Pinterest Grows to 150 Million Users, Up 50 Million in Last Year

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Pinterest continues to grow in popularity, having gone from 100 Million monthly users in September 2015 to 150 million today. Pinterest is also losing its status as a platform that is primarily for women, with men now making up 40% of all users, which is a 70% increase over last year. Even more amazing is that over 50% of all millennials in the US are now on Pinterest!


“As a Pinner once said to me, “Pinterest is for yourself, not your selfies”—I love that,” said Ben Silbermann, CEO & Co-Founder of Pinterest. “Pinterest is more of a personal tool than a social one. People don’t come to see what their friends are doing. (There are lots of other great places out there for that!) Instead, they come to Pinterest to find ideas to try, figure out which ones they love, and learn a little bit about themselves in the process.”

He added, “Personally I can’t wait to see what new ideas all these people bring to Pinterest, and find out what happens when they give those ideas a try. Thank you all so much for being here…each and every one hundred and fifty million of you!”

Pinterest is a Huge Business Marketing Opportunity

The company also noted that Pinterest now provides 10 billion recommendations daily, more than 150 million visual searches happen monthly, and there are more than 1 million businesses on the service with “tens of thousands” actively advertising.

They say that they now have over 75 billion pins and an amazing 75% of them were posted by businesses.

“Growing the number of people on Pinterest by 50% over the last year is pretty impressive especially when you consider that Pinterest is more a personal tool than a social one,” said Jon Kaplan, Head of Global Sales for Pinterest. “People don’t invite all their friends to join, and they don’t log in to see what their friends are doing (there are lots of other great places out there for that!). Instead, they come to Pinterest to discover and do the things they love, and learn a little bit more about themselves in the process.”

Pinterest is now able to offer marketers precise information what products people are searching for the most and who those people are and they are willing to let marketers link into that data.

“With so many people around the world saving and searching for ideas on Pinterest, we now know more about what’s trending—and with which audiences—than anyone else,” says Kaplan. “As a business, this means you have millions of new opportunities to connect your ideas and products to the people who are most interested in giving them a try.”

Marketing with Pinterest

Pinterest is a unique marketing opportunity for both large and small businesses. Pinterest can be used as a traffic driver like many other search and social platforms, but Pinterest can also uniquely be used to inspire and engage audiences with your brand.

Babylist, a unique baby registry service that allows you to put anything on your registry from ANY store, used Pinterest to rapidly grow brand awareness and engagement with their exact targeted audience. To reach the 43 million people on Pinterest preparing for a baby, BabyList optimized their website for Pinterest and included Pin-worthy content in every blog post from the start, according to the Pinterest ad team.


“We were surprised at just how many new registries Pinterest drove for us,” said Brittany Murlas, former CMO of Babylist. “I would describe our overall success on Pinterest in two words: Explosive growth.”

According to Pinterest, within the first 5 months of using Promoted Pins, they saw a 70% increase in account signups and a 40% increase in revenue and heir content has been saved by more than 50,000 people to baby-specific boards.

What’s Next for Pinterest?

According to Kaplan, Pinterest is evolving into a “truly worldwide (platform), with more men, more ideas and more sophisticated technologies to help get the right ideas to the right people.

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October 14th 2016 Marketing, Social Media

Some Comments on the CA/TX Attorneys’ General Prosecution of Backpage’s Executives

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By now I’m sure you’ve heard that California Attorney General Kamala Harris is prosecuting three Backpage executives for pimping/conspiracy to pimp. This is the latest–and perhaps last–development in a decade-long effort by legislators, state AGs and local prosecutors to shut down online adult classified ads, first on Craigslist and then on Backpage. I have three main questions:

Why “Pimping”? The pimping charge is a head-scratcher. A “pimping” crime requires the defendant to “derive support and maintenance” from a prostitute’s activities. So the prosecutors appear to be treat classified ad fees as “support and maintenance” from prostitution. Where does this definition of “support and maintenance” end? Many prostitutes set up Facebook pages to promote their services, and Facebook sells ads on those pages. Does that mean Facebook is deriving “support and maintenance” from prostitution such that Facebook’s executives also could be prosecuted as pimps?

This theory raises some obvious First Amendment problems. Backpage’s only “support” of prostitution is the publication of advertising. Criminalizing publication implicates both free speech and press issues. Consider an analogy to the cases against social media sites for providing “material support to known terrorists” by allowing terrorists to publish content. I don’t see how such lawsuits can be squared with freedom of the press–in addition to the other legal deficiencies of those cases. See Fields v. Twitter.

Also note the indirect parallels to the anti-Airbnb statutes like San Francisco’s, which hold Airbnb liable for accepting money for illegal listings. Stitching all of these issues together, it’s clear where the anti-Internet regulatory impulses are focused: treating online dollars as criminally tainted. If this prosecution and the San Francisco statute both succeed, the roadmap for future regulation of the Internet is clear.

Why Now? The timing of this prosecution baffles me. If prosecutors think accepting paid classified ads from prostitutes is pimping, why didn’t they prosecute Craigslist (or its executives) for pimping nearly a decade ago? The crime of pimping has been on the books, and available to prosecutors, the entire time. Why is it being invoked only now? Over the years, prosecutors have tried a variety of wacky legal theories (remember Cook County sheriff Dart suing Craigslist for “public nuisance”?) and even enacted new statutes specifically designed to target Backpage (including, most recently, last year’s federal SAVE Act). If pimping is really the right crime for these facts, then it seems like all of the prior efforts were a waste of energy and taxpayer money–and time, as sex trafficking created new victims every day. But if pimping isn’t the right crime for these facts, this could just be a desperation play, i.e., nothing else worked, so plasticize the boundaries of a crime that wasn’t designed for this purpose.

