PlugIn Issue #25 - Advertising in the Digital Age

The Taylor Wessing e-journal
Issue #25
Advertising in the
Digital Age

EDITORIAL
Whether it be Adtech, Influencer Marketing or Dynamic Pricing – The digital transformation of advertising is
changing the marketing industry rapidly. As the legal situation becomes more and more complex,
companies are left with different legal uncertainties. In this PlugIn edition, our experts provide insights on
the legal framework of advertising in the digital age. They take a closer look on topics such as the legal use
of foreign trademarks in online marketing, comparison websites, pricing strategies as well as the legal
framework of influencer marketing and Adtech.

CONTENT
Dr. Thorsten Troge
Partner, Hamburg
Influencer Marketing – Effective Promotion with Legal Uncertainties 4
Katharina H. Reuer M.Jur.
Salary Partner, Hamburg
How Digitalisation enables the Legal Use of Foreign Trademarks in Online Marketing Tools 5
Debbie Heywood
Senior Professional Support Lawyer, London
Adtech – what do the EU regulators think? 6
Dr. David Klein
Salary Partner, Hamburg
Adtech industry under scrutiny of the German Data Protection Authorities 7
Andreas Bauer
Partner, München
Comparison Websites in the focus of the German Federal Cartel Office 8
Dr. Benedikt F. Flöter
Associate, Hamburg
Dynamic and Personalized Pricing 9
Issue #25
3

Influencer Marketing – Effective Promotion with Legal
Uncertainties
Marketing in the digital age is dominated by new technologies that enable tracking and
automated profiling. This leads to targeted marketing and tailor-made advertising,
constantly improved by self-learning algorithms: digital marketing in the personal
environment of the consumers through their mobile phones, tablets or digital assistants
at home. However, experience has shown that it is ultimately content that grabs the
attention of the consumer and convinces him or her to buy. If the content is entertaining
and a distraction from everyday business, the consumer will be more likely to follow its
call. The most effective impact, however, is achieved if the product or the service is
promoted by a person in whom the consumer trusts. While until recently testimonials of
athletes and actors were used, exploiting their fame and credibility in the promotion of
the marketing message, today the personal recommendation can be more targeted
and more effective through the use of influencers and their impact on their followers.
Digital technology has made it possible for every niche expert in fashion, food, sports,
games, family matters or special interests to produce their own blog, with high quality
photos and/or video. Thousands of Bloggers on YouTube or Instagram are considered
interesting enough for people with similar interests to follow every post and trust the
influencer’s recommendations. Of course, there are the well-known influencers with
several millions followers, easily reaching a million likes for a single post within hours.
However, there is also a not-so-well-known blogger community…
AUTHOR
Dr. Thorsten Troge
Partner, Hamburg
PROFILE
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Issue #25
4

How Digitalisation enables the Legal Use of Foreign
Trademarks in Online Marketing Tools
The digital transformation of commerce in recent years has led to new online marketing
opportunities for trademark proprietors. The use of your own trademarks in order to
navigate the consumer through the internet to your products, for example by means of
SEO (search engine optimization) and keyword advertising, has certainly become a
very important marketing tool nowadays. One of the unspoken rules of competition is
that the entrepreneur wants to also draw the consumer’s attention to his own products
when the consumer is looking for a competing product. The question of the extent to
which it is legally permissible to use a competitor’s trademark for one’s own online
advertising has been largely clarified by German and European case law in the field of
keyword advertising. However, there are still some legal pitfalls and recent
developments to be considered:
What Do you need to know about trademarks when using them for
online marketing?
Trademarks are distinctive signs to identify certain goods or services with the proprietor
of the trademark. They protect the specific interests of their proprietor that is to ensure
that the trademarks fulfil their economic and legal functions.
AUTHOR
Katharina H. Reuer M.Jur.
Salary Partner, Hamburg
PROFILE
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Issue #25
5

Adtech – what do the EU regulators think?
While governments around the world grapple with the issue of how to regulate content
on the internet, the Adtech ecosystem is already subject to a wide regulatory
framework. This has intensified with the advent of the GDPR which raises issues
around transparency, lawful basis, security and consent, in particular.
AUTHOR
It’s not just data protection regulators who are focusing on Adtech though. Competition
and consumer regulators have also enforced against some of the tech giants for abuse
of a dominant position in online advertising, and aggressive and misleading practices,
respectively.
It’s also worth considering that the EC is bringing in GDPR-style fines for breaches of
consumer protection law. As recent decisions and actions by regulators have shown,
there are substantial risks if you get it wrong, not least, in the most extreme cases,
significant fines.
Data protection regulators
EU data protection regulators are looking closely at Adtech, sometimes in response to
complaints from privacy campaigners, and sometimes carrying out their own
investigations or initiatives…
Debbie Heywood
Senior Professional Support Lawyer, London
PROFILE
READ MORE
Issue #25
6

