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Bluetooth marketing: advertisers should tread carefully

October 2006 - Media, Entertainment & Sport. Legal Developments by Harbottle & Lewis LLP.

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Bluetooth was the name of a Viking king who was best known for his diplomatic skills. Although his efforts have done little to soften the image of the Vikings, they have been belatedly recognised through the adoption of his name for the short-range communication technology that enables wireless devices to exchange messages and content.

Bluetooth technology is increasingly being used by shrewd advertisers looking to maximise the sale of their products. However, the manner in which Bluetooth marketing works does raise some genuine privacy concerns, and such innovative campaigns should only be used after a careful examination of the legal ramifications - more specifically, their compliance with the Privacy and Electronic Communications (EC Directive) Regulations 2003 (the ‘Privacy Regulations').

How does ‘bluecasting' work?

In very simple terms, Bluetooth technology comprises a tiny radio transmitter and receiver system which is contained within most mobile phones and other digital mobile devices. The process of Bluetooth-based marketing, frequently described as ‘bluecasting', involves placing the Bluetooth transmitter at a particular location (often built into advertising hoardings at train stations or airports). The transmitter then broadcasts new media content, including song downloads and video clips, to any Bluetooth-enabled handsets within range of the transmitter.

Bluetooth phones are, at any given time, in one of three Bluetooth states - ‘discoverable', ‘invisible' or open to specific devices they have previously been ‘paired' with for the purposes of receiving content. The transmitter will detect mobile devices within its range (which can be anything up to 100ft) that are set to ‘discoverable' and will send a message to that device. The user can then elect to either receive the content being offered or reject it.

Good or bad?

The advantages for marketers are obvious. It is a highly effective and cost-efficient marketing concept capable of beaming anything from film trailers to discount voucher codes to any Bluetooth-enabled device in the vicinity of the transmitter. For example, when Coldplay launched one of the first major Bluetooth campaigns in conjunction with their album release last summer, over 13,000 people reportedly downloaded free pre-release video clips, band interviews and audio samples.

However, the consumer protection-based counter-arguments are strong. For instance, in the same Coldplay campaign, about 87,000 mobile phones were apparently discovered by the transmitting devices. Therefore, the initial message offering the free content was not responded to by some 74,000 people. While a response rate of 15% compares favourably with many forms of advertising, critics argue that the technique means a large number of people who are not interested still receive the initial message. Some critics have labelled the practice ‘bluespamming', and questions have been raised about whether it should be covered by EU anti-spam laws.

Privacy laws

Laws implementing the EC Directive on Privacy and Communications 2002 were brought into force in the UK on 11 December 2003 under the Privacy Regulations. In general terms, these prohibit the sending of unsolicited electronic commercial communications if the recipient has not previously ‘opted in' to receive such messages. Ordinarily, users will ‘opt in' by clicking on an icon or ticking an appropriate box. A failure to comply with the Privacy Regulations could lead to fines, civil damages or, in extreme cases, criminal liability.

The Privacy Regulations were introduced with e-mail marketing in mind, but not personal area networks such as those made possible by Bluetooth. There has, therefore, been some confusion about the extent to which Bluetooth marketing is covered, prompting both the Direct Marketing Association (DMA) and the Mobile Marketing Association (MMA) to produce specific guidance on the issue of Bluetooth marketing. In short, their view is that Bluetooth marketers should jump through similar hoops to those for e-mail marketing.

What constitutes ‘opting in'?

At the heart of this debate is the issue of consent, and there are a few arguments put forward for why consent is, in fact, not a problem for bluecasters.

The first, somewhat hopeful, argument is that, because a person has turned their Bluetooth device to ‘discoverable', it is reasonable to infer that they have ‘opted in' to receive advertising material. However, this assumes that people have made a deliberate and informed choice to switch their phone to discoverable. In fact, a number of mobile phone manufacturers sell phones with the Bluetooth turned on and, as such, many people have not actively decided, or even know how, to switch their phone to ‘discoverable'.

The second argument raised by Bluetooth advocates is that the initial message sent to mobile phones asking if the user wishes to receive or reject content is not a marketing message in the Privacy Regulations sense. In effect, they claim that promotional material is not actually sent until the user has agreed to receive the content. However, a number of parties, including the DMA, take the view that ‘sending an initial message enquiring whether the recipient would like to receive the actual marketing message still involves the receipt of a message that the recipient has not opted in for'.

The third argument is that Bluetooth marketing should not equate to e-mail marketing at all. The volume is small and messages can only be sent when the user is near a transmitter. Is this any more intrusive - so the argument goes - than most conventional advertising methods?

So how can you gain opt-in consent with Bluetooth marketing?

Following the MMA and DMA guidance, a number of the leading Bluetooth advertising agencies are pioneering new methods of lawfully exploiting Bluetooth marketing. For example, the development of ‘touchpoint' transmitters has become increasing popular. Such devices emit a more focused Bluetooth signal that only delivers content to consumers who deliberately place their Bluetooth phone within a few centimetres of an interactive surface. As this requires a more proactive role by the end-user it is obvious that the need for ‘opt-in' consent under the Privacy Regulations will be far more likely to be satisfied.

Another possible solution - proposed by the MMA - would be to promote the availability of Bluetooth content on a poster or hoarding and encourage people to ‘pair' with the marketing campaign. If a user wishes to opt out, they can simply delete the pairing. However, as long as a person's device is paired to the marketing campaign, the device is eligible to receive marketing messages. This solution is less attractive to advertisers, as it requires much more effort by the user than most forms of advertising.

In conclusion, it is obvious that Bluetooth technology could provide a magnificent opportunity for marketers to engage users in an effective and innovative manner. However, in recognition of the highly personal nature of this medium, advertisers must tread carefully in order to ensure that the potential of Bluetooth technology can be fully realised without infringing the privacy of its prospective customers.

By Mark Owen, partner, and Paul Groves, solicitor.

E-mail: mark.owen@harbottle.com; paul.groves

For more information please visit www.harbottle.com.