Unfortunately, the unauthorized use of a celebrity’s name and image has become a deceptive marketing practice frequently used by dishonest online marketers. This type of promotion typically claims (falsely) that a public figure has used or endorsed what is billed as the latest miracle weight-loss supplement or wrinkle-reducing cosmetic. Going after these bad actors to protect one’s right of publicity and intellectual property rights can be a challenge. It also tends to be difficult to identify the responsible parties, and even if they can be found, they may be either a small operation that appears not worth pursuing or an enterprise outside of the reach of U.S. laws. A recent action by the Federal Trade Commission, however, serves as a reminder that those who peddle in false online endorsements may be part of a larger network that can be identified and stopped.

In December, the FTC announced that it had reached an agreement to settle charges against a network of internet marketers who for years had sold its alleged weight loss, muscle-building and wrinkle-reducing products to consumers using false and deceptive marketing and billing practices. These practices included the use of fake magazine and news articles and phony celebrity endorsements. The settlement is notable not only for the substantial financial award achieved by the FTC, but also for the breadth of the marketing network involved. Celebrities and public figures seeking to combat the unauthorized use of their names or images in internet marketing campaigns should take comfort from the FTC’s settlement. Through skilled investigatory work, it is possible to identify the parties responsible for such misconduct and put a stop to their deceptive schemes.

The network

According to the FTC’s complaint, three individuals used a complex network of 19 corporate entities to market and sell purported weight-loss, muscle-building, and wrinkle-reducing products. The defendants allegedly marketed and sold their products “through an interrelated network of companies” that were under common control and ownership, and shared officers, managers, employees, call centers, recordkeeping systems, commingled funds, and sales practices. The FTC alleged that the three individual defendants controlled each of the corporate defendants, some of which they owned themselves, and others which were owned by family, friends, employees, and unpaid interns.

The defendants marketed and sold their products on their own websites and on those operated by “affiliate marketers,” which are independent marketers hired through third parties known as “affiliate networks.” The defendants paid a fee to the affiliate network every time a consumer bought one of the defendants’ products after visiting a site hosted by an affiliate marketer in the network. The FTC alleged that in 2015 alone, those fees amounted to more than $19 million.

The ‘fake news’

The FTC’s complaint describes a variety of deceptive marketing and billing practices that were used by the defendants. Most notably, the FTC alleged that the defendants — and the affiliate marketers working on their behalf — hosted “websites designed to look like legitimate and independent news reports or magazine articles about one of defendants’ products.” The fake media sites used domain names and mastheads that falsely appeared to be from legitimate news, magazine, or health websites and engaged in numerous deceptive practices. These practices included falsely claiming that celebrities such as Kim Kardashian, Jennifer Aniston, Will Ferrell, and others had used or endorsed the products.

The FTC also alleged that the defendants failed to properly disclose the terms of sale, including that their “risk-free” trial offers would in fact lead to negative option renewal programs unless cancelled within a short amount of time. In addition, the FTC alleged that the defendants attempted to conceal their misconduct from regulators, banks and payment processors by creating “alternate ‘cleaner’ versions” of websites that had more prominent disclosures than the “landing page” websites that consumers would typically see.

The settlement

The defendants agreed to settle the FTC’s charges in a stipulated order entered in federal court in California. That court order includes a staggering monetary component of $179 million, which is how much the FTC alleged consumers had paid to the defendants over a period of more than five years. The court, however, suspended that judgment upon the defendants’ payment of approximately $6.4 million to the FTC, paid directly and by relinquishing title to assets held by dozens of payment processors and other financial services companies. The court order also imposes extensive injunctive relief, including prohibitions on certain negative option sales and other sales practices.       Of particular note, the order prohibits further deceptive marketing through the use of fake media sites, false endorsements and other
phony testimonials and claims, and requires the defendants to more strictly monitor the marketing materials of affiliate marketers to ensure their compliance with the order.

Bottom line

The FTC’s settlement with the defendants allegedly engaged in these deceptive marketing practices serves as a reminder that the
parties responsible for online marketing using public figures’ names and images without authorization can be identified and stopped.
Those parties may include the operators of large marketing networks. In other words, the FTC did not just find the parties responsible for
the unlawful marketing practices; it also found parties within the U.S. with assets significant enough to disgorge millions of dollars in
deceptively-acquired profits. PR firms should also be mindful about who they accept as clients. There is unlikely to be any indemnification in a client agreement that will extend to this type of serious and substantial economic and reputational loss.

Author: Michael Lasky

For the original article, click here.

