ACI,

1. Smart Promotions for Smart Phones:
Avoiding Legal Pitfalls While Leveraging New
Trends in Mobile Apps and Gamification
Yvonne M. Imbert-Garraton
CBS Interactive
John Panourgias
PrizeLogic
Gonzalo E. Mon
Kelley Drye & Warren LLP

2. Mobile Usage

3. A Snapshot of the Current Mobile Landscape
»According to comScore’s “2012 Mobile Future in
Focus” Report published in February 2012,
nearly 42% of mobile subscribers in the US are
smartphone users and by the end of 2011 nearly
1 in 5 smartphone users used their device to scan
a product barcode.
»By 2016 it is expected smartphone users will
make up 74.1% of mobile subscribers in the US.

4. A Snapshot of the Current Mobile Landscape
»Smartphone penetration is on the rise:

5. A Snapshot of the Current Mobile Landscape
»According to a KeyNote/Adobe Survey
conducted in 2010, US smartphone users use
their device in 4 key categories:
» Media and Entertainment
» Travel and Mapping
» Banking and Finance
» Shopping

6. A Snapshot of the Current Mobile Landscape
Source: http://www.keynote.com/docs/news/AdobeScene7_MobileConsumerSurvey.pdf
Activity Participation
Accessing Maps/Directions 81%
Social Networking 76%
Obtain Local Info 73%
Read News 68%
Check Bank Account 67%
Listen to Music 63%
Play Games 61%
Conduct Bank Transactions 51%
Research Travel 47%

7. The Not-So Rise of QR Codes

8. What is a QR Code?
»A “QR Code” is an abbreviation for “quick
response code”. QR Codes are 2-dimensional/
matrix bar codes originally designed by the
Automotive Industry to quickly track vehicles
during the manufacturing process and assist
with inventory management as an alternative to
the single beam-scanned traditional bar code.

9. What is a QR Code?
»With the rise of smartphones, QR Codes started
to be used by marketers as ways to launch a
brand’s website or other mobile site – an easier
way to drive consumers to mobile content
instead of having them remember and type in
long URLs.
»QR Codes make up just 1 of over 70 “Mobile
Tagging” options. The Mobile Tagging process is
the same, regardless of the mechanism:

10. How Does Mobile Tagging Work?
»Using the camera on a smartphone and a
downloaded Mobile Tag reader Mobile App, a
user “takes a picture” through the Mobile App of
the Mobile Tag.
»The Mobile Tag reader program then digitally
analyzes the matrix barcode, converting the
images and positions (and sometimes colors)
into binary numbers, decoding and launching a
website in a mobile browser or other content on
the user’s smartphone.

11. How Does Mobile Tagging Work?
The 3 larger dots
provide
reference points
and the fourth
smaller dot in
the lower corner
assists with
angle, size and
orientation.
QR Code Example

12. Mobile Tag Uses
» Although primarily used to launch a mobile website on
the smartphone’s browser, the uses have expanded
beyond web browsing:
»Share contact information and import into address books
»Ticketing
» Concerts & Events
» Transportation
»Loyalty Program Tracking
»Mobile Couponing
»“Check In” and Location Based Programs
»Send an SMS
»Create a calendar event
»Sharing a Text Note

14. QR Scanning Usage & Frequency
»Usage skews Male to Female, in the 24 – 35 age
range and with the average household income
(HHI) of $100K+, presumably due to that
group’s adoption of smartphones.
Sources: comScore Mobilens, comScore (June 2011; updated August, 2010)
Gender Composition of Visitors to mobile websites, Nielsen (December 2011)
Winter 2012 NHCS Adult Survey 06-month

15. QR Scanning Usage & Frequency
»Of those Shoppers who have used a QR Code:
Sources: Consumer Behavior and QR Code, CMB (2012)
Digital Marketing Factbook, Marketing Profs (May 2010)

16. QR Scanning Usage & Frequency

17. The Downside to Mobile Tagging
»Each Mobile Tag type requires its own specific
reader App
»There are numerous Apps available for download for
each type of Tag
»Many consumers are confused by the range of
options available and unfamiliar with the
required technology to successfully use a Mobile
Tag
»To ease this confusion some operating systems,
like Blackberry, are programming reader
programs directly into the handsets