Adtech industry under scrutiny of the German Data
Protection Authorities
When we use apps or browse the web, play online games or stream the latest season
of our favorite tv shows on mobile devices, the publishers of the app or content are
often tracking our activity to provide us with relevant advertising in consideration for
free apps and games. The so-called adtech, i.e. the technology working behind the
scenes for such advertising, is highly sophisticated and usually requires the processing
of some personal information of the users.
AUTHOR
What has happened so far in Europe?
In the last months, the adtech industry has been in the focus of several data protection
authorities in Europe. Beside fines posed on several businesses for their advertising
practices, the data protection authorities provided some guidance on how they want
the privacy and data protection rules in Europe, in the first place both the so called e-
Privacy Directive (Directive 2002/58/EC and its updates) as well as the General Data
Protection Regulation (Regulation 2016/679, GDPR).
The Information Commissioner’s Office (ICO) in the UK published their “Update report
into adtech and real time bidding” in June, challenging the data processing practices of
complex advertising technologies. The French Commission Nationale de l’Informatique
et des Libertés (CNIL) published at the end of June their action plan for 2019…
Dr. David Klein
Salary Partner, Hamburg
PROFILE
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Issue #25
7

Comparison Websites in the focus of the German Federal
Cartel Office
The competence of the German Federal Cartel Office (Bundeskartellamt, FCO) in the
area of consumer protection may soon become significantly broader. This would
provide the FCO with a completely new role as a consumer protection agency. This
could significantly change the enforcement of consumer protection regulations in
Germany, such as the German Act against Unfair Competition (UWG).
AUTHOR
Sector Inquiry into Comparison Portals
In October 2017, the FCO launched a sector inquiry into online comparison websites.
In recent years, comparison websites have gained in economic importance as they are
used by a large number of consumers to compare different offers. In April 2019, the
final report was published. Since then, the public discussion about whether and to what
extent the competence of the FCO in the area of consumer protection should be
broadened has significantly intensified. , It is currently of more interest than ever due to
the upcoming 10th Amendment of the German Act against Restraints of Competition
(GWB).
Andreas Bauer
Partner, München
PROFILE
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Issue #25
8

Dynamic and Personalized Pricing
The Dynamic Pricing model is the basic model of individually determined prices. Here,
price fluctuations are carried out over time on the basis of different variables (demand,
capacity utilization or market situations). Think of the often-cited example of airlines
tickets increasing in price as the time of departure approaches.
AUTHOR
The evolution of Dynamic Pricing is Personalized or Individualized Pricing. This
technique allows for price discrimination based on factors such as economies of scale
(quantity discounts), performance based differentiation (loyalty programs) or group
based differentiation (student discounts). With the improvements in digitization pricing
decisions can concentrate on the individual (Targeted Pricing) with the consequence
that the customer is offered an individual price tailored to his willingness to pay. The
use of personalized prices is, however, marginal in the German market, which is
attributable to the strict rules prohibiting the use of personal data (see section B.IV.
below).
On the contrary, the use of Dynamic Pricing is widespread. A study from 2017 shows
that four out of ten online shops use Dynamic Pricing and that 60% of prices are
adjusted once to three times a day. The highest frequency of price adjustments was
found for a pizza oven the price of which was updated 20 times a day. The range of
price adjustments can be quite substantial…
Dr. Benedikt F. Flöter
Associate, Hamburg
PROFILE
READ MORE
Issue #25
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ISSUES
#24 Games
#23 Real Estate
#22 Aerospace #21 Competition
#20 AutoTech #19 Commercial #18 Digitising Disputes #17 Laws of AI
#16 Recap 2018 #15 Finance #14 IoT Licence #13 Maritime Industry
#12 Asia 4.0 #11 InsurTech
#10 Venture Capital #09 Energy
Issue #25
10

The Taylor Wessing e-journal
Issue #25
Rethinking the laws of
the digital future