My last column for 2017 is an appropriate time to look back at the consolidation, merger, and acquisition activity by and among PR firms.

According to data compiled by my law firm, there were 103 publicly announced and completed transactions worldwide in 2017 involving public relations firms. This reflects an increase of 14% in completed, publicly announced transactions from the 89 completed in 2016. This alone is significant because it demonstrates the existence of a robust M&A market for PR firms. Even more noteworthy is the nature and size of many of the transactions, as well as the factors that are causing owners to sell and buyers to buy.

According to our research, 35% of the 103 consummated 2017 transactions involved PR firms with less than $3 million in revenues. An additional 15% of the transactions involved sellers with revenues of between $3 million and $10 million. In other words, 50%, or more than 51 transactions, involved sellers whose firms had revenues of less than $10 million. It was indeed the year of the  small deal, often designed as a “tuck in” to an existing firm, practice area, or specialty. This is especially true given that technology  continues to bring forward a host of ever-changing and ever- growing practice areas and platforms on which savvy PR firms are able to capitalize.

Who were the buyers in 2017?

•66% of the deals involved independent PR firm buyers;

•29% involved public holding company buyers;

•5% involved private equity firm buyers.

In 2016, in contrast, independent PR firms were the buyers in only 59% of the consummated transactions. This data reflect that more firms, including more independently-owned firms, have adopted M&A as a growth strategy.

The next interesting question is what is causing the sellers to sell. Our research provides some answers. Overall, many firms are having a difficult time attracting and retaining talent. The talent marketplace has not only become more competitive, but top talent, based
on principles of supply and demand, has become more expensive. PR firms also face an increasingly specialized marketplace and one in which client budgets are declining or remaining flat, at least in the traditional service areas. The smaller firms, by definition, have a smaller revenue base, over which to amortize their operating costs. One way in which these firms can spread their operating costs over a larger base is to be part of a larger firm. Doing so may also allow the seller to spend more of his time on new business and client work, instead of taking time from those revenue-producing activities to run a smaller firm.

Buyers find many of these nimble, smaller PR firms attractive as a way to “acquire” entrepreneurial and other talent, enhance a service offering to its existing clients, or grow a practice area. Buyers are also finding it increasingly difficult to grow while relying solely on organic growth to increase revenues. Thus, combining organic growth, with smart or “tuck in acquisition” can be accretive for the buyers. This approach can also fill the different, but complementary needs, of both buyers and sellers.

The “hot” specialty areas of the firms that were bought and sold in 2017 are also noteworthy. Twenty-seven percent of the firms acquired identified themselves as technology or digital firms, 18% as integrated marketing communication firms, 12% as consumer firms, 8% as financial services, and 8% as healthcare firms, and a smattering of other speciality areas.

What is the M&A forecast for 2018? We are likely to see an equally robust M&A market in 2018. In fact, 83% of firms surveyed in late 2017 indicated that they had been approached within the last two years to sell their firms. More significantly, 56% of the responding firms thought it was likely or very likely that they would sell their firms prior to 2021.

Go here for Davis & Gilbert’s complete analysis about M&A trends and issues.

Michael Lasky is a senior partner at the law firm of Davis & Gilbert, where he leads the PR practice group and co-chairs the litigation department. He can be reached at mlasky@dglaw.com.

Click here for the original article.

Still new to the South African market, podcasting has yet to reach its full potential. But moves are being made to increase its presence.

Original article by Michael Bratt, The Media Online

According to Statista, almost a quarter of the US population listened to a podcast in the past month in 2017, an increase from less than 10% in 2008. While this market is surging, its South African counterpart is still in its infancy, but is starting to take off. Elna Schutz, content producer at the Wits Radio Academy, explains. “Podcasting in South Africa is much bigger than most people realise … It’s not huge, but more and more people are getting into it and some have been doing this for many years. There is a growing interest but the majority are hobbies, side gigs or part of brands,” she says.

The power of podcasts

Like online radio, Schutz touts the intimacy of a podcast as its most powerful element. “While radio and other media has wide appeal, podcasts have a personal appeal,” she explains. “The exclusion of many people means the podcaster can talk to their audience very particularly… Directional intimacy and a community that wants to be there are the benefits.” The niche topics covered make the listener feel more involved and they are invested in the podcast because they are interested in the topic.

Podcaster Erich Viedge agrees with niche content being a major strength of podcasts. “Brad Brown makes this point very well; he says, ‘you might only have 200 or 300 listeners, but those people are hyper hyper invested and engaged in your podcast’ and if you can get the right audience you have a very powerful medium indeed.” He adds that people can listen to them while also doing something else or can download them and listen at a later stage, giving listeners choice of when they choose to consume the media.

