Admation Blog

The risks of letting your marketing compliance slip!

Posted by Jodie Byass on Aug 11, 2016

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While creativity is at the core of what you do – great ideas, clever strategies, inspiring campaigns – it’s critical that you also make marketing compliance a priority in your work. Marketing compliance might not be the most exciting facet of what you do, but it’s a necessary evil that actually works in your favour.

Here are some of the risks associated with letting your marketing compliance slip.

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1. Your brand could be fined large amounts of money by external regulatory bodies.

More recently, government regulatory bodies and consumer watch dog organisations have been taking brands to task over misleading marketing campaigns. In the US:

“There were approximately 49 enforcements from the Consumer Financial Protection Bureau (CFPB) and 47 settlement orders from the FTC in 2015 alone … Average fines ranged from $134 million (for companies that received 2,000 to 10,000 complaints) to $758 million (for companies with 10,000-plus complaints).” ‘Three Marketing Compliance Trends That Should Be On Your 2016 List’, Alex Baydin, 6 January 2016, www.cmo.com

You only have to spend a few minutes googling how many brands the ACCC has fined over marketing non-compliance recently to see that no one is safe when guidelines are breached.

Nonetheless, being bailed up on misleading information isn’t always the result of a brand spruiking misconceptions. It could be as simple as an ineffectual approval workflow process that has bypassed the brand’s legal team resulting in inaccurate information going public. Either way, once it’s out in the public domain, a brand is fare game. Likewise, not having an audit trail of all marketing work also places brands in danger if they’re ever called up to disprove legal misconduct.

2. Marketing non-compliance could hurt your brand’s reputation. 

Marketing compliance, though, is not just about dodging hefty fines. It’s about being accountable for the way your brand acts and is perceived in the public eye. Many brands have learnt the hard way that a bad reputation can adversely affect their bottom line.

Deloitte’s ‘2014 Global survey on Reputation risk [email protected]’:

“Respondents who had previously experienced a negative reputation event say the biggest impact areas were revenue (41 percent), loss of brand value (41 percent), followed by regulatory investigations (37 percent).”

If you don’t have clear protocols and approval workflow processes in place to keep your branding and messaging consistent, then consumers may come to mistrust your brand. This in turn could send them running to your competitors, which will result in loss of revenue for your business. So while something might sound like a brilliant marketing idea at the time, you have to ensure that it’s on brand and in line with the authentic value of your products and services. It might be wise to remember that in some extreme examples, some brands never recover from a sullied reputation.

3. Technology poses new risks to marketing non-compliance.

While technology has provided new ways for brands to mine and collect data, businesses are still grappling with processes to protect personal information. With cyber hacking and brand’s being accused of misusing personal information, there is no time like the present to get your security and marketing protocols up to scratch. You only have to observe those brands that have failed to protect customers’ personal data to see the lawsuits ensue.

While social media is lauded for giving marketers a direct route to customers, there can be a downside to using these platforms. For example, there’s nothing like a rant about misconduct going viral on social media to send a brand into damage control. Reports indicate that a major blind spot for brands is their inability to effectively and promptly manage customer complaints, especially on financial matters such as fraud and theft. Poor brand perception again affects a brand’s reputation and, if guidelines are breached, may lead to legal action.

4. Marketing non-compliance could result in an overall loss in business profits.

All the risks of non-compliance we’ve discussed so far could result in an overall loss in profits if they come to fruition. But there’s also the treacle down effect of non-compliance to consider. For example, imagine trying to recruit and keep quality staff in an environment where your brand has earned a poor reputation, or where you don’t have the money to invest in good staff because it’s being spent on law suits. At the end of the day, non-compliance just isn’t worth it.

Next week, we’ll take a closer look at why marketing compliance is more important than ever.

If you wish to learn more about approval workflows and how you can improve your team's processes, and ultimately help you stay on top of marketing compliance download the "Understanding Approval Workflow Solutions' whitepaper now!

Understanding Approval Workflow Solutions

Topics: Marketing Compliance