2022 Marcom Trends - Magazine - Page 30
NAD/GREEN MARKETING
TALENT
The NAD has continued to issue decisions illustrating how
to qualify these claims. For example, in Georgia-Pacific
Consumer Products LP (Quilted Northern Ultra Soft & Strong
Bathroom Tissue), the NAD found that certain “sustainability”
claims were sufficiently qualified when consumers were
not likely to miss or ignore the claims’ ties to specifically
described environmental benefits (e.g., tree planting and
energy efficiency).
“Carbon neutral” claims have also become increasingly
popular. While the Green Guides do not discuss carbon
neutrality explicitly, they offer general principles and specific
guidance on carbon offsets that help inform treatment of
carbon neutrality claims. Applying this guidance, the NAD
found in LEI Electronics, Inc. (Eco Alkalines Batteries) that
“carbon neutral” claims are not sufficiently supported when
the advertiser fails to provide material information (when
carbon reductions occurred or will occur) and provides an
unreliable life cycle analysis.
Q:
Why has there been an uptick in challenges to green
claims at the NAD?
A:
Marketers are more focused on environmental claims
and consumers are more interested in them because of
the administration change in Washington, the constant
barrage of environmental disasters and the further growing
acceptance that climate change is a real and present danger.
As such, regulators — governmental and self-regulatory —
and class action counsel have become especially focused on
environmental claims.
Q:
A:
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30 DAVIS+GILBERT LLP
Now Streaming: The Rise of the at Home Theater
and the Changing Model for Content Distribution
Recently there has also been a focus on aspirational claims
(like “aim to,” “commit to” and “strive to”); just because
a claim is aspirational, it is not necessarily puffery. In
Butterball, LLC (Butterball Turkey Products), a recent case
concerning sustainability marketing, the NAD found that
the claim that a company “recognizes” its “responsibility” to
“preserve the planet” required evidence that the company
had taken concrete steps to meet the stated goal.
James Johnston, Partner, jjohnston@dglaw.com
Paavana L. Kumar, Associate, pkumar@dglaw.com
Jordan M. Thompson, Associate, jthompson@dglaw.com
Q:
The NAD has also challenged environmental
marketing by independently monitoring the
marketplace. What are these cases about?
A:
When deciding to open a monitoring case, among the things
the NAD considers is whether it would be filling a gap in
the FTC’s and the state AGs’ regulatory efforts, and/or if the
advertising addresses a novel or emerging issue of interest.
Arguably, modern green marketing fits both of these criteria,
and it is anticipated that the NAD will continue to monitor the
marketplace — particularly if the FTC releases revised Green
Guides.
The NAD recently challenged several environmental benefit
claims in Georgia-Pacific Consumer Products LP (Quilted
Northern Ultra Soft & Strong Bathroom Tissue) — including
sustainability claims (“Premium comfort made sustainably”)
that consumers may not understand were limited to specific
described benefits. In Everlane, Inc. (Everlane ReNew
Clothing), the NAD brought a monitoring case against a
fashion brand, recommending modification to environmental
benefit claims to ensure that there is no deception.
What trends are popping up in recent NAD cases that
highlight the technical and practical risks of green
marketing?
There is a continuing focus on potentially overbroad claims.
Advertisers need to ensure that broad claims are qualified
with specific, supportable benefits. For example, earlier
this year in PurposeBuilt Brands (Green Gobbler Drain Clog
Dissolver), the NAD heard a challenge concerning, in part, the
claim “POWER meets Green” for a drain cleaning product.
The NAD recommended that this claim be discontinued
because it reasonably conveyed the unsupported message
that the drain opener product achieved the unlikely
combination of being both sufficiently powerful to unclog
drains, but broadly environmentally friendly. On the flip side,
the NAD recently found, in Safe Catch, Inc. (Pouched and
Canned Tuna), that the claim “100% Sustainably Caught Wild
Tuna” was sufficiently supported, largely because the claim
was qualified and based on reputable methods that were
clearly communicated to consumers.
Q:
What can companies hoping to support environmental
efforts do to manage legal risk?
A:
Just as green technologies are rapidly evolving, this area is
continuing to develop; industry standards are emerging, and
updated regulatory guidance may soon be released. There
will likely be further enforcement activity (particularly at the
NAD) and class action counsel are on the hunt. Companies
must keep apprised of all NAD, FTC and state developments
in this area to be sure the decisions they make are well
informed and the advertising is legally compliant.
The talent compensation model for A-list film productions has
traditionally resisted disruption in the entertainment industry. In
particular, the model has long adhered to the following two-part
format: the guaranteed up-front payment, and the contingent
backend revenue share payment (beginning with theatrical box
office and moving through home video, pay television and free
television exhibition windows).
If a film does well at the box office, talent earns the guaranteed
compensation, plus a cut of the revenues based on a prenegotiated percentage. If the film is a dud and doesn’t earn
its money back (or simply costs too much), there’s no backend revenue share to be realized, and talent is left with the
guaranteed up-front payment as primary compensation for their
performance. Back-end deals align the interests of producers
and talent, so that, when the movie makes more money, the
talent (theoretically) makes more money. For lower budgeted
productions, talent may even negotiate smaller up-front
guarantee fees in exchange for larger back-end contingent
revenue shares.
Yet the rise of streaming services has begun a gradual erosion of
the traditional model. Subscription-based streaming services like
Netflix, Hulu and Amazon Prime now regularly produce straightto-stream original productions, featuring A-List talent that never
hit the traditional box office or subsequent exhibition windows.
Enter 2020’s widespread stay-at-home orders arising from the
COVID-19 pandemic. With theatres being closed around the world
film distributors were finally forced to consider real and lasting
alternatives to the traditional mainstream in-theatre distribution
channel and associated talent compensation model. Instead
of pushing out distribution dates and waiting for mandatory
quarantines to lift, traditional distributors partnered with
streaming services to take a dual release approach, releasing
major studio films in a limited number of theatres (where open)
and online to streaming service subscribers simultaneously.
This fundamental shift in release strategy by major distributors
upended the assumptions built into traditional back-end pay
structures. When the only revenue generated from a film is the
subscription revenue paid for the streaming service as a whole,
calculating revenue shares becomes a Herculean task. Moreover,
even when films are sold by traditional studios to streaming
services, in most cases these streaming services are affiliates
or subsidiaries of major media companies, like Warner Brothers/
HBO Max, Disney/Disney Plus, Searchlight/Hulu and Universal/
Peacock, ratcheting up concerns about self-dealing and below
market pricing to new heights.
The question for talent then becomes: How should backend
profits be calculated, and how should they be tracked when
talent is left in the dark about such cross-affiliate related party
transactions? Like the distributors, talent reps are now becoming
forced to think creatively and evolve past the traditional way of
doing business.
With the ever increasing number of streaming services and the
vertical integration of these services into major studios, even
though theatres have reopened, we’ll continue to see changes
in distribution strategy that outlast the pandemic, with many
motion pictures distributed exclusively on, or simultaneously with,
streaming channels.
What’s on the Horizon
• A push for increased front-end guaranteed
compensation;
• Alternative approaches to backend, including prenegotiated automatic backend buyouts in the event there
is no theatrical distribution;
• A push for transparency when it comes to performance
on streaming services (e.g,, number of streams,
subscription growth relative to film releases); and
• Strategies to circumvent the often losing battle over fair
compensation when a studio sells a film to an affiliated
streaming service.
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TRENDS IN MARKETING COMMUNICATIONS LAW 31