Social Media and Risk Management

Written on Jan 22 2013

In just a couple of years, social media managed to grow and integrate itself in our personal and professional lives. We can say that social media became a necessity for businesses and brands. It became a powerful and efficient tool of communication for those who know how to use it.

However, to get there, a business/brand must build, cultivate and maintain its social media presence. According to a recent survey, 65 precent of organizations are adjusting their workflow to incorporate social media. These organizations see value in controlling the content that is broadcasted on their social channels. However, this could be a hard task for some companies because it requires time, patience and know-how. With this in mind, more and more companies are hiring marketing agencies to handle their social media activities. According to a recent report, 32 percent of marketers are entrusting their social media accounts to third-party businesses.

Is this a viable solution? 
It can be for those who look at it without having a broad perspective and without doing some specific research. There are many risks and before making a decision you need to analyze everything. Things can go wrong in many ways and disputes between companies and the marketing agencies they hire can arise at any moment.

Let’s just take the case of a non profit organization (NPO) that had a legal quarrel with the marketing agency it hired. At a certain point, the NPO was late on one payment so the marketing agency decided to change the passwords of the social media accounts (Facebook and Twitter). Did the NPO foresee this situation? Did it take all the required measures? Sadly, no.

It’s best to avoid these kinds of situations because social media is a new field and the laws are rather vague at this moment. However, if you want a more detailed perspective on the risks associated with marketing and social media, you can find below an excerpt from a white paper published by Venable LLP, a corporate law firm:

Companies that have relationships with third-party affiliate marketers should ensure that those affiliates comply with advertising and marketing laws in marketing the companies’ products or services through social media. Businesses should have agreements with affiliates requiring the affiliates to comply with all applicable federal, state, and local laws and regulations; it may be prudent to include specific representations and warranties by the affiliate with respect to compliance, with specific references to significant laws such as the FTC Act. The agreements should also have a provision whereby the affiliate agrees to indemnify the company (either though a mutual indemnification or otherwise) from liability arising out of the affiliate’s conduct – preferably with a provision requiring that the affiliate carry sufficient insurance to fund the indemnification should it be triggered.

On a related note, confidentiality provisions and related provisions ensuring data security have become increasingly important in the current legal environment, particularly in agreements involving cross-border activities where consumer personal information is collected online. Additionally, businesses should, to the extent it is feasible, monitor the advertising and marketing practices of affiliates and review their marketing materials before they are disseminated. A company should take similar measures with respect to third parties who market through social media outlets operated by the company.

Let us give you another example, a more in-house one. We will take the PhoneDog vs. Kravitz case. Noah Kravitz is a blogger who worked for PhoneDog (tech blog). When he started working, he created a Twitter account, @PhoneDog_Noah, which gathered around 17.000 followers. In 2010, Noah Kravitz left PhoneDog in good terms. He managed to keep the created Twitter account with all of its followers, changing the username from @PhoneDog_Noah to @NoahKravitz.

Things got ugly when he filed suit over back pay. PhoneDog countersued, claiming the followers of the created Twitter account (@PhoneDog_Noah). They requested $2.50 for each of the followers.

This case got its final outcome at the beginning of December. PhoneDog and Noah Kravitz decided to settle so it’s still hard to say who owns certain Twitter accounts, in this case @PhoneDog_Noah/@NoahKravitz.

These situations can be easily avoided if you, as a company, make your own social media policy. If this might seem a tough job, visit SocialMediaGovernance. The website offers a section with 218 social media policies.

Also, keep in mind the following questions before deciding to hire a third-party company to take care of your social media presence:

Will it do a better job than your staff?
Will it understand your brand completely?

As a conclusion and recommendation, if you still want to follow this path, make sure you pave it well enough and get professional help when needed. Be smart, learn from others’ mistakes! The simplySocial team is here to ensure your online success.

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