I’ve been trying to think of other things that have changed in the last decade that would cause the prosecutors to pursue the pimping angle now. Some possibilities:

* Kamala Harris is seeking a higher office and this prosecution generated a new press event highlighting one of her key messages. As highlighted by this prosecution, Harris’ track record on technology issues is checkered, and I will be taking that into account when casting my vote.
* Backpage has made material changes to its services over the years, including a recent change of ownership, the parallel prostitution-advertising sites discussed in the complaint, and other evidence gathered in 3 years of the AGs’ investigations. I don’t think any of these changes make a big difference to the pimping charge, but maybe the AG’s offices see it differently.
* Recent Section 230 jurisprudence. More on that in a moment.

As for timing, the SAVE Act was recently passed with the sole purpose of squashing Backpage. If pimping was already available to shut down Backpage, why did Congress need to pass the SAVE Act? And given its new availability, why doesn’t the SAVE Act form the basis of regulators’ latest anti-Backpage move?

What about Section 230? I hate to be Chicken Little, but I think we’ll look back at 2016 as the year Section 230 finally fell apart. It still works well for certain paradigms, but the immunity’s edges have become so rough that the exceptions are beginning to swallow up the rule. To wit: Section 230 apparently no longer forces local prosecutors to distinguish between the executives of an online UGC classified ads site and a garden-variety street hoodlum.

We know the state attorneys’ general felt that Section 230 prohibited a prosecution of Backpage because they told Congress so in 2013. At the time, exasperated by their seeming inability to prosecute Backpage, 47 AGs sent a letter to Congress seeking an amendment to Section 230 that would allow both state and federal criminal prosecutions. That was a spectacularly bad proposal for reasons I explained at the time, but fortunately Congress ignored their letter (I never heard a Congressional peep in response, formally or informally). But if the AGs felt Section 230 stopped them cold in 2013, why do two AGs feel differently in 2016?

Three recent Section 230 rulings stand out to me as possible bases why the AGs might now think that they can now get around Section 230:

1) People v. Bollaert, 2016 WL 3536550 (Cal. App. Ct. June 28, 2016). I didn’t get a chance to blog this case previously. It’s a California AG’s office prosecution against a revenge porn website operator for identity theft and extortion. Because the third parties submitted pornography for publication, the operator asserted a Section 230 defense, which the court flatly rejects. The court expressly admits that it didn’t need to discuss Section 230 at all (“Under section 530.5, subdivision (f), Bollaert’s status as an interactive computer service or access software provider is irrelevant if Bollaert acted with the intent to defraud. Thus, the jury’s finding that Bollaert acted with the intent to defraud renders it unnecessary for us to proceed to the question of CDA immunity”). Yet the court went ahead and laid down some anti-Section 230 dicta-garbage nevertheless. Sigh.

I think this is the key line from the opinion:

Bollaert’s design and operation of—which required users who wished to use the Web site to provide content that violated other persons’ privacy—does not entitle him to statutory immunity under the CDA.

Note the obvious conflict with the uncited Doe v. Backpage ruling, which said that “features that are part and parcel of the overall design and operation of the website” were editorial choices protected by Section 230. The Bollaert court continued:

Bollaert created so that it forced users to answer a series of questions with the damaging content in order to create an account and post photographs. That content—full names, locations, and Facebook links, as well as the nude photographs themselves—exposed the victims’ personal identifying information and violated their privacy rights. As in Roommates, but unlike Carafano or Zeran, Bollaert’s Web site was “designed to solicit” (Roommates, supra, 521 F.3d at p. 1170, italics added) content that was unlawful, demonstrating that Bollaert’s actions were not neutral, but rather materially contributed to the illegality of the content and the privacy invasions suffered by the victims. In that way, he developed in part the content, taking him outside the scope of CDA immunity.

I’ve repeatedly discussed the incoherence of discussing website “neutrality” because every website necessarily has an editorial policy, and that is irreconcilable with “neutrality.”

It’s easy to see why the California AG’s office might think the Bollaert case helps its prosecution. After all, the AGs can craft a story that, similar to Bollaert’s revenge porn operation, Backpage was “designed and operated” to gather and disseminate illegal prostitution ads. We knew the Bollaert ruling was trouble when it came out, and this prosecution might be the first of many to apply the Bollaert precedent expansively.

[Two other notes about how much I dislike the court’s Bollaert opinion: In discussing the identity theft charge, the opinion favorably cites the In re Rolando S. ruling–always a red flag. And the opinion dubiously distinguished the Levitt v. Yelp extortion ruling because the court circularly says Bollaert “did not have a lawful right to collect a fee to remove the victims’ personal information.”]

2) FTC v. LeadClick. There is a lot for plaintiffs to embrace in that opinion, including how LeadClick was liable for content it never drafted or published.

3) J.S. v. Village Voice. This is Backpage’s most prominent courtroom loss, so I imagine the state AGs found it incredibly interesting. The court merely rejected Backpage’s motion to dismiss, so the opinion did not provide a final resolution on the merits. Nevertheless, the court’s mangling of the Section 230 defense (in part making another mangling of the “neutrality” concept) will almost certainly appear in the state AGs’ filings.

I cherrypicked these three rulings out of the dozen-plus bad Section 230 defense losses in the past year or so. Collectively, I can see why the state AGs might think the Section 230 tide has turned in their favor, at least regarding Backpage. As a result, unlike other commentators, the growing anti-Section 230 precedent makes me less confident that the Backpage executives have a solid Section 230 defense.

One twist: the prosecution is against the executives as individuals, not Backpage as the corporate entity. I don’t think this should make a difference to the Section 230 analysis (if anything, it might strengthen the defense because the causal connection is even more tenuous) but I’ll be interested to see how the AGs’ briefs address this issue.

The Broader Implications. From a business community standpoint, prosecuting Backpage’s executives as individuals is a nuclear option. Entrepreneurship inherently involves great risks to your capital; but prosecutions like this raise entrepreneurs’ fears that they are also risking their liberty. We’ve seen how this dynamic chills entrepreneurship in Europe, when German prosecutors went after Compuserve executive for the availability of child porn on the network and Italian prosecutors went after Google executives because of a mean video on YouTube. In light of those prosecutions, what entrepreneur thinks it’s a good to start up a user-generated content website? Unfortunately, the California and Texas AGs are sending the same messages to entrepreneurs in California, the world’s start-up capital and the economic engine driving the entire US economy. Whoa.

