THE LEGAL PERSPECTIVE OF AN EMERGING TACTIC FOR BRAND BUILDING
* The research assistance of Puja Varma, Student-at-Law, is
CMA’s 9th Annual Branding Conference: Branding in a Sea of Change
June 21st, 2007
• Stealth Marketing
• Canadian Legal Framework in a Nutshell
• “Stealth Marketing” - WOMM
• “Stealth Marketing” - Product Placements
• Next Steps
• Commonly referred to as “Buzz Marketing” or “Guerilla
• Involves a marketer engaging with customers without
disclosing that they are in fact compensated by the business
for which they are marketing a product or service.
• “Surreptitious” brand awareness development can be
• Industry insiders are concerned about the legal risk related to
the lack of disclosure of the direct marketing connection.
CANADIAN LEGAL FRAMEWORK IN A NUTSHELL
• Competition Act
• Consumer Protection Act
• Canadian Marketing Association
– Code of Ethics and Standards of Practise
• Advertising Standards Council
– Canadian Code of Advertising Standards
• Word of Mouth Marketing Association (WOMM)
– The WOMM Code of Ethics
COMPETITION ACT (Canada)
• False or Misleading Misrepresentations: – s. 52(1) No person shall,
for the purpose of promoting, directly or indirectly, the supply or use of
a product or for the purpose of promoting, directly or indirectly, any
business interest, by any means whatever, knowingly or recklessly make a
representation to the public that is false or misleading in a material
• Misrepresentations to the Public: s. 74.01(1) A person engages in
reviewable conduct who, for the purpose of promoting, directly or
indirectly, the supply or use of a product or for the purpose of
promoting, directly or indirectly, any business interest, by any means
(a) makes a representation to the public that is false or misleading in
a material respect…;
Discussions with the Competition Bureau
• Whether non-disclosure of identity in WOMM campaigns is
contrary to to Canadian law will have to wait for judicial
review in Canada.
• However, the Competition Bureau stated that non-disclosure
of identity during a stealth marketing campaign would likely
be deceptive and misleading and thus would be contrary to
Do Criminal and Civil Prohibitions Apply?
• There are civil and criminal sanctions against false or
misleading advertising in any medium.
• Where marketers are making false or misleading
representations about the product or service, the
prohibitions against false or misleading advertising would
• What if the representations about the products are accurate?
– Could still be deceiving consumers by not disclosing their
CONSUMER PROTECTION ACT (Ontario)
False, Misleading or Deceptive Representation:
• Section 14 (1) – It is an unfair practice for a person to make a false,
misleading or deceptive representation.
• Section 14 (15) – A representation that misrepresents the purpose or
intent of any solicitation of or any communication with a consumer.
• Section 14 (17) – A representation that misrepresents or exaggerates the
benefits that are likely to flow to a consumer if the consumer helps a
person obtain new or potential customers.
Unfair Practices Prohibited:
• Section 17 – Makes it an offence to engage in an unfair practice.
• Section 18 – Permits the consumer to rescind any agreement and allows
for an action for damages where rescission is not possible.
The combined effect of these provisions could have very serious
consequences when an unfair practice has occurred.
CMA – Code of Ethics & Standards of Practise
Accuracy of Representation:
• 1.1 Marketers must not misrepresent a product, service or marketing
program and must not mislead by statement or manner of demonstration
• 1.3 Marketers must ensure that the general impression of the
communication does not deceive by omission or communication.
• 5.4 Marketers should avoid undercover or word-of-mouth marketing
initiatives that encourage a consumer or business to believe that the
marketer’s agents are acting independently and without compensation
when they are not.
ASC – Canadian Code of Advertising Standards
Accuracy and Clarity:
• 1 (a) Advertisements must not contain inaccurate or deceptive claims,
statements, illustrations or representations, either direct or implied, with
regard to a product or service. In assessing the truthfulness and accuracy
of a message, the concern is not with the intent of the sender or precise
legality of the presentation. Rather, the focus is on the message as
received or perceived.
(b) Advertisements must not omit relevant information in a manner that,
in the result, is deceptive.
Is Stealth Marketing Perceived as deceptive?
• Directly targets consumers and does not openly appear as a marketing
• “A line is crossed, I think, when you go outside of those normal
boundaries and start to deceive people in ways that they are, where they
are totally unwitting to what's going on.”
