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HIGHLY REGULATED BRANDS MUST PLAY BY THE RULES WHEN CRAFTING MARKETING AND ADVERTISING CAMPAIGNS, BUT THAT DOESN’T MEAN THEY CAN’T HAVE FUN WHILE DOING SO BY MATTHEW SCHWARTZ 4 // ASSOCIATION OF NATIONAL ADVERTISERS GETTY IMAGES/GAIAMOMENTS T he marketing team at Mike’s Hard Lemonade was starting to put together ideas for a video to promote the brand’s new Hard Watermelon Lemonade. Knowing the video would run on digital media outlets and social media channels during the 2016 Memorial Day weekend, the team wanted to infuse the message with some summer fun — but it proceeded with caution. Mike’s Hard Lemonade contains alcohol, so the brand’s marketing and advertising must adhere to certain regulations imposed by the Beer Institute, the trade association of the American brewing industry. Among the rules, spots for beer- related beverages cannot show over consumption and must depict talent that ANA.NET // 5 appears to be at least 25 years old. “You have to know what’s off limits, what carries some risk, and what’s a safe space to play in,” says Diane Sayler, director of brand experience at Mike’s Hard Lemonade. “You look to find a surprising element, or twist, in a situation.” The video spot for the brand’s new flavor fit the bill. Titled “Whack-A-Melon,” the ad stars a diverse group of Millennial professionals gathered in an office park, playing a game of Whack-A-Mole — where the moles have been replaced by watermelons. When someone makes a direct hit, watermelon bits spray the air, slow-mo, as the crowd jumps for joy with bottles of the new Hard Watermelon Lemonade in hand. “We shot [the video] at the end of a routine workday, when people are worried about getting home,” Sayler says. “But then we brought them to this moment, where they can kick back, and get to after- work fun a little bit sooner, along with some refreshment.” Sayler stresses that Mike’s Hard Lemonade’s marketing executives are all very well-versed on branding regulations. They work closely with the company’s compliance team to ensure that all marketing collateral is above board, regulation-wise, and no aspect of the creative has been left to chance. It’s a similar drill at LivWell Enlightened Health, which owns 14 marijuana dispensaries throughout Colorado, where pot is legal recreationally. Earlier this year, for example, the marketing department 6 // ASSOCIATION OF NATIONAL ADVERTISERS created a print ad campaign for THC Magazine, which caters to the hemp and cannabis industries. The ad, portraying a person mountain biking through lush forest, originally included the text: “Riding the perfect trail is exhilarating. When you’re done — hang out with the trees a little longer. Enjoy responsibly.” (The bottom of the ad carries price points for eighths and ounces of recreational marijuana sold at some of LivWell’s dispensaries in Colorado.) However, when compliance officers saw the ad they had marketing change the copy because the phrase “hang out with the trees a little longer” could be read as encouraging public consumption of marijuana, which is forbidden in any marketing or advertising of marijuana products in Colorado, according to Matthew Givner, director of marketing at LivWell. The ad’s revised text reads, “There’s nothing like the feeling of riding through the trees. Except for maybe relaxing with some of ours at home. Enjoy responsibly.” Adding the words “some of ours at home” was key to ensuring the ad would pass regulatory muster. It’s a subtle alteration in phrasing. But it helps to illustrate the creative challenges highly regulated companies face when developing branding and/or marketing campaigns, in which even the slightest misstep can cost a company precious credibility with consumers (not to mention monetary fines). “There are so many rules and regulations,” says Givner, who points to more than 150 new or revised regulations for the Colorado marijuana industry promulgated in 2015. These rules, which are enforced by the state’s departments of agriculture, health, and revenue, include not being able to refer to marijuana- infused edibles as “candy” (because that appeals to children), and new rules requiring a universal THC symbol to appear on the packaging of edibles and the edibles themselves, which goes into effect next month. The rules and regulations are “pretty black and white,” Givner says. “The penalties for violating any one of the rules could be anything from a warning from the Marijuana Enforcement Division to a suspension or revocation of our licenses.” EXTRA VIGILANT Creating innovative marketing campaigns is challenging enough. But it’s a bigger challenge for highly regulated brands to develop the creative and execute marketing campaigns without running afoul of regulations. Here, marketers must be extremely cautious regarding precisely what can be communicated, and how. That’s why it’s vital that marketing execs work closely with compliance to nip any potential problems in the bud, as in the case of LivWell’s lifestyle ad campaign. Depending on the business sector, such as financial, health care, insurance, or pharmaceuticals, brand managers confront a maze of federal and/or state regulations and even industry association guidance as they start to build the creative for marketing and advertising campaigns. However, regulations don’t have to be creative roadblocks. “The irony is that marketing efforts can often be just as effective working in a controlled [legal] environment as when you try to push the envelope,” says Joe