For more on the troubling implications of unleashing state and local prosecutors from Section 230, see my 2013 article, The Implications of Excluding State Crimes from 47 U.S.C. §230’s Immunity.

While the individual executives are now fighting for their lives, the stakes are also high for Backpage. I think the odds of Backpage successfully surviving the prosecution are low. Companies rarely recover from such a crushing development to their leadership, even if the executives eventually defeat the prosecution. So this prosecution may finally succeed in driving Backpage out of the market, irrespective of its legal merits. Still, anyone who thinks Backpage’s demise, or the conviction of its executives, will make any difference in the quantity of online prostitution ads is delusional. The ads will scatter to various corners of the Internet, and Backpage’s disappearance will not cause prostitution ads to simply disappear.

Case library:

* Criminal Complaint
* Declaration in support of arrest warrant and warrant
* Press Release, Attorney General Kamala D. Harris Announces Criminal Charges Against Senior Corporate Officers of for Profiting from Prostitution and Arrest of Carl Ferrer, CEO
* Press Release, AG Paxton: Arrest of CEO Shows Texas Doesn’t Tolerate Human Trafficking

Prior posts on Craigslist/Backpage

* Big Win For Free Speech Online In Backpage Lawsuit
* Backpage Gets Bummer Section 230 Ruling in Washington Supreme Court–J.S. v. Village Voice
* Backpage v. Cooper
* Backpage Gets Important 47 USC 230 Win Against Washington Law Trying to Combat Online Prostitution Ads
* Backpage Gets TRO Against Washington Law Attempting to Bypass Section 230
* Backpage Gets 47 USC 230 Defense for Prostitution Ads–M.A. v. Village Voice
* Craigslist Isn’t Liable for Erotic Services Ads–Dart v. Craigslist
* Cook County Sheriff Sues Craigslist for Erotic Services Category

See also

* Online Marketplaces Facilitating Gun Sales Don’t Kill People. People Kill People
* ‘Silk Road’ Ruling Will Hurt Online Commerce

October 14th 2016 Marketing

Facebook Seeks To Be the World’s Largest Marketing Platform

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Facebook sees a huge opportunity to become the marketing platform of record for businesses seeking to reach consumers and other businesses to promote cross-country sales. Facebook is uniquely positioned as both a social platform and a marketing platform that has an astounding 1.7 billion monthly active users, one-fifth of the entire world’s population. By 2018, according to eMarketer in an April report, overall internet users are predicted to grow 30% to 3.82 billion. If Facebook grows at the same rate which seems likely, they will have over 2.2 billion active users in less than 2 years!

According to a February 2016 study by McKinsey Global Institute, 361 million people worldwide have participated in cross-border ecommerce. This is a growing and huge opportunity for Facebook, finding ways to make international ecommerce seamless and practical for businesses. Internal Facebook data shows that nearly 50 million businesses use Facebook to find customers, and 30 percent of their a businesses Facebook followers fans are in fact from other countries.

Download Facebook’s Cross-Border Business Handbook for a full review of their international marketing opportunities.


Australia has a population of 24 million with over 21 million using the internet and of those one-third, or 14 million are active on Facebook. On average, people are checking their Facebook feed 14 times a day, making Australian’s an especially reachable target for cross-country businesses. They say that 92% of students below 25 years old access Facebook on a daily basis.



Brazil has over a 113 million internet users, 80 million digital shoppers and 49 million smartphone users. According to Facebook surveys, over 70% of users want to receive offers and information about brands and products.



Nearly 30 million Canadian’s are on the internet and over 21 million of them are on Facebook. According to Comscore, 29% of all time spent on mobile properties in Canada happens on Facebook.



Close to 50 million people in France are on the internet and 31 million of those are active on Facebook. One survey showed that 25% of internet users considered Facebook as one of their favorite platforms for discovering
new content/ products or services.



Germany has 29 million active Facebookers and 82% of all internet users in Germany say that Facebook is their favorite social platform. Over 32% of Germans say they use Facebook while watching TV. There are big marketing opportunities for sports related businesses in this country, with 10 million soccer fans using Facebook.



Malaysia has a population of 30 million, 20 million of them are on the internet and nearly all internet users, 18 million, are active on Facebook. In Malaysia, the internet is Facebook!



Less than half of the 68 million people in Thailand are even on the internet, yet Facebook says that it has 40 million monthly active users there. It’s total ecommerce spending is around $1 billion, leaving substantial room to grow considering the population. Over 95% of people in Thailand use at least two devices and a third use three: a smartphone, a tablet and a desktop or laptop.



Almost all of the people on the internet in the Philippines are on Facebook, over 50 million with 1.2 more time spent on Facebook than TV, according to a Reach study commissioned by Facebook. Over 70% of internet users have seen or searched for product information on Facebook.


United Kingdom

Most people in the UK are on Facebook, over 51 million of them, and 37 million of those use Facebook. With the UK’s ecommerce market expected to hit $132 billion by 2018, this is one of the world’s biggest marketing opportunities for businesses.


United States

The US has over 200 million Facebook users, close to 77% of everybody on Facebook. The ecommerce opportunity for businesses will be nearing $500 billion by 2018 and Facebook is routinely used by US brands to promote their products.


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October 12th 2016 Facebook, Marketing

Facebook Launches a Simple Event App

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Have you ever wondered if you were missing a party your friends were having or an event in your community? Facebook has launched a simple to use app that organizes all of the events of your friends and public community activities and festivals that will prevent you from missing out.

Could it be the beginning of a Facebook competition with Google Calendar? Possibly, but at this point it is clearly a consumer targeted feature, although small businesses and community groups will love the marketing potential of having their events put in front of locals without having to get them to Like their page.

