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Legal Challenges in Ad-Tech

Adv. Doron Snapiri

The advertisement-technology (“Ad-Tech”) world is a complex one. The different variants vary not only in the markets they operate but also in their legal best practices.

This article lays out some key legal aspects to consider when operating in the marketing field.

Affiliate Marketing.

If you’re one of the thousands of people working in the affiliate marketing world, you must know that GDPR compliance is a major issue to address in your daily operations. Why is that, you ask?

Think of it this way: you’re working on a CPA deal with an affiliate. Each month the partnerships manager needs to provide you with a report with the number of acquisitions made.

To do so, that account manager should probably take three actions:

First – download the qualifying acquisitions from its CRM.

Second – sieve the data from its report, filtering out all personal data.

Third – send the filtered data your way.

In today’s hyper-speed business perception, it is reasonable to believe that many would try to be as quick and efficient as they can, even if it means skipping that important second step.

By doing so, one may or may not be aware of the legal implications that skipping that simple step can have, such as the potential of being considered as a “processor” of personal data, under the GDPR.

Aggressive Marketing.

Another issue that requires special care and attention by ad-tech companies is a matter of aggressive marketing. While it is not yet known how regulators will enforce the GDPR on online marketing, Vodafone suffered a fine of 12.25 million euros in 2020 for its aggressive telemarketing. Read more here: GDPR Fine Vodafone.

The different legal considerations that may arise include, among many others, data protection regulations, commercial engagement’s restrictions on limitation of liability, conflict of laws provisions per each country, and many others.

It is quite impossible to compose a complete guide for all the special considerations listed above, as each is comprised of countless specific challenges.

However, two more extraordinary issues which are worth mentioning in this space:

  1. As all advertisers know so well, it is highly important to comply with advertising platforms & application stores’ terms of use, as any infringement of these may cause significant losses or even ban the advertiser from using those platforms. This is relevant to the internal marketing departments of all ad-tech companies, as well as to any external marketing required for advertisers and publishers (including applications promotional pages).
  2. Any use of Blockchain technology and consummation of an ICO in the marketing industry and/or by using multi-layered-marketing (MLM) or crowdfunding, is an extremely sensitive and complicated process in terms of regulation. In the US, for instance, the SEC charged Salt Blockchain Inc. for their unregistered ICO, forcing the company to return all 47M USD to the investors. While over-eager entrepreneurs like to move fast, it is important to know that launching an unregistered ICO may constitute a criminal federal offense in the US.

Read more here: Salt Blockchain Charged.

While this article may be prolonged for pages more, I believe the message is clear — the legalization of the ad-tech industry can only become more severe as regulation tightens, and as public opinion push elected officials to legislating more and more robust protective laws.

Once you figure out how you want to operate your business, contact a personally recommended legal advisor & get the comfort you need to move forward without fear.

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