Mason, CMO at Allianz Worldwide Partners, which sells tuition insurance and travel insurance that is regulated at the state level. “We don’t feel we are overly encumbered by rules and regulations. Instead, we recognize the boundaries and do our best to work within them to create compelling marketing campaigns.” Take the company’s “Easy Partner” campaign, which debuted in 2015. The B-to-B campaign, targeting thousands of travel agents, ran in travel trade publications, such as Travel Agent Magazine and Travel Weekly, as well as many online properties targeting the travel industry. One ad, titled “Easy as Sundae Morning,” shows a beaming young girl about to take a spoonful from a heaping bowl of sprinkled ice cream. “Enjoy the sweet taste of success with AgentMax Online,” reads the copy, which goes on to say, “AgentMax Online puts the award-winning power of AgentMax in the palm of your hand. You’ll love the added flexibility of selling travel insurance anytime, anywhere on your phone or tablet — making it easier to reach your business goals.” “We have very defined processes for all of our marketing efforts, which include frequent interactions with our legal and compliance teams,” Mason says. “In the case of the Easy Partner campaign, we worked with them to showcase the benefits of Allianz, which included our AgentMax sales tool and educational materials for prospective agents. Such a campaign was very straightforward, whereby there was a clean, clear value proposition to a very specific audience.” Indeed, for highly regulated companies, half the marketing battle is not to get bogged down on what’s acceptable in communications, be it the labeling attached to products and/or services or casting a TV commercial. It’s beneficial for marketers to discuss the regulatory outlook “upstream, rather than downstream” to avoid any unpleasant surprises once the campaign is in full swing, says Jamie Moldafsky, CMO at Wells Fargo. “It’s a philosophical conversation you have first, and then you work your way through it.” Moldafsky says that regulations help to inform the bank’s overall marketing communications, including a series of branding ads running this year promoting the bank’s security services. In one spot, for example, two pals belly up to a juice bar when one of the guys gets a text message from Wells Fargo on his smartphone alerting him about suspicious account activity. FOR HIGHLY REGULATED COMPANIES, HALF THE MARKETING BATTLE IS NOT TO GET BOGGED DOWN ON WHAT’S ACCEPTABLE IN YOUR COMMUNICATIONS. His pal eggs him on to commence drinking, but it only takes a second for the first fellow to send a text back confirming the purchase in question before they resume with their drinks. “It was a desire to assure customers that we have their security interests at heart,” Moldafsky says. “We wanted to be very respectful in how we show that to our customers, not over-promise, and be very transparent about it, and that made regulators very happy because this is a topic they care very passionately about.” INTEGRATED APPROACH Despite ever-developing changes in marketing and the growing influence of social media platforms, brand managers working for highly regulated companies need to stick to the fundamentals. “The same regulations apply to the traditional marketing world — radio ads, newspaper ads, direct mail — as to the digital marketing space,” says C. Michael Zabel, group VP of corporate communication at M&T Bank, a Buffalo, N.Y.– based bank that owns more than 800 branches throughout the Northeast and Mid-Atlantic regions. The bank is regulated by the Federal Reserve and the Financial Industry Regulatory Authority, among others. “What makes digital different is our customers increasingly expect a certain amount of interactive experience, which we can provide via online and social media, but then there’s more room for potential violations and less room to take your time,” he says. To get the word out faster — but ensure it sticks to the regulatory guardrails — M&T Bank has been increasing the amount of information and content that it pre-approves for online marketing and advertising purposes. The bank continues to bolster its traditional marketing campaigns with digital messaging, as well. For instance, leading up to the bank’s acquisition of Paramus, N.J.–based Hudson City Bancorp in late 2015, M&T deployed a microsite to supplement print, TV, and radio spots promoting the transaction and how it benefits its new customers and prospects in the New Jersey area. The microsite was promoted via both M&T’s traditional and digital advertising and featured localized content and videos of customer testimonials. Jacqueline Kotek, partner and managing director at the integrated communications and marketing firm Peppercomm, who works with several highly regulated brands, including M&T Bank, says financial services companies understand there’s a growing need to craft integrated marketing messages despite regulatory limitations. “You’re starting to see [highly regulated] companies moving toward a marketing strategy that drives content across all channels,” she says. Lincoln Financial Group (LFG), which sells insurance and financial-related investment products and is regulated at the federal and state levels, used omnichannel marketing for its 2014 campaign plugging its employer-sponsored retirement plan for Franciscan Missionaries of Our Lady Health System (FMOLHS), a Baton Rouge, La.