“Every day, more than 100 million people use Facebook events to discover things they can do with their friends — from festivals and 5Ks to neighborhood fairs and nightlife,” says Aditya Koolwal, who is a Product Manager at Facebook. “With hundreds of millions of events shared on Facebook every year, the fear of missing out is becoming a thing of the past.”

The app lets the user pick topics of interest and sorts them by date. You can also view events from areas outside of your current location that you might be traveling to. If any event you are attending is updated the app will send a notification.


“If you’re looking for something to do this weekend or even right now, you can easily browse event recommendations based on time, location and your interests,” said Koolwal. “Explore events happening where you are or in places you like to go using the interactive map. You can also search for events in any city if you’re planning ahead for a trip.”


You can also merge your calendars into the app, although I couldn’t link Google Calendar to the app although I assume that will be added soon.

The app is available for download now from the iOS app store and is coming soon to Android.

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October 10th 2016 Facebook, Marketing, Social Media

Federal Court Rejects Online Gambling Lawsuit Against Valve–McLeod v. Valve

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screen-shot-2016-10-05-at-7-26-10-amThis lawsuit alleged that Valve “allowed an illegal online gambling market” based on its videogame Counter Strike Global Offensive (CSGO) and its Steam platform, an online marketplace where players can buy and sell virtual items and make payments. This lawsuit is similar to ones brought against Machine Zone and Big Fish. Both of those lawsuits were dismissed and are pending on appeal.

Here is the court’s description (citing the complaint) of how players participate in, and gambled via, the marketplace, and Valve’s involvement in the process:

CSGO players can purchase CSGO Skins (Skins), virtual weapons with different “textures” that can be used during gameplay, through Steam. Skins can then be “traded and used as collateral for bets placed on Skins Gambling Websites through linked Steam accounts.” Plaintiffs contend that Skins are like casino chips that have monetary value outside the game itself because of the ability to turn Skins directly into cash through these third-party gambling sites. All Skins are “put into a large pool, and one winner is chosen at random to take all of the Skins.” These Skins can then be sold and converted into cash. Valve allegedly takes a 15% fee on the sale of each Skin through its Steam marketplace and Skins allegedly “never actually leave Valve’s servers.”

In addition to Valve, plaintiffs sued a third party service (CSGO Lotto) that allegedly allowed gambling. Plaintiffs, proceeding as a putative class, brought numerous state law claims plus a single federal law claim: a RICO claim.

The court says that plaintiffs failed to meet the RICO standing requirement. Ninth Circuit RICO jurisprudence makes clear that “gambling losses are not sufficient injury to business or property for RICO standing.” Plaintiffs tried to buttress their RICO standing by pointing to other malfeasance by defendants, but the court says neither of these are sufficient:

  • state law and common law gambling violations
  • separate or additional allegations of fraud or dishonesty (the CSGO Lotto CEO’s alleged failure to disclose his ownership interest when he promoted the service)

Plaintiffs also alleged state law claims, but the court says it does not have jurisdiction over these claims. There is no diversity jurisdiction. The court says plaintiffs’ allegations fail to satisfy by a preponderance of evidence that the amount in controversy exceeds $5,000,000 (to support jurisdiction under the Class Action Fairness Act). Plaintiffs said it is “common sense” that (1) CSGO is popular and (2) Valve allegedly made more than $567M in revenue from CSGO last year, so plaintiffs must have over $5 million in damages. The court says these speculative allegations are insufficient. Given the dismissal of state law claims on jurisdictional grounds, plaintiffs can re-file these claims in state court.


This lawsuit received a lot of attention when it was filed. Unlike the other online gambling lawsuits that merely dealt with purchases of in-game virtual property, Valve allegedly promoted (or its platform “powered”) actual gambling sites where people were clearly betting on the outcome of games. The other lawsuits turned on whether buying a chance to receive valuable in-game property constituted gambling, but this lawsuit seemed different, given the use of Valve’s platform. Indeed, the attention led to Valve issuing cease and desist letter to actual gambling sites who utilized the Steam platform. (See Valve Issues Cease And Desist Letter To 23 Counter-Strike Gambling Sites.)

The big question was how a RICO claim—widely viewed as a tool of choice for crackpot internet commenters—would play out. Apparently the court did not think much of it. The decision will likely be appealed. It will be interesting to see what the Ninth Circuit does with it. Although it wasn’t addressed in this ruling, I’ll note that section 230 may have been another hurdle to plaintiffs trying to hold Valve liable for the actions of participants on its platform.

NB: Valve brought a motion to compel arbitration, but since the court resolved the case on CSGO Lotto’s 12(b)(6) motion, it does not resolve the arbitration issue.

Added: “Valve ordered to stop all gambling-related skin transfers by Washington State Gambling Commission” (The Esports Observer)

Case citation: McLeod v. Valve Corp., 2016 U.S. Dist. LEXIS 137836 (W.D. Wash. Oct. 4, 2016). The initial complaint.

Related postsBig Fish’s Virtual Casino Doesn’t Violate Washington’s Gambling Statute

October 6th 2016 Marketing

Facebook Expands Canvas Marketing Opportunities

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Canvas is Facebook’s mobile marketing platform for companies wanting to present a more immersive experience to potential customers. It’s a full-screen mobile ad that Facebook touts as loading nearly instantly and is designed specifically for Android and iOS devices. Using the same technology for loading photos and video quickly in the Facebook mobile app, Canvas can load up to 10 time faster than the mobile web.

When Canvas launched back in February, advertisers had to have either a web click or website conversion objective. Making Canvas even more versatile for advertisers, especially for marketers looking to seriously gain brand engagement, marketers can now choose brand awareness or video view objectives. “This means brand marketers can use Canvas across their range of goals for their campaigns,” noted a Facebook post.

