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Mobile will take power from the Web, but compliance won’t be easy: DMA Mobile Day

To address the fast growing emerging mobile marketing space the DMA held its annual Mobile Marketing Day 2010 in New York on March 4th. The mobile marketing event looked at the ins and outs of mobile marketing through panels on legal issues concerns mobile marketers, as well as through a keynote from Google executive Alex Barza, mobile ad sales and business development director, who spoke about the future potential for mobile marketing as mobile operating systems get more powerful and more.

Barza said that Morgan Stanley is predicting that by 2013 there will be 1 billion mobile devices in the world that connect to the Internet, which includes phones, GPS systems, notebooks and mobile gaming devices. As these devices get more widespread and the bandwidth gets bigger, Barza predicts that online behaviors like shopping and researching products will shift to the mobile device. “4G is the equivalent of putting a broadband cable modem into the palm of your hand,” he said.

Barza said that mobile will become more powerful than online advertising because of the ability to target locally. Not a surprising thing for him to say, as last month, Google CEO Eric Schmidt told the Mobile World Congress attendees that the desktop would become irrelevant in three years.

As mobile grows, so too do compliance concerns. During the panel, called “Legal Dos and Don’ts of Mobile Marketing,” attorneys Adam Snukal at Reed Smith and Andrew B. Lustigman, principal attorney, The Lustigman Firm discussed the ins and outs of mobile marketing legal space, which is much stricter than other marketing channels. Mobile is the only channel in which consumers have to opt-in to receive messages, rather than just providing sufficient information about the program and the option to opt-out.

Unlike some traditional forms of advertising, the mobile space is under the strictest scrutiny of privacy and data laws, said Snukal, attorney.

Because mobile is an Internet-based medium and a telephone-based medium it is uniquely subject to both the CAN-SPAM rules, the Telephone Consumer Protection Act (TCPA), as well as any other legislation that is being considered by the FCC or FTC in regards to online advertising and privacy such as the ongoing investigation into behavioral targeting.

Lustigman said that unlike other channels, mobile’s intimacy makes it the most scrutinized. The two lawyers stressed that it is best to be transparent about data collection practices and marketing practices, since most of the legislation sides with protecting consumer privacy.

Marketers looking to use the emerging channel should be very clear about their terms and conditions when getting consumers to opt-in. The terms and conditions have to be prominently placed next to the opt-in in a font big enough to read, and not just available when clicking on a link. In addition, the pricing has to be clear and transparent. If opt-ing into a free mobile alerts program also means subscribing to a $9.99 a month magazine subscription, then that must be stated.

Marketers should also be wary of co-branded mobile marketing that is not explicitly laid out in the opt-in terms. If a consumer opts in to receive mobile messages from one company and they plan to share the data with another company, this all must be spelled out clearly.

Sometimes following best practices is not enough. As the market gains traction, legal precedents are being set. The lawyers highlighted the 2009 class action suit, Satterfield versus Simon & Schuster as an example.

In the case, the plaintiff had opted in to receive mobile messages on behalf of Nextone and its partners in exchange for free content. On January 18, 2006, Laci Satterfield received a text message from Simon & Schuster advertising saying that it was sent on behalf of Nextone. The message stated, “The next call you take may be your . . . Join the StephenKing VIP Mobile Club at www.cellthebook.com. RplySTOP2OptOut.

PwdByNexton.” The phone call was a haunting ad for the new book Cell, which was answered by Satterfield’s child. She sued and won the case. The ruling stated that “the equipment utilized by Simon & Schuster has the requisite capacity under the TCPA.”

“Nextone had the right to send SMS on behalf of Simon and Schuster and were very transparent about it, but they lost on account of the auto dialer violation,” said Snukal. The case is a good example of how the precedents for mobile are still being determined.

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