18. The Future of Mobile

19. Alternatives to QR Codes
» Mobile internet browsing grew from 98 million
users to 129 million users in just one year
» Mobile App downloads grew from 42 million in 2011
to 72 million in 2012
» 152 billion SMS were sent in 2009 in the United
States, that figure is projected to rise to 9 trillion in
2012
» 75% of smartphone users prefer receiving offers via SMS
» SMS spans all ages, HHI, education levels, and
demographics with 51% of all adults sending and receiving
at least 1-10 texts a day

20. The Future of Mobile
»In addition to smartphone growth, Tablet sales
are also on the rise: according to research-based
consulting firm Frank N. Magid Associates, the
Tablet audience is predicted to grow from 51
million users to 106 million users by the
midpoint of next year.
»Consideration: Flash is not support by Apple OS –
iPhones and iPads; you will see more HTML5 in
the marketplace to adjust

21. The Future of Mobile
»Consumers are expecting the same content on
their mobile devices as they are on their
computers: “There's no such thing as distinct
mobile content anymore," says Tom Godfrey,
Executive Director/Mobile Strategy at Frank N.
Magid Associates. "What publishers and
advertisers have to realize is that most content
going forward will be consumed on a mobile
device and that it must be accessible and
optimized for that platform."

22. Sweepstakes and Contests

23. What You’re Up Against
»Promotions are governed by 50+ sets of laws.
»Most were written long before mobile phones.
»Most don’t fit neatly with mobile technology.

24. Lottery and Gambling Laws
»Lottery and gambling laws prohibit combining:
»Prizes
»Chance
»Consideration
»You need to remove at least one element.

25. Option One: Eliminate Prizes
»Don’t offer prizes:
»If it has monetary value, it’s probably a prize.
»If it doesn’t, it’s probably not.
»Virtual currency may be OK if it can’t be cashed in.
»If you don’t offer prizes, you can:
»Charge for game play; and
»Include chance.

26. Option Two: Eliminate Chance
»Chance is something outside entrant’s control.
»Ensure winners are selected based on skill.
»Easier said than done:
»Many states use a predominance test.
»Some states have higher thresholds.
»Laws/cases don’t provide clear guidance.

27. Option Two: Eliminate Chance
»Can I require a purchase?
»In most cases, but . . .
»Some states prohibit payments in skill contests.
»Laws/cases don’t provide clear guidance.
»Option Two requires a state-by-state analysis.

28. Option Three: Eliminate Consideration
»Consideration includes:
»Purchases and payments (even to third parties).
»Maybe more?
»Definitions change over time:
»Internet access is probably not consideration.
»We may not be there yet on mobile access.

29. Consideration?
Yes to Probably
»Payment
»Purchase
»Premium text fees
»Standard text fees
Probably Not to No
»Check-ins
»Virtual currency
»Data
»Time/effort

30. Option Three: Eliminate Consideration
»Alternate method of entry:
»Ensure all aspects are equal.
»Consider what makes sense in context.
»Clearly and conspicuously disclose free option.

31. Lawsuits Involving Premium Rates
»Four game show sweepstake were challenged.
»Viewers could enter by paying a premium fee; or
»Viewers could enter for free online.
»Georgia Lawsuit
»Plaintiffs alleged games were gambling.
»Court disagreed and dismissed case.
»California Lawsuit
»Plaintiffs alleged games were a lottery.
»The case settled.

32. Tips for Text-to-Win
»Standard Rate
»Have an alternate method of entry.
»Premium Rate
»Have an alternate method of entry; and
»Give something of value for the premium rate.

33. Disclosures
»No purchase/text necessary
»Material terms
»Link to rules
»Link to privacy policy
»Consider a layered approach.
»Consider the mobile context.
»Do you need consent?

34. MMA Disclosures for Text Message Programs
»Depending on context, you may have to include:
»Msg&Data Rates May Apply
»Help instructions
»Stop instructions
»Message frequency
»Point to full terms

35. Other Things to Keep in Mind
»MMA and carrier requirements
»Platform requirements
»Registration and bonding
»Contracts with partners
»Tax reporting obligations

36. Official Rules

37. The Official Rules
»Now that you know the parameters within which
to create your promotion you need an official
way to communicate the workings of the
promotion while complying with the different
existing laws and regulations.
»This way is via the Official Rules of the
promotion.