The future of Canvas

Facebook is seeking to make Canvas an extremely robust marketing tool, especially for companies looking for new branding and customer relationship opportunities. “The future of Canvas will include many more features designed to make this immersive, attention-grabbing format accessible to any business, regardless of size or creative resources,” said Facebook. “Recently, we introduced new metrics for Canvas to help marketers understand the performance of each component—videos, photos and buttons—within their Canvas. Marketers can now learn from each Canvas they run, determining which designs work best to achieve their campaign goals.”

They plan to make Canvas simple for any brand to implement by providing advertisers with templates that immolate how other advertisers have used the new platform. Facebook says that the templates will be available over the next few months, but they provided one as an example:


360 Videos Coming to Canvas

Facebook wants to make Canvas its most immersive ad format in order to attract the Madison Avenue brands. Soon they will be offering 360 videos that provide advertisers a unique way to engage people on mobile and interact with a brands advertisement. According to Facebook, ITAU, a Brazilian bank, used Canvas with 360 video in it to tell an immersive story for children, in order to let people know about the banks outreach and charity in the area of education.

They are also offering the ability to link Canvas ads to one another via linked buttons and images, instead of just linking to a website. The allows advertisers to create a multi-Canvas experience. “By linking Canvases, Beats by Dre could invite people to explore differently colored versions of its iconic headphones, designed after different countries’ flags,” noted Facebook. “When people tapped on their different Beats options, instead of being driven to a slow-loading website, they got another Canvas, loaded quickly, that they could explore. Beats saw an average of 39 seconds spent in the Canvas, and 73% of the Canvas was viewed on average.”

Brand Success on Canvas

Facebook released some statistics from a couple of brands that have recently tried the Canvas marketing platform. Royal Caribbean used Canvas to promote a contest to win a free cruise where the last Canvas screen provided an access code and a link to enter the sweepstakes. Their cost per action was $0.17 and the average time potential customers spent on their Canvas as 72 seconds.

They say that Canvas works for smaller localized brick and mortar businesses too. A company (Edifica) built a new condo complex (also called Canvas) in Peru and was looking to find buyers using Canvas. According to Facebook, they saw a 50% lower cost-per-click, a 15% lower cost-per-thousand impression, and a 2.3X click-through-rate versus their other link ads, and got a 46-second average time spent in their Canvas. It’s unknown how many of these clickers turned into condo sales.

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September 28th 2016 Facebook, Marketing, Social Media

Does the FTC Get a Free Pass From Section 230?–FTC v. LeadClick

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I’ve often joked that the FTC and state AGs choose to live in a fantasy world where Section 230 doesn’t exist. A new ruling from the Second Circuit has turned my joke on its ear, suggesting that my underlying fears–of a Section 230-free zone for consumer protection agencies–may have become our dystopian reality.

The Opinion

The case involves weight loss products, including colon cleanses, vended by LeanSpa. To generate more sales, LeanSpa hired LeadClick to act as an affiliate marketing manager. LeadClick coordinated promotion of LeanSpa’s products with LeadClick’s network of affiliates. Some affiliates promoted the products using fake news sites, with articles styled to look like legitimate news articles and consumer comments/testimonials that were fake. Apparently, all of this added up to big business. LeanSpa paid LeadClick $35-$45 each time a consumer signed up for LeanSpa’s “free” trial (which was a negative billing option). LeadClick shared 80-90% of these sign-up fees with affiliates and kept the remainder for itself. In total, LeadClick billed LeanSpa $22M, of which LeanSpa paid only $12M. Still, LeanSpa turned into LeadClick’s top customer, constituting 85% of its eAdvertising division’s sales.

The court summarizes the key facts about LeadClick’s role in the fake new sites scheme:

While LeadClick did not itself create fake news sites to advertise products…it (1) knew that fake news sites were common in the affiliate marketing industry and that some of its affiliates were using fake news sites, (2) approved of the use of these sites, and, (3) on occasion, provided affiliates with content to use on their fake news pages.

The court also notes that LeadClick occasionally bought ads on legitimate news sites to promote fake news sites in its affiliate network.

The FTC’s Prima Facie Case

The FTC alleged that LeadClick engaged in deceptive practices. LeadClick responded that it didn’t do any deceptive practices itself; if anyone did, it was its affiliates. Extensively citing the Ninth Circuit’s FTC v. Neovi ruling from 2010 (an unfairness case, not a deception case, but this panel ignores the difference) and a subsequent 11th Circuit case (FTC v. IAB Marketing Associates), the Second Circuit concludes that “a defendant may be held liable for engaging in deceptive practices or acts if, with knowledge of the deception, it either directly participates in a deceptive scheme or has the authority to control the deceptive content at issue.”

In the Neovi case, the defendant Qchex had an online check-creation tool that fraudsters used to create and send bogus checks. The court held that Qchex engaged in unfair practices when it printed and then delivered the bogus checks to recipients. But here, LeadClick never “delivered” anything. Indeed, LeadClick argued that the legal standard conflates direct liability with aiding/abetting liability. The Second Circuit disagreed, saying a defendant who “allows the deception to proceed” thus “engages, through its own actions, in a deceptive act or practice that causes harm to consumers.”

I’m not a philosopher, but to me, “allowing” a third party to commit misconduct is a bizarre and overly expansive way of defining *direct* liability. Once this court makes this doctrinal cheat, LeadClick didn’t have a chance. Applying the legal standard to LeadClick:

* knowledge. “LeadClick knew that (1) the use of false news pages was prevalent in affiliate marketing, and (2) its own affiliate marketers were using fake news sites to market LeanSpaʹs products.”
* “direct participation in the deceptive conduct.” LeadClick satisfied this standard by “recruiting and paying affiliates who used fake news sites for generating traffic, managing those affiliates, suggesting substantive edits to fake news pages, and purchasing banner space for fake news sites on legitimate news sources.”
* “ability to control.” LeadClick ran an affiliate network that included fake news sites. “As the manager of the affiliate network, LeadClick had a responsibility to ensure that the advertisements produced by its affiliate network were not deceptive or misleading.” I thought the legal standard required “ability,” but the court tautologically uses the term “responsibility” to satisfy this element. Also note that the court’s legal standard (“has the authority to control the deceptive content at issue”) sounds a lot like principal-agency liability, but the court doesn’t say or imply that LeadClick had a principal-agency relationship with affiliates. Apparently the court is applying some kind of agency-lite liability.