A distinction has to be made between audio archiving and podcasting. The former is where existing audio content, like a radio show, is packaged so listeners can revisit it or those who missed it have the chance to listen. Podcasting is original content which is packaged, and contains many different formats and styles.

Is podcasting in SA profitable?

The biggest challenge to this space in the country, believes Schutz, is the time and effort required versus its profitability potential. “It’s currently not particularly profitable for many people,” she reveals. “I’m hopeful that in the future we will figure out business models that work for people … A lot of people are looking to the US and expecting it to work the same here”.

Viedge adds, “There’s no money in podcasting and it’s quite time consuming … In South Africa it’s nowhere at the moment”. He believes “the way to think about monetisation is not to think about advertising and also not to think about being paid for the podcast. The way to think about monetisation is what is the podcast part of”. He elaborates that the podcast can be used as a business card to attract further business, like guest speaking, training, or lecturing around the topic, as it gives you credibility and authority on a particular subject. Books and merchandise can also be sold on the back of the podcast, so money is being made even though the podcast itself is not generating the revenue.

At present, it seems podcasting is merely a supplementary tool for those participating in it, rather than the primary offering. Brands utilise podcasts as part of their marketing strategy, while some individuals are using their podcasts to get attention for their products or services.

Are data costs still a problem?

High data costs are also bandied about as a major challenge to South African podcasting, but Schutz doesn’t buy this. “Many people can find wi-fi somewhere and download the podcast for later. People incorporating podcasts into their lives and realising the value they offer should be a priority and promoting local podcasts, as listenership for international podcasts is growing, but locally not so much.”

It could be argued that not enough support and guidance has been given to the South African podcast industry. Schutz says, “A legacy of training and financial support and ways of doing things in other countries hasn’t been transferred to the SA podcast industry”. Schutz adds that a lot of local podcasts are not being crafted professionally, since it is merely a part time activity for the podcaster, and they are merely putting out content without having learnt the basics of this art form. Viedge agrees with Schutz, stressing that the lack of quality content in South Africa is a hurdle and disappointing. “Good podcasts will chase away bad podcasts, but the fear of course is that bad podcasts will just tank the whole industry,” she says.

Viedge sees educating the public as a vital priority. “If I say listen to a podcast and you’re not a podcast listener, trying to explain to you how to get one if you don’t have an iPhone is just a farce”. Platforms such as Google and Apple (which changed the game by placing podcasts in its store in 2006) want to increase the accessibility by placing podcast platforms in cars, which Viedge says will be another game changer.

How brands should be podcasting

Brands, marketers and media people should think about getting into this space, says Viedge, explaining the best way to do this. “Like Dorothy Black did recently for Cosmopolitan, make a series of five or six or 12 episodes and make a package of it. Don’t start a weekly series with an open end, make a campaign that includes the podcasts, social media and YouTube … If you do six or 12 episodes, it’s a long enough test to understand the power of it and if it’s going to work and it’s short enough to limit your exposure, time and budget.”

Podcasters usually have a preferred distribution platform that they favour, which differs from person to person. SoundCloud is a popular choice, not only in South Africa but also globally, as well as iono.fm. They also favour embedding the podcast in their website or blog as well as on social media sites like Twitter and Facebook. Podcast apps and iTunes are other platforms that podcasters should look to as people are actively seeking podcasts on these outlets.

A meeting of the minds

Schutz is the organiser of Podmeet, a gathering of podcasters/potential podcasters at Wits University. The second edition recently took place, with 15 to 20 people in attendance.

Explaining the reason behind the creation of these meetings Schutz says, “The conversation around podcasting keeps coming up in the radio industry and I personally am very interested in going into that space more. It’s a labour of love from me wanting for this to be an industry in this country and wanting people to be supportive and realise that this type of support is not happening a lot.

“People kept coming up to me saying ‘I do a podcast, but I’m the only one I know doing it’. The idea was to bring podcasters together and connect them so they could learn from each other’s problems and needs. An example of this happened at the gathering, where one podcaster stressed he had so many content ideas, but no studio to implement them, and another podcaster saying they have a studio but no connect ideas.

