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Think BR: Geo-targeting is a powerful ad tool but a legal minefield

Location based advertising is a valuable weapon in the marketer's armoury, but advertisers, agencies and social networks must stay the on right side of the law when dealing with personal information, writes Reed Smith's Marina Palomba.

Marina Palomba is a partner at Reed Smith

Marina Palomba is a partner at Reed Smith

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In summary, LBA is propelled by GPS on mobile devices, and its technology allows your smart phone to pinpoint you on a map and then recommend a local restaurant or shop, for example. Increasingly, people are using such devices to plug into their social networks.

This enables advertising servers to then decide when and what advertising messages to send to individuals based on factors such as advertising category, time of day, the user's GPS-derived location and search query keywords the user may have entered.

Mobile carriers then provide advertisers with the possibility to send GPS-based targeted advertising directly to the user’s mobile device. The LBA technology can also apply to inanimate objects. A restaurant could tweet messages as to whether it is full or not, or tell users what music is being played. Even your plant could, in theory, ask to be watered.

LBA is a lifestyle aid for users and a marketing bonanza for businesses, enabling not only targeted advertising but also an ability to reach potential customers almost anywhere at any time. But while very exciting, there are risks involved, and new providers of geosocial advertising need to tread carefully.

Needless to say, there are huge implications for privacy and data protection, and huge regulatory and reputational concerns. To a large degree, these issues centre around the idea of a user’s choice. In recognising the need for consent and transparency, for example, the iPhone asks its users for consent every time a location based service is activated.

The Information Commissioners Office (ICO) has just published its best practice guidelines: "Personal Information Online Code of Practice," which provides organisations with a practical and common-sense approach to protecting individuals’ privacy online, explains how the law applies, and calls on organisations to give people the right degree of choice and control over their personal information.

Risks to social media networks, advertisers, and agencies will be in ensuring compliance with such government guidelines, managing data use and ensuring they not only have adequate privacy policies but also that they are actively policed and enforced.

Advertisers often seek to gain personal information by incentivising existing customers to "recommend a friend", but even this relatively innocent technique can fall foul of the ICO’s interpretation of the Data Protection Act and the Privacy and Electronic Communications Regulations.

Industry guidelines about online privacy and LBA also exist but have yet to catch up with new trends in mobile and LBA. Nevertheless, the principles laid down by such guidelines are useful for advertisers seeking to move into the social media and behavioural advertising arena.

Ensuring transparency and the ability to opt out of targeted messages will be crucial to avoid potential breaches of legislation and reputational damage.

Marina Palomba is a partner at Reed Smith specialising in advertising law and regulation and past Legal Director of the Institute of Practitioners in Advertising  

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