Finally, the court says that LeadClick’s intent to deceive consumers is irrelevant; “it is enough that it orchestrated a scheme that was likely to mislead reasonable consumers.”

Section 230

Because of the court’s intellectual corner-cutting that LeadClick committed a “direct” violation of the FTCA, the Section 230 immunity was already doomed. This is consistent with the Neovi case, where Section 230 didn’t even come up even though all of the fraudulent content was provided by third parties. Even though Section 230 doesn’t apply to a defendant’s own legal violations, the court unfortunately decides to muck up Section 230 jurisprudence anyway, apparently for kicks.

I believe this is only the second time that the Second Circuit has discussed Section 230. The prior case was GoDaddy’s undramatic 2015 win in Ricci v. Teamsters, issued per curiam. Oddly, this panel doesn’t cite the Ricci case at all–not even once. The opinion simply says “We have had limited opportunity to interpret Section 230” without referencing the Ricci case by name. I’m baffled why this opinion so deliberately avoided engaging the recent and obviously relevant Ricci precedent…? Could it be that Ricci would have forced the panel to reach a different result or clearly created an intra-circuit split? Is there some kind of behind-the-scenes politics among Second Circuit judges? I welcome your theories.

The court runs through the standard 3 prong test for Section 230’s immunity:

1) provider/user of an interactive computer service (ICS). The court correctly says “Courts typically have held that internet service providers, website exchange systems, online message boards, and search engines fall within this definition.” (What is a “website exchange system”?). Then the court goes sideways, saying it is “doubtful” that LeadClick qualifies as an ICS because it acts as an affiliate manager that doesn’t provide access to servers.

LeadClick argued that it provided affiliate tracking URLs and recorded activity on its server, but the panel responds that LeadClick didn’t cite any cases applying Section 230 in similar contexts. The court continues that LeadClick’s tracking service “is not the type of service that Congress intended to protect in granting immunity” because “routing customers through the HitPath server before reaching LeanSpaʹs website[] was invisible to consumers and did not benefit them in any way. Its purpose was not to encourage discourse but to keep track of the business referred from its affiliate network.”

Say what? Affiliate programs are just another form of advertising, so like other advertising programs, they help compensate publishers for creating and disseminating their content. We may not want this particular content (fake news sites touting dubious weight loss products). Even so, affiliate programs do support discourse, and the court’s denigration of affiliate programs’ speech benefits is unfortunate and unsupportable. More generally, the court seems to be marginalizing the speech benefits that third party vendors to publishers, which is obviously misguided when vendors help publishers conduct their business more efficiently. I hope other courts don’t apply a “discourse promotion” threshold for applying Section 230.

We rarely see cases turn on the ICS prong, so it’s really shocking to see the court go there–especially when it eventually expressly punts on the issue, making this discussion dicta.

2) content provided by another information content provider (ICP). The court cites Accusearch for the proposition that ICP “cover[s] even those who are responsible for the development of content only in part,ʺ but then adds a “defendant, however, will not be held responsible unless it assisted in the development of what made the content unlawful.”

The court says LeadClick “participated in the development of the deceptive content posted on fake news pages” because it recruited affiliates knowing some had fake news sites, paid them, occasionally advised them to edit content, and bought ads on legitimate news sites. In other words, the court cites the exact same evidence of LeadClick’s prima facie liability as evidence of its lack of qualification for Section 230. This is just another way of saying that once the Second Circuit treated LeadClick as a direct violator of the FTCA, LeadClick had no chance of qualifying for Section 230.

Notice that none of the cited facts actually involve content “creation” by LeadClick, so the court apparently assumes content “development” covers other activities–but doesn’t say what that term means.

The court continues: “LeadClickʹs role in managing the affiliate network far exceeded that of neutral assistance. Instead, it participated in the development of its affiliatesʹ deceptive websites, ‘materially contributing to [the contentʹs] alleged unlawfulness.’” What does “neutral assistance” mean, and how does that relate to Section 230 immunity? I assume all future plaintiffs in the Second Circuit will claim that the defendant provided “assistance” to the content originator that wasn’t “neutral.” That should be fun.

3) treated as publisher/speaker. The court pulls the same trick with this prong, i.e., LeadClick was facing direct liability due to its own misconduct and citing evidence from the prima facie case as disqualifying evidence for this prong.

Further Implications

As we all know, no business wants to litigate against the FTC in court. Not only do the FTC’s litigation resources dwarf those available even to large defendants, but judges give the FTC extra credit as the voice of consumers. This case highlighted how the Second Circuit bent plenty of legal doctrine to get the FTC its win. Future defendants who want to fight the FTC in federal court, take note. This kind of doctrinal distortion happens far too frequently in FTC cases, so it would be a mistake to treat it as an unlikely-to-repeat accident.

There is so much unnecessary bad stuff here for Section 230 jurisprudence in the Second Circuit. Plaintiffs can find plenty of mischief in the court’s discussion about what qualifies as “interactive computer services,” “neutral assistance” and “development.” Yuck.

In a footnote, the court says the analysis would be the same under Connecticut’s UTPA. This suggests that state AGs could similarly establish a prima facie “direct” violation against defendants like LeadClick per their state unfair competition laws without running afoul of Section 230 either. I expect we’ll see this case cited extensively by state AGs in future enforcement actions.

Section 230’s year-of-woe keeps going. I’m ready for 2016 to be over. Perhaps the Section 230 pendulum will swing back towards defendants in 2017.

