Facebook Advertisers 'May Have To Pre-Moderate Comments' After Landmark Ruling

Could This Decision Kill Facebook's Advertising Business?
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Facebook advertisers could be forced to moderate the comments made on their pages after a landmark decision in Australia.

The Australian Advertising Standards Board said that posts on Smirnoff's Facebook page were advertising - whether they were made by the company or the public.

The judgement could mean that companies have to pre-moderate comments, to avoid misleading statements

Comments that make claims about a product which are not true, are racist or sexist or are defamatory about another company could leave the advertiser open to being sued.

Though not applicable in the UK, there are now concerns the ruling could lead to action by advertising watchdogs across Europe.

One analyst told the Daily Telegraph the ruling would be "the first of many"

"There used to be no downside to advertising on Facebook," said Chris Watson, a partner at lawfirm CMS Cameron McKenna. "Now the free lunch is over and reality has intervened. Companies have to take responsibility".

According to the UK Advertising Standards Authority's current guidelines, user-generated content like comments is only regarded as a marketing material under certain conditions:

Did the website owner originally solicit the submission of UGC from private individuals, then adopt and

incorporate it within their own marketing communications?

Did a private individual provide the website owner, on an unsolicited basis, with material which the website owner subsequently adopted and incorporated within their own marketing communications?

If the answer to either question is yes, (and of course that the content of the material and the form in which it is re-used by the marketer does itself constitute an advertisement or marketing communication by the marketer)

Facebook is already struggling to shore-up its share price, after numerous claims undermining its advertising platform.

One start up said recently that up to 80% of its click-throughs via Facebook were made by bots. Last week Facebook was forced to admit at least 83 million of its accounts were fakes run by spammers, duplicate users or other scammers.

The company's share price has dived from $38 at its initial public offering in May to below $20 last week.