38. Official Rules Requirements

39. Official Rules Requirements
Next the rules need to let you, the users, know
when and how to enter the sweepstakes.
“3. Promotion Period. The Sweepstakes begins on
June 6, 2012 at 2:00:00 PM ET and ends at 5:00:00 PM ET
on June 6, 2012 (the "Promotion Period").
4. Entering. To enter this Sweepstakes, send an e-
mail with your name, telephone number and the secret
word _________ to __________ [EMAIL
ADDRESS] via the CBSI Service.“

40. Official Rules Requirements
Prizes
Rules have to explicitly define the prize – what’s
included and what’s excluded.
The rules also have to disclose specifics about
the drawing and notification of potential
prizewinners.

41. Official Rules Requirements
“Rules of Protection”
-Unforeseen events;
-Typos or mistakes in the rules or promotional
materials (proofread, proofread, proofread)
-Indemnity/limitations of liability/disclaimers of
warranties;
-Governing law;
-Technical disclaimers; and
-Identity disputes.

42. Official Rules Requirements
»Remember the rules create the legal binding
agreement between the participants and the
sponsor – and they will be construed against the
sponsor in the event of a claim, so they need to
be followed to the letter.

43. Gamification

44. Gamification
»Gamification is the use of game
design techniques, game thinking and game
mechanics to enhance non-game contexts and
promotions.

45. Gamification
» Typically gamification applies games to non-game applications and
processes, in order to encourage people to adopt them, or to
influence how they are used.
» In promotions, gamification works by making technology more
engaging, by encouraging users to engage in desired behaviors and
by taking advantage of humans' psychological predisposition to
engage in gaming.
» Using games can encourage people to perform chores that they
ordinarily consider boring, such as completing surveys, shopping,
reading web sites or engaging with sponsor’s products.

46. Gamification
Early examples of gamification were based on
rewards. For example making users read
through websites to find answers to clues to
enter sweepstakes and have a chance to win a
prize.
Now days the tactic has not changed much the
rewards have changed a bit, now we give points
to people who share experiences on location-
based platforms such as Facebook’s "Place"
feature, Foursquare, etc..
Some of the techniques include:

47. Gamification
Some of the techniques include:
»achievement "badges"
»achievement levels
»"leader boards”
These all play on the competitive nature of human
beings.

48. Gamification
» A progress bar or other visual meter to indicate how
close people are to completing a task a company is trying
to encourage, such as completing a social networking
profile or earning a frequent shopper loyalty award.
» Virtual currency
» systems for awarding, redeeming, trading, gifting, and
otherwise exchanging points
» challenges between users
» embedding small casual games within other activities.

49. 7-up Sweepstakes tied to Survivor TV Show

50. Survivor TV Show Sweepstakes

51. Survivor Fantasy Game

52. Words with Friends - Grammy Live

53. Grammy Live App

54. Grammy Live on Facebook

55. Dogs in the City Game

56. Big Bang Theory

57. Big Bang Theory

59. Facebook Issues
Issues Using Facebook:
You cannot administer/conduct a promotion directly on the
Facebook platform
Promotions can only be administered within third party apps on
either a canvas page or an app on the brand’s page tab
You can require that someone “Like” your page to be eligible, but
that can’t be the method of entry
Entries can not be accrued for posting on Facebook/ so need to
be careful of giving entries for sharing on Facebook.
You can’t use Facebook for any voting
You can’t use Facebook to notify winners

60. Facebook Disclaimer
THIS PROMOTION IS IN NO WAY
SPONSORED, ENDORSED OR
ADMINISTERED BY OR ASSOCIATED WITH
FACEBOOK. YOU UNDERSTAND THAT YOU
ARE PROVIDING YOUR INFORMATION TO
SPONSOR AND NOT TO FACEBOOK AND THE
INFORMATION COLLECTED WILL ONLY BE
USED IN CONNECTION WITH THIS
PROMOTION.

61. Sports Fantasy Games

62. Sports Fantasy Games

63. Gamification
»Through the nature of gamification as a data
aggregator and its growing adoption, multiple
legal restrictions may apply to gamification.
Some refer to the use of virtual currencies and
virtual assets, data privacy laws and data
protection, or labor laws. So you need to make
sure when developing a promotion that utilizes
gamification that you do not violate any laws or
regulations.

64. Questions?
Gonzalo E. Mon
Partner
Kelley Drye & Warren LLP
gmon@kelleydrye.com
Yvonne M. Imbert-Garraton
Director, Business & Legal Affairs
CBS Interactive
yvonne.imbert@cbsinteractive.com
John Panourgias
Assistant General Counsel
PrizeLogic
jpanourgias@prizelogic.com