–based hospital system with 13,000-plus employees. “When we look at omnichannel it means we have to think about different regulations that apply across all channels that apply to the company,” says Jamie ANA.NET // 7 Ohl, president of Retirement Plan Services at LFG. “Our opportunity is to make the message easy, simple to understand, and aligned with regulations. As we do that, we become more successful.” In order to spur participation in the plan among the hospital’s Millennial employees — many of whom were reluctant to sign up — the campaign ran a video contest featuring some of the hospital’s workers answering questions about why retirement is so important, with some of the responses delivered in a humorous vein. “We wanted to use a medium that would really engage Millennials about a subject they don’t typically engage in: retirement planning,” Ohl says. More than 60 employees submitted video clips, and more than 200 people voted on their favorite ones. LFG’s marketing unit selected 11 of the videos and worked with compliance officers to review the videos selected for the campaign and make sure no content violated any regulations. The video was emailed to employees and shown at the FMOLHS benefits fair. In addition, LFG retirement consultants on site at the hospital presented the video via iPads to employees who had questions about the retirement program. The campaign, which was blended with postcards displayed at the benefits fair and in HR offices, provided solid returns. When the five-month campaign ended in December 2014 there was a 25 percent spike among Millennial employees enrolled in FMOLHS’s LFG retirement plan, according to Ohl. “With the Franciscan Missionaries of Our Lady Health System, our [marketing] team looked at the regulations that exist as something that forced them to be more thoughtful and creative about how they could reach Millennials,” Ohl says. “Marketing works closely with our compliance department through every step of the process, to ensure that how we are approaching the campaign is within the 8 // ASSOCIATION OF NATIONAL ADVERTISERS 5 Takeaways for Marketing in Highly Regulated Industries 1 Work closely with your compliance department. Senior marketers should consider the compliance department an extension of marketing (and, ideally, vice versa). Constant communication between the two departments is vital to making sure any branding efforts don’t run afoul of regulations. 2 Follow the regulatory track. Having a strong bond with compliance aside, the onus is on senior marketers to stay attuned to changes in the regulatory landscape and be mindful of the delineations, which can be subtle, in terms of what can be communicated, how, and the language therein. 3 Stay within your creative sandbox. When creating branding campaigns marketers need to know the regulatory boundaries and what’s a safe place to play in. 4 Think long term. As they develop creative and communicate via new platforms, brand managers need to think about how the regulatory landscape is changing in relation to market forces. 5 Conduct competitive analysis. Gauging what competitors are doing to get their message out gives brand managers a comfort level about accepted business practices for highly regulated brands. — M.S. bounds of the regulatory framework that exists.” EMOTIONAL RESCUE Messaging that is straightforward and easy to absorb is crucial for CMOs and brand managers working for highly regulated companies. Giving the message an emotional core can also mitigate any regulatory issues, particularly among B-to-B brands. MSD Animal Health, a subsidiary of Merck & Co., took an emotional path when in 2015 the company introduced a rebranding campaign for Bravecto, an oral chew for dogs and a topical drop for cats that protects from fleas and ticks for up to 12 weeks (as opposed to monthly protection by most similar products). The previous branding campaign for Bravecto took a functional approach to the messaging and MSD Animal Health was eager to switch creative gears. “I said to my ad agency, ‘Go wild, and don’t think about pharmaceuticals,’” says Karin Jager, global marketing director at MSD Animal Health, which is regulated by the Food and Drug Administration. “Our goal with Bravecto is to become the world’s preferred brand for flea and tick control in dogs and cats,” Jager says. “To do this we had to make sure to connect with different audiences while delivering the same brand message. Our audiences include dog and cat parents, veterinarians, veterinary staff, pet shop owners, and staff, but they all have one thing in common: they love animals.” The global campaign, “Expect the Extraordinary,” features “extraordinary moments” between people and their beloved animals. One banner ad, for instance, shows a bearded, tattooed biker gazing into the eyes of a beautiful gray kitty nestled on his shoulder. “Dare to Provide the Extraordinary to Cats,” reads the headline. The campaign, which also includes technical but easy-to-digest information about the product, has been distributed via direct mail to veterinarians throughout the world. Banner ads and signage plugging the message have appeared at various events catering to pet care. Jager says giving the message an emotional core made developing the creative easier. That helped the message travel well. “We localize the touchpoints [to comply with regulations from different countries],” she adds, “but it’s the same message, which is the strong feelings that people have for their dogs and cats.” Perhaps most important, the creative theme provided the marketing team with that all-important comfort that the campaign was regulatorily sound.