Case citation: Federal Trade Commission v. LeadClick Media, LLC, 2016 WL 5338081 (2d Cir. Sept. 23, 2016)

September 28th 2016 Marketing

How the Power of Employee Engagement Will Boost Your Business

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What if you could attract, retain and engage the world's best talent with purpose-driven employee engagement? And what if you could increase employee productivity while inspiring your workforce to become brand evangelists reaching millions of people with just one­ click?

CJ Follini

Purpose­-driven employee engagement that utilizes advanced VR, AR & 360-degree video and presents a holistic strategy for an employee's emotional, spiritual, physical and professional growth needs could be the disruption that makes a difference. has defined employee engagement as "the emotional connection an employee feels toward his or her employment organization, which tends to influence his or her behaviors and level of effort in work related activities." To create such an emotional connection, a company has to treat its employees as its first customer. Employee engagement can make the difference between success and failure, as disengaged employees are estimated to cost the U.S. economy billions in lost productivity, accidents, theft and turnover.

In contrast, organizations with highly engaged employees had an average 3-year revenue growth 2.3 times greater than those whose employees showed average engagement. And 79 percent of today's graduates consider a company's corporate social responsibility (CSR) commitments when deciding where to work, according to a recent Cone Communications study. Purpose­-driven content and sponsored volunteer activities have proven to be the most effective means of increasing emotional investment for employees, making the workplace more meaningful, productive and just plain irresistible.

Unfortunately, today's employee engagement landscape consists mostly of uber­ specialized technology platforms that while highly functional, usually don't address all of their employees' needs especially when it comes to content­ creation, social sharing and wellness. Thus quickest path to a successful program would be an easy­ to­ use, singular platform presenting a 360­-degree offering for emotional, spiritual, physical and professional growth with meaningful content distribution and sharing, particularly immersive video. This places technology in the service of companies and society in an organic way that engages and champions the individual as they build a socially ­conscious, positive self­ esteem.

With this in mind, here are eight elements critical to really tapping into the power of employee engagement.

Content Centric 

A company that provides entertaining and inspiring, yet deliberately transparent content can increase employee engagement and inclination to share positive stories about its company and its fellow employees.
 Activating employees as co-creators of the corporate message in this way fortifies internal reputation and enables another way to externally represent the brand. As such, an employee engagement portal should provide one-stop content distribution from across all company channels, as well as allow for employee content creation and management within the platform. 

Video in particular is the most easily consumable and shareable form of media—it represents an increasing share of digital/mobile ad spending, with growth driven by a substantial increase in mobile video allocations. The latest VR, AR, and Google 360° advanced video techniques should be implemented for any truly holistic employee engagement campaign due to its potential to dramatically improve participation rates as well as enhance goal communication and content sharing both internally and externally.

Cause Driven

If CSR causes are the core of optimizing employee engagement, then cause-driven content is more effective toward engaging employees than any other. With a singular purpose-driven portal, brands and corporations could integrate all their CSR & cause initiatives into a database that provides employees with a searchable source of causes and ideas.

Nonprofits benefit from exposure on the platform so that brands and their employees can become familiar with causes and support them if they match the brand's mission. Employees wouldn't have to worry about where to have their donations matched, or what causes their company supports, and could track their individual, group and company social impact all in one place.

Authentic storytelling through social sharing 

The reach of online sharing by employees is growing as social media algorithms evolve. For example, Facebook's News Feed algorithm challenges companies to be smarter marketers and better storytellers to provide fans with content that matters to them. An individual employee sharing personally-created content deepens engagement for employees and, importantly, their social networks.

This "Inside-Out" approach starts from within—a company's talent, resources, customer relationships and distribution networks—and leverages these to reach company cause marketing goals through organic, authentic employee stories. With one-click social sharing on the platform, employees don't have to jump through hoops to get their stories out there, resulting in benefits for the business, associated nonprofits or causes and stakeholders (employees and customers).

Secure bi-directional communication capabilities 

To best take advantage of employee ideas in cause-driven content, an atmosphere of open, clear communication must be encouraged. Through a safe, built-in communication system on a singular portal, companies can open up discussion to springboard ideas and coordinate efforts. When we say "bi-directional," we mean horizontally and vertically—horizontally to encourage peer-to-peer messaging and recognition, and vertically to support communications from management to reporting employees.

Access to wellness resources & experts 

When employees feel physically and mentally well, and also feel valued by their companies, they are more likely to be engaged in all aspects of work. While some employee engagement programs include wellness tracking, this method is mostly do-it-yourself. To encourage holistic wellness and keep employees at their best, companies need to provide resources for workers to find quality information, as well as experts and leaders in physical and mental health.

Game mechanics

If employees can attribute earned value to causes, they'll be more likely to participate in them. Game Mechanics systems "add[s] value to product, to increase employee engagement and to drive crowdsourced innovation." Upon signing up, employees can track their efforts and share their involvement socially so that the cause they love gets more support, as well as earn them points toward leaderboard status and rewards.

Single entry point 

Ease of use is crucial to participation on any platform. Whereas multiple portals each with their own logins can be confusing and lead to employee opt-out, single sign-up and login can seamlessly integrate multiple corporate departments, improving coordination.

Administrative dashboard and reporting

In contrast to fragmented solutions that track either one campaign or another, the portal could track multiple campaigns in real-time, allowing companies to systematically measure engagement and social impact. This makes it possible to glean actionable data and thereby optimize performance on all fronts, from hours volunteered, to miles run, to posts shared. It could also create comprehensive, segmentable reports to determine which employees deserve rewards fulfillment, which areas need improvement, which causes deserve more attention, and so on.

By merging CSR, content storytelling, and wellness with the latest technology, a singular employee engagement platform has the potential to help companies turn holistic employee wellness into action and action into impact.

Real change—and real engagement—happen inside-out, showing that when employees are happy and feel valued, they share that happiness with the world. And that can never be bad for business.

CJ Follini (@cjfollini) is founder and chief evangelist at Imminent Digital, an employee engagement firm.

