advertising Practice extended its Code (the “CAP Code”) to cover “advertisers’ own marketing communications on their own websites and in other non-paid-for space online under their control”.

This means that the Advertising Standards Authority (“ASA”) (the independent, one-stop-shop that investigates alleged breaches of advertising codes, including the CAP code), is now able enforce the withdrawal of all online marketing messages that don’t meet the CAP Code, including those which are on companies own Twitter or Facebook profiles, and also those which are contained in companies’ own promotional emails.  (Of course, the ASA is an advertising industry body – so don’t expect too much from it – you may recall my blog about its remarkably permissive Bodyform adjudication in March.)

Nevertheless, a high-profile consequence of the extension of its powers is that the ASA appears to be considering complaints against emails sent by “deal of the day” websites, and has already upheld 2 such complaints against the biggest “deal of the day” website in the world, Groupon.  The adjudications can be read here and here.

I treat the Groupon offers as more or less “advertising puffs” – that is, unenforceable advertising claims that no reasonable consumer would take seriously. I expect a discount to be involved, but not on the sensational “90% off” sort of scale routinely indicated. 

Perhaps this indifference is because I have viewed Groupon as a passing fad, like those ghastly rubber charity wristbands that everybody used to wear, or MySpace. My hunch is that the business model doesn’t have legs.  (Douglas says that once I get married I may feel differently – I have referred him to the European Financial Review, which backs up my hunch with all sorts of fancy analysis – and Douglas has, in turn, referred me to his wife’s monthly 3-figure Groupon spend…)

However, if lots of less cynical folk than myself (like Douglas’s wife, and, admittedly, my fiancee) are giving Groupon their money, then it’s a good thing that the ASA is regulating it (even if the only punishment which the ASA can at present enforce is the withdrawal of the unlawful communication).  Groupon should also beware of the Unfair Trading Regulations 2008, and their general ban on unfair commercial practices – various parties entitled to enforce the Unfair Trading Regs may not decide to look upon Groupon’s advertising as benevolently as I do.

Overall this blog post is a decent reminder that businesses shouldn’t get too carried away when stating the brilliance of their product or service, even if it’s just words contained in a throwaway tweet or blog. With that in mind, I’ll let the Law Society of Scotland Journal boast about Brodies LLP on our behalf.

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July 2011
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