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The Law of Social Media Endorsements and Testimonials For Business - What Companies & Their Employees Can & Cannot Tweet, Blog, or Say

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Robert McHale provides guidelines to help your business take advantage of positive customer reviews while avoiding potential legal liability.
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Businesses spend considerable time and money building and executing marketing campaigns to promote their brands when, in fact, one of the most effective advertising tools costs almost nothing: word-of-mouth advertising.

Happy customers and their endorsements can steer business in your direction quite effectively, and with little cost. Studies, such as the one recently published by the e-tailing group PowerReviews1, consistently show that customer reviews have a significant affect on purchasing behavior.

This study indicates "shoppers today are spending more time reading reviews before making purchasing decisions, 64 percent take ten minutes or more (as compared to 50 percent in 2007) and 33 percent take one half hour or more (as compared to 18 percent in 2007)."

Further, "consumers today are also reading more customer reviews in order to be confident in judging a product, 39 percent read eight or more reviews (as compared with 22 percent in 2007) and 12 percent read 16 or more reviews (as compared with 5 percent in 2007)."

Online reviews and endorsements can also improve rankings in organic search results, leading to improved discoverability, an increase in web traffic, and greater brand awareness. For these reasons, capturing and leveraging positive customer reviews to drive consumer demand and increase sales is a critical component of today's marketing landscape. Nonetheless, online reviews and endorsements are not risk-free, and there are strict legal requirements with which businesses must comply to avoid liability.

Familiarizing yourself with the fundamentals—as summarized in the below figure—will pay dividends for you and your brand.

The contents of this article are derived from Chapter 2: Online Endorsements and Testimonials: What Companies and Their Employees Can and Cannot Tweet, Blog, or Say, from Navigating Social Media Legal Risks: Safeguarding Your Business. The article is also part of a series in which author and attorney, Robert McHale, provides practical Social Media Dos and Don’ts for companies to consider when using social media for business.

Robert McHale, Esq. is the founding partner of R | McHale Law, a full-service law firm whose corporate practice represents clients on a wide variety of IT and intellectual property law matters, including privacy and data security, copyright, trademark, licensing, and other proprietary protections. He may be contacted at: robert.mchale@rmchale.com.

1 E-tailing group/PowerReviews 2010 Social Shopping Study, available at http://www.e-tailing.com/ content/?p=1193

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