- Malcolm Gladwell
• “We don’t take these sorts of risks with our advertisements. We regard
ourselves as honest and respectable”
- Spokesperson for Volkswagen
• “Fraud is fraud, and a harmless-sounding name such as “buzz marketing”
doesn’t change that. - Gary Ruskin, Executive Director
YouTube Bride Video & Sunsilk Canada
• Since its January 18th release, the You Tube video “Bride
Has Massive Hair Wig Out” was seen over 2.8 million times.
• Sunsilk Canada revealed that they were behind the
Opinions from the press:
• Ads posing as blogs create a generation of skeptics
• “by exploiting our tendency to trust in the veracity of such
online videos, it is only a matter of time, before we will
dismiss even real events or sincere emotional outpourings as
just another buzz-building strategy”.
Fake Blogs & Sony Play Station Portable
• Sony hired marketing company Zipatoni to set up a viral marketing
scheme by registering the domain alliwantforxmasisapsp.com
• This website is set up as a PSP fansite where the marketers with Sony’s
approval pretend to be kids that want a PSP and posted a rap video titled
“All I Want for X-mas Is A PSP”.
• The Sony fake blog (referred to as “flogs”) marketing the Play Station
Portable was exposed by bloggers who traced the site’s URL to the
marketing company behind the flog.
Burger King & Subservientchicken.com
• Visitors to the site will find a person in a chicken suit, standing in the
middle of a room. Beneath the chicken is a box to type in your request
for the chicken, along with the slogan “Get chicken the way you want it.
Type in your command here.”
• The chicken had some obvious links to BurgerKing including:
– Display of BK logo while loading, including a link to BK.com
– Eventually, mention of subservient chicken website started appearing on BK
– Domain name was registered to BK’s advertising agency, Crispin Porter &
Fake Tourist & Ericsson Mobile Phone
• Marketing campaign by Sony Ericsson Mobile for its T68i mobile phone
and digital camera.
• The initiative, called "Fake Tourist," involved placing 60 actors posing as
tourists at attractions in New York and Seattle to demonstrate the
• The actors asked passersby to take their photo, which demonstrated the
camera phone's capabilities, but the actors did not identify themselves as
representatives for Sony Ericsson.
• "Excuse me, you mind taking a picture of us?” asks one fake
tourist. “Thanks a lot, man. It's cool, right?"
• Subset of Stealth Marketing
• Popular brand development tactic for movies and television shows in
light of trigger happy remote control users
• Video games, board games, live theatre and novels
• Regulated in Europe
• There are no explicit legal restrictions on product placements in Canada,
however marketers must still be cautious to ensure that the placements
do not contravene advertising and marketing laws:
– False and misleading advertising
– Industry specific restrictions (i.e. alcohol and tobacco placements)
– Marketing to children and young teenagers
CASINO ROYALE: Watches, Cars & Electronics
• The 'Mondeo' is seen in a Bahamas-based chase scene specially created for
the car company.
• 2007 Ford Mondeo in Casino Royale Ad (23 seconds)
• Is that a Rolex?" enquires Bond's main love interest. “No," replies our Bond, "it's
Omega". "Very nice," she purrs …
• Every laptop is a Vaio, digital cameras are CyberShots, mobile phones are
SonyEricssons, cd players are Sony, and CDRs are even Sony brand discs.
• Heineken International partnered with EON Productions and Sony
Pictures Entertainment to launch a world-wide promotional campaign
• Partnership between Smirnoff Vodka and James Bond, which began with 1962's "Dr.
No," is being renewed in "Casino Royale," to be released Nov. 17.
Disclosure of Word of Mouth Marketing Campaigns
1. Media Release of Campaign
2. Website listing terms & conditions of Campaign
3. All advocates identify themselves
• Prudent to have “surreptitious branding campaigns”
reviewed by legal counsel during the initial creative planning
stage of the campaign to avoid a situation where the
campaign is compromised at the last minute because of legal
• Novel tools to improve brand equity must be used within
legal parameters – be aware of new legal developments that
might affect your campaign
• Opportunity to challenge the actions of competitors in the
event their stealth marketing practices are damaging your
organizations’ brand equity