Automotive Digital Marketing

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Dealership compliance concerns have traditionally focused primarily on the sales and finance processes. However, the unprecedented growth of digital marketing, social media, and online reputation management has invited new regulations and created additional legal challenges for dealers to contend with. Following are six areas that dealers should pay close attention to in 2013:

Advertising Online - Internet advertising may be handled by any number of people in the dealership, such as a used car manager, internet manager, marketing director or perhaps an outside vendor. The Federal Trade Commission (FTC) and state regulators have been taking a much more aggressive stance in examining and challenging internet advertising. It’s vital that anyone who is responsible for writing and posting advertisements online be well aware of state and federal advertising regulations.

A particular area of concern is social media. Despite the fact that social networking tends to be a low-keyed, casual type of communication, advertising regulations still apply. For instance, if inventory is posted or prices/payments are quoted on a social media site, it’s likely that the posts will be deemed to be advertisements and will be subject to disclosure and truth in advertising regulations. A good rule of thumb is to have any information that could possibly be construed as advertising reviewed by upper management or a qualified professional before it is posted online. Remember, advertising violations can be easy for regulators to identify and difficult to defend against.

Online Reviews - The FTC’s updated Endorsement and Advertising Guidelines require companies to ensure that their posts are completely accurate and not misleading, and planting or allowing fake reviews is a violation. Reviewers must never endorse a product or service that they have not used personally or create any other form of false endorsement.

Dealers may also face liability if employees or vendors use social media to comment on the company’s services or products without disclosing the employment or business relationship. The FTC has indicated that companies are fully responsible and liable for all inappropriate actions of their employees and their vendors.

Regulations also require that any reviewer provided with any form of compensation for posting a review must fully disclose the source and nature of any compensation received. So, if a dealer gives away free oil changes or gas cards for reviews and the reviewers fail to disclose their compensation, the dealership may face liability.

Social Media Policies - Social media applications have soared in popularity and it’s important that dealers control the information that’s coming out of their business. Policies and procedures should be put in place to spell out how employees are expected to conduct themselves within social media.  A social media policy can help take the guesswork out of what is appropriate for employees to post about a company to their social networks.

In addition, there are a number of legal considerations that every company should be aware of when establishing their social media policies and procedures, such as social media use in employment decisions; potential overtime claims; harassment, discrimination and defamation claims; and copyright and privacy issues. Beyond legal risks, employees can harm a company’s reputation by disseminating controversial or inappropriate comments.

Contests and Sweepstakes - Sweepstakes, contests, and giveaways have become increasingly popular among dealerships, especially on sites such as Facebook. These promotions can be a great way to get word out about your company, increase your social media presence and develop leads. However, entry into a poorly considered sweepstakes or contest can be a trap for the unwary dealer. These promotions are governed by a variety of federal and state laws as well as social networking sites’ terms of service. Failure to follow pertinent statutes and regulations regarding promotions can lead to government inquiries, civil enforcement actions, adverse publicity, and even criminal penalties.

Text Message Marketing - A recent high-profile lawsuit involving a large dealer group that allegedly failed to honor text message opt-out requests ended in a $2.5 million settlement. Text messaging is subject to a number of federal and state restrictions and the rules are extremely confusing. These regulations can be much more difficult to deal with than telemarketing or email regulations - primarily because many consumers are charged for text messages and the government feels that they should be afforded additional protection against unwanted solicitations. It’s wise to always consult knowledgeable legal counsel before launching a text marketing campaign.

Online Privacy - Dealerships typically collect a great deal of personal information from their website visitors through contact forms, online credit applications, etc. What many businesses fail to realize is how vitally important it is to properly handle any Personally Identifiable Information (PII) collected from consumers through their sites. The potential penalties are substantial. It’s important for dealers to examine their policies for handling consumer privacy online and to review the policies with their employees and vendors to ascertain their understanding. The FTC has penalized a number of companies for failing to follow their own published privacy statements.

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Tags: Digital Compliance, Digital Dealer, compliance, digital marketing, legal, regulation, social Media


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Comment by Jim Radogna on January 14, 2013 at 10:41am

Thank you for the feedback Michelle.

It should be noted however that the Lithia lawsuit was apparently the result of their vendor's failure to honor the opt-out requests.

Another recent text marketing lawsuit was also apparently the result of a vendor's error. Jiffy Lube hired an SMS text service to send promotional text messages to millions of consumers who had not consented to receive such messages. Under the proposed settlement, Jiffy Lube agreed to pay approximately $47 million in services to class members, and also agreed to obtain and retain “informed written consent” through “affirmative action on the part of the consumer through a clear statement regarding the receipt of text message advertisements.”

So it would seem that consumers must be provided with an explicit opt-in with very specific language used to tell the consumer exactly what they are signing-up for.

I'm not sure what you're referring to as "an opt-in KEYWORD", but perhaps the courts don't feel it's as simple as you do? I'm pretty sure Lithia and Jiffy Lube would also agree that it's not that simple as they thought...

I'm sorry that you feel that this was "a poor summation of the real issue with compliance" but I feel compelled to stand by my original statement - It’s wise to always consult knowledgeable legal counsel before launching a text marketing campaign.

Comment by Michelle Dumay on January 14, 2013 at 8:32am

This article has plenty we can all use to grow.

However, as a SMS/text message marketer, your section was a poor summation of the real issue with compliance. The reason that the aforementioned dealer group was smacked with that law suit is quite simple: they were not honoring subscribers requests to opt out. And there is absolutely NOTHING confusing about STOP. Lithonia and other entities that have found themselves on the wrong end of the law simply would not stop.

Other businesses have tried to sneak around best practices by 'dumping'...they simply dump the list of customer's mobile numbers into a text messaging platform. Others have skirted around best practices by simply sending SPAM.  In my opinion, this is wrong on so many levels. It's obviously the opinion of many State Attorney Generals as evidenced by the lawsuits against Twentieth Century Fox, Simon & Schuster, Timberland, Rolling Stones, BurgerKing and others.

Again, there is NOTHING confusing about allowing customers to voluntarily OPT-IN and OPT-OUT. It's simple: incent them to use your keyword, stay on message and make it worth their while to stay with you. And if/when they want to leave the party, let them go.

Perhaps, for some that are pressured to make a quota or have an engagement goal to get 10,000 ups within 14 hours of launching a campaign there is a certain degree of urgency. But for the rest of us that want to engage with customers over the long run because we see the long-term value of mobile engagement, we will go about creating organic and revenue-generating SMS campaigns.

I would say to many an impatient GM or Service Dir., 'Grow your list and fertilize it. It's going to produce the biggest harvest.' Instead of the looking at the number of FB fans or +1 counts, folks should be delving into the ROI of these things. It's great to have 10,356 fans, but are those ups coming in the door and booking service in your bays? Uhhm, much harder to say.

At least with SMS, we can deploy a campaign and I can INSTANTLY see who opened our offer and then when they come into the dealership, I have a second hard count of how many butts I put in the seat. Finally, after they have spent a few bucks with a dealership because of the SMS promotion, a hard ROI can be calculated. 

With the number of customers using digital coupons on the rise (almost $5 billion in 2011 and growing) and the prevalence of mobile phones (340+ million US subscribers), it only makes dollars and sense to create organic (opt-in), revenue-generating SMS campaigns now.

Again, it's not 'extremely confusing'. Stop means STOP. Use an opt-in KEYWORD and stay on message.

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