To view original post, click here: http://themediaonline.co.za/2017/11/podcasting-in-south-africa-not-profitable-yet-but-a-powerful-medium/

The biggest challenges for the PR industry are the matters related to cybersecurity and Internet of Threats which is how Melissa Hathaway, one of the leading experts in cybersecurity who worked for Bush’s and Obama’s administration, calls the Internet of Things. This challenge can be compared to the revolution in communication which took place several years ago when social media emerged. Thanks to it, we’ve became more digital and finally received tools which analyse our company actions and most of all – provide direct contact with our consumers. These are the advantages. The speed at which crises escalate right now is a major drawback along with the fact that it often takes a single post to start it. Many brands learned how to prevent such events and how to predict the course of actions. Thanks to constant social media monitoring, we are able to spot the starting point of a crisis and apply approprie procedures in order to contain the crisis which is going t happen anyway.

The future that’s already here

You may have thought that thanks to media monitoring, trainings and perfectly crafted crisis procedures, you are safe. Far from it. The net provides much more dangerous threats which we are not able to spot until the very last moment. And such situations may be in development process for a lot longer than we think. According to Johan Arts, the vice-president of IBM Security Europe, it usually takes 200 days from the moment the cyberterrorist has infiltrated our system to the discovery of the attack. In the meantime, the effects of such break-in may see the light of day which in turn causes a much bigger breakdown than a social media crisis. That’s the main challenge related to the area of expertise called cybersecurity.

The threats arising from cyber attacks are real and have significant effect on whole sectors of economy or even countries. WannaCry ransomware attack is a good example: in 2017 it blocked hundreds of thousands of computers around the world. Another example: a recent attack on Poland and Ukraine with NotPetya which has also affected numerous European companies. And contrary to the popular belief, this is not about some intelligence agencies business or break-ins to government severs. The latest attack on British healthcare system was particularly difficult for thousands of patients while the acquisition of selected American companies’ data by the hackers allowed them to manipulate shares on Wall Street. And these are real crises which we, communication specialists, will have to cope with in our daily work. And that’s just a small fraction of what’s going on in cyberspace.

Sir Julian King (European Commissioner for the Security Union) who was one of the main speakers at CYBERSEC Forum this year stressed that we should change the approach to the feeling of security and treat real and cybersecurity with the same attention. That’s because these two worlds intermingle and have the same impact on our lives nowadays. Sir King also mentioned several interesting numbers which should help us understand how real is the web-related threat (based on European data):

• 5 dollars – for that price people on the dark web are offering a hack attack service
• 4000 cyber attacks – is ransom ware per year
• 1000 cyber attacks – takes place per month in aviation
• 1 billion Euros – is collected from the cards per phishing scams.
• 350,000 – shortfall of cybersecurity specialists personel
• 1.8 billion – value of investment to be implemented

What’s interesting is the fact that, according to Arts, 60% of these break-ins is caused by internal security flaws in a company or institution. It’s hard to argue with that, especially after reading about ShadowIT, a problem at many companies, where computer users create a second IT circulation by installing given software and apps, without internal IT departments consent or even knowledge. I won’t even mention PR departments which probably have no idea how dangerous is the lack of basic security norms obedience for the image of the company. This subject deserves more attention if successful crisis procedures are to be introduced.

e-HIV

Another problem of PR which may seem unrelated at the first glance is the approach to design and production of devices sold by companies. As proved by Melissa Hathaway, security should be treated as a routine engineering process starting at the design stage. In my opinion, we should have similar approach to the communication process – we should address it as if it was an engineering task. Currently all cybersecurity matters need to be discussed in the very beginning of works on the marketing and communication strategy. Therefore it is a good idea to invite an IT department member or a person responsible for safety in the organisation to the next meeting, at which the strategy is discussed.

We cannot trust the IT infrastructure blindly. Joel Brenner, the former general inspector at NSA said that there is no other area of our lives and economy that’s as vulnerable as software and hardware. Can you imagine “updating” an underdeveloped medicine or “patching” a brand new car? Our lives rely on this solutions and it’s time to treat IT solutions the same way since, as we can see, they have a critical impact on our lives. Brenner also compares the security system to human immune system and adds that we should keep working on new solutions which are supposed to strengthen it and make it more immune to new threats. Let’s think about the HIV epidemic. What have we done to contain it? Education, prevention, research, social campaigns, healthcare for patients. Let’s now consider the cyber attacks an epidemic an e-HIV. Wouldn’t it be reasonable to introduce similar measures, also within companies, which is, de facto, a part of internal communication? We have to remember that the “digital HIV” is not only a threat to typical IT infrastructure (corporate servers, desktop and laptop computers). The Internet of Things brings more and more potential hosts to the virus, and by IoT I mean a wide spectrum of devices from toys for children to cars, ships and even satellite systems. That’s why I used Melissa Hathaway’s term the Internet of Threats; she thinks that we shouldn’t recklessly connect everything with the network.