September 28th 2016 Marketing, Mobile, Technology

Court Dumps Crappy Trademark & Keyword Ad Case–ONEPul v. BagSpot

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It’s a highlight of my day to read an opinion that starts out: the litigants “are competitors in the dog waste disposal industry.” Blogging can be a crappy gig, but someone’s gotta do it.

dog-1293049The litigants have competing offerings that allow users to grab a dog-poop-pickup bag with a single pull. The plaintiff claims trademarks in the terms “ONEPUL” and “SINGLEPUL.” The defendant uses the “BagSpot®” mark and often refers to its bags as “one-pull” or “one pull.” It appears the defendant didn’t use the exact terms ONEPUL or SINGLEPUL or the unhyphenated words “onepull” or “singlepull.” The defendant also ran competitive keyword ads based on the plaintiff’s Zerowaste mark.

The court dumps the case for lack of likelihood of confusion. The defendant’s marketing featured its house mark BagSpot extensively, which helps inform consumers that they aren’t dealing with the plaintiff. The court says “ONEPUL” and “one-pull” are semantically quite different, and many other competitors use the “one pull”/”one-pull” terms descriptively because they are common ways to describe the product feature (the court never mentions descriptive fair use because it says ONEPUL is suggestive). The court also cites the defendant’s competitive intent, saying even if the defendant sought to compete with the plaintiff, that doesn’t show it duped consumers.

Similarly, keyword advertising:

may be strong evidence of a desire to compete with plaintiff in the marketplace. But it is no evidence of unfair competition or intent to infringe. Plaintiff has offered no evidence that defendant has done anything more than advertise its own products to potential consumers who are shopping for dog waste disposal bags online.

In a footnote, the court rejects any initial interest confusion claim:

Even if that type of infringement claim were cognizable in this circuit, it would not aid plaintiff here. A claim of initial interest confusion requires sufficient evidence to survive summary judgment, like any other infringement claim. Plaintiff has introduced no evidence from which a reasonable jury could determine “confusion” caused by defendant’s specific use of “one pull” (as opposed to its entry into the market and its legitimate business practices) likely “create[d] an initial customer interest” in defendant’s dog waste disposal bags.

With that, the court tosses this litigation into the summary judgment trash can.

Case citation: ZW USA, Inc. v. PWD Systems, LLC, 2016 WL 5236934 (E.D. Mo. Sept. 22, 2016)

Blog Posts on Competitive Keyword Advertising

* AdWords Buys Using Geographic Terms Support Personal Jurisdiction–Rilley v. MoneyMutual

* FTC Sues 1-800 Contacts For Restricting Competitive Keyword Advertising

* Competitive Keyword Advertising Lawsuit Will Go To A Jury–Edible Arrangements v. Provide Commerce

* Texas Ethics Opinion Approves Competitive Keyword Ads By Lawyers

* Court Beats Down Another Competitive Keyword Advertising Lawsuit–Beast Sports v. BPI

* Another Murky Opinion on Lawyers Buying Keyword Ads on Other Lawyers’ Names–In re Naert

* Keyword Ad Lawsuit Isn’t Covered By California’s Anti-SLAPP Law

* Confusion From Competitive Keyword Advertising? Fuhgeddaboudit

* Competitive Keyword Advertising Permitted As Nominative Use–ElitePay Global v. CardPaymentOptions

* Google And Yahoo Defeat Last Remaining Lawsuit Over Competitive Keyword Advertising

* Mixed Ruling in Competitive Keyword Advertising Case–Goldline v. Regal

* Another Competitive Keyword Advertising Lawsuit Fails–Infogroup v. DatabaseLLC

* Damages from Competitive Keyword Advertising Are “Vanishingly Small”

* More Defendants Win Keyword Advertising Lawsuits

* Another Keyword Advertising Lawsuit Fails Badly

* Duplicitous Competitive Keyword Advertising Lawsuits–Fareportal v. LBF (& Vice-Versa)

* Trademark Owners Just Can’t Win Keyword Advertising Cases–EarthCam v. OxBlue

* Want To Know Amazon’s Confidential Settlement Terms For A Keyword Advertising Lawsuit? Merry Christmas!

* Florida Allows Competitive Keyword Advertising By Lawyers

* Another Keyword Advertising Lawsuit Unceremoniously Dismissed–Infostream v. Avid

* Another Keyword Advertising Lawsuit Fails–Allied Interstate v. Kimmel & Silverman

* More Evidence That Competitive Keyword Advertising Benefits Trademark Owners

* Suing Over Keyword Advertising Is A Bad Business Decision For Trademark Owners

* Florida Proposes to Ban Competitive Keyword Advertising by Lawyers

* More Confirmation That Google Has Won the AdWords Trademark Battles Worldwide

* Google’s Search Suggestions Don’t Violate Wisconsin Publicity Rights Law

* Amazon’s Merchandising of Its Search Results Doesn’t Violate Trademark Law

* Buying Keyword Ads on People’s Names Doesn’t Violate Their Publicity Rights

* With Its Australian Court Victory, Google Moves Closer to Legitimizing Keyword Advertising Globally

* Yet Another Ruling That Competitive Keyword Ad Lawsuits Are Stupid–Louisiana Pacific v. James Hardie

* Another Google AdWords Advertiser Defeats Trademark Infringement Lawsuit

* With Rosetta Stone Settlement, Google Gets Closer to Legitimizing Billions of AdWords Revenue

* Google Defeats Trademark Challenge to Its AdWords Service

* Newly Released Consumer Survey Indicates that Legal Concerns About Competitive Keyword Advertising Are Overblown

September 26th 2016 Marketing

The biggest problem with Snapchat’s geofilter product

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snapchat-down Snapchat’s current geofilter product is a nightmare for event managers, brands, and any commercial business because anyone can coat-tail or hijack the space. Let’s say you’re holding a political rally at City Hall, and you want to buy a geofilter for the augmented Snapchat space at the event. When you go to purchase it from Snapchat, your plan gets rejected. Why? Someone… Read More

September 24th 2016 Marketing, Mobile