6 Online Advertising Risks You Need to Know (And How to Avoid Them)

Online advertising is a powerful tool for any business. Since the internet has become the primary means of doing business, it’s necessary and the best advertising route. However, there are several key risks involved in online advertising that can create excess risk for online advertisers if not handled with great care and managed properly.

Here are the 6 biggest risks for online advertisers.

  1. Invasion of User Privacy

User privacy is one of the biggest risks in online advertising. As an online advertiser, it is your duty to respect the privacy of your users. All of the following constitute illegal invasions of user privacy: using someone’s name or likeness without their permission, sharing their private data, or revealing information about a user that represents them falsely. The best example of this risk is the use of personal information without obtaining the permission of the customer, which can often be quite costly. As an online advertiser, you are not allowed to publish the positive personal testimonial of a customer without their written consent.

You can avoid the risk by treating user’s data with respect (since privacy is so important) by obtaining proper permissions for use of a name or likeness in advertising, respecting the privacy of your users. A general release and permission-for-use is sufficient, and can significantly mitigate risk for your business.

2. Advertising Idea Theft

You absolutely cannot steal another company’s method of advertising if the company has developed a unique method of advertising. If an average person could reasonably believe that you ripped off another company, you could be in trouble legally. For example, if a competitor promotes its product using flashy advertising designs with catchy, specific catchphrases, you could be violating their copyright and be subject to litigation around intellectual property appropriation.

You mitigate this by being original and not stealing the advertising copyrights of others. Creativity is the most powerful tool we have in advertising, and the most original ads — the ones that people haven’t seen before — are often the most effective and have the highest ROI.

3. Defamation

If your advertisement makes untrue, disparaging statements about another company, a company’s product, or a person, you could be liable for damages since you’ve committed a tort against them. For example, suppose you are trying to differentiate your good or service from a good or service of a competitor, the objective of your advertisement is to convince customers to switch from your competitor’s service to yours. While your advertisement can highlight the reasons why your product or service is superior to your competitor’s, you cannot make untrue statements or libel your competitor. Online advertisers often push the envelope with regard to what could be considered cheeky or defamatory, and this is a significant risk that can oftentimes result in litigation.

Online advertisers can mitigate this risk by heavily vetting all of their information and avoiding defamatory statements about a competitor. Generally, if one exercises reasonable care in ensuring that defamatory statements are not made in online ads, this risk is mitigated.

4. Regulatory Compliance

There are well over ten thousand laws governing electronic communication in the United States, so it’s relatively easy to make mistakes in online marketing. The broad purpose of these laws is to ensure fairness and honesty so that consumers are protected against false and misleading claims about products or services. Broadly speaking, the FTC requires three things of all advertisers: (1) advertising must be true and non-deceptive, (2) evidence must be provided for all claims made in advertisements, and (3) a business may not make unfair advertisements.

The solution to this risk is to obtain an in-depth familiarity with the laws governing online advertising and electronic communications in your specific industry. If you don’t have a thorough understanding of what you can or cannot say in an ad — or don’t know specifically how to say it — then you should consult with an attorney who specializes in the regulatory guidelines governing advertising.

5. Fraud

Few online advertisers are aware that they could be defrauded by the advertising services they hire, and in a terrifying November 2014 report from Google, it was revealed that 56% of all online ads are never seen by actual humans because they are placed outside the main area of the computer browser. And “bot fraud” is highly pervasive as well, with one report estimating that companies will waste $6B in fraudulent ads in 2017, with bots making up over 12% of online ad traffic.

You can avoid being defrauded by heavily vetting the platforms from which you purchase advertisements and demand specific performance metrics. And pay attention to your payoff from your ad, because if you aren’t garnering valuable conversions from your ad, then the fraud will show up in your low ROI on the ad. You can mitigate your risk of being defrauded by carefully evaluating each online advertisement you run, and keeping a close eye on all of the services you purchase ads from.

6. Reputational Gaffes

We’ve all seen instances in which a company sticks its foot in its own mouth and generates negative goodwill for its product or service with an online advertisement. As a more extreme example, consider the mattress store in Texas that put up a tasteless advertisement poking fun at the 9/11 terrorist attacks (yes, this actually happened). Tasteless jokes and cultural appropriation are the most common types of reputational gaffes in online advertising that can cause the most severe and permanent damage to a company’s goodwill. Other examples include improper management of company social media, where someone retweets or reposts content that could potentially harm your company’s reputation and result in the opposite outcome of what your advertisement was intended to yield.

To avoid this, make sure that you have many team members carefully reviewing your content, and err on the side of conservatism versus edginess (unless the edgy content is highly calculated and your team believes that nothing will be taken the wrong way). Play it safe and make sure that your content is reviewed by many team members, and you’ll be fine.

Navigating the jungle of online advertising is not a simple task, and we need to be fully cognizant of all of the risks in our undertaking. But with a bit of reasonable care and some common sense, online advertisers can avoid the risky pitfalls that many fall victim to.