Dark and bright side of AI

Another thing that becomes increasingly dangerous in the wake of dynamic development of cyber attacks is an increasing application of artificial intelligence. Of course, I’m far from being as sceptical as the authors of pessimistic AI development visions seen in movies about war of people and machines called terminators. I’d rather focus on simple AI systems such as advanced chatbots, which – if they are controlled by hackers – can do harm to our organisation and hundreds/thousands of clients, we worked so hard to acquire (also communication-wise). This also changes the reaction to the crisis. Before the times of social media, we usually had few hours to deal with the situation before the information is broadcasted during evening news or published by the press. Facebook and Twitter give us only minutes t to react, while during cyber attacks it’s often about seconds. If you’re interested, here’s a great simulation of a cyber attack crisis presented second after second by IBM. A real eye-opener. https://www.youtube.com/watch?v=sHrgVqKW1RQ

Of course, there is also a bright side to AI systems. In our company, we can start working on the implementation of a solution which will automatically run crisis management procedures in case of an attack including notifications sent to key persons and possibly external PR specialists, publication of readymade announcements on company’s website, separation of the infected department from possible external communication channels or social media etc. There will probably be some completely revolutionary ideas for us – PR specialists too. At Planet PR we have been discussing the idea to design such solutions for a while.

Getting back to the main point, cybersecurity. The first question is – what possible threats we are facing here. The answer is simple – it’s about data. Data is the currency of 21st century, which in many places is more important than the regular currency. That is because financial loss can be retrieved while lost data may cause a halt in production on one hand a severe image crisis on the other, when the data becomes public.

As written in Cisco 2017 Annual Cybersecurity Report, 22% of companies which have been attacked in cyberspace lost their clients (for 40% of them it was more than 20% of all their clients). Also, it’s obvious how difficult it is to rebuilt public trust you spent years on building. It’s the loss of data (and ways of data storage) that is the foundation of a new EU directive called GDPR (General Data Protection Regulation) which will become effective in May 2018. It gives local and international authorities a powerful set of instruments to use to fine companies and institutions which leaked data or neglected the storage of data.

The question whether we, the marketing people, would like to have access to more specific client information is probably a rhetorical one. Clients provide the information about themselves by logging everywhere, paying in so called free apps or services with their facebook accounts or e-mail addresses. We know more and more about them. And even though Google and other companies provide more and more ways to block online tracking, people still act as if digital reality and security were something completely unrelated to their lives. Ask your friends who have Google accounts if they entered the My Account section at least once and checked how they can turn off advertising tracking. That’s why it’s our role as communication specialists to provide the sense of security because people trusted our services and let us collect additional information about them which in turn undoubtedly increased our effectiveness.

So what can we do to protect ourselves, improve our communication procedures or take part in the security improvement process in the company? Firstly we should learn ourselves – for example what are the contents of the abovementioned GDPR Directive or the basic IT security principles which can be found either in our IT departments or on websites devoted to cybersecurity. Trainings are yet another way. We should start thinking about them right now and plan attendance in order to be up to date with all information about threats that can cause a crisis in our organisation. It’s a good idea to join forces with IT departments and organise trainings with a simulation of a cyber attack on our company combined with the leak of data to the media and social media (I just leaked a part of our new offer we’re working on at Planet PR this quarter :)). In simulations it’s importnat to focus mainly on all effects of such attacks, not only on prevention and security measures.

Internal communication or “Culture” departments should also focus on education on the Shadow IT problem – double IT circulation. Let’s support IT department in the often uneven fight with corporate users, since it’s these departments that are responsible for minimising the cyber attack risk on our organisation. Unfortunately the relations with “IT guys” are often “distant” which often complicates the work on procedures, VPNs and other solutions that are seemingly tiresome. The goal of internal communication should be to build a culture of understanding and cooperation with the people who care for our cybersecurity. We should take some simple steps to prevent our work tools too – take a closer look at what you are using to work (external cloud drives, external apps) and whether you can separate one computer without network connection, where the most vulnerable data (i.e. strategies, financial documents or media contacts which to many PR specialists are the most valuable information) can be stored.

Cybersecurity is currently the basis of our life, therefore it’s time for communication specialists to implement it as one of the foundations of their work.

Author: Lukasz Wilczynski, President of Planet PR and CEE Manager of GlobalCom PR Network