Leveraging Social Media In Regulated Industries - Social Media Explorer
Leveraging Social Media In Regulated Industries
Leveraging Social Media In Regulated Industries

Jason Falls
Jason Falls

Today I have the honor of presenting to SOMESSO, a social media for business conference in London, England. The event includes talks from some of the top thinkers in Internet and social media marketing for a one-day summit at Emirates Stadium near Highbury in North London. Being on the roster with the likes of Stowe Boyd, Marilyn Pratt of SAP, Merran Wrigley of Sony Ericsson Mobile, SocialText CEO Eugene Lee and Wesley Chan of Google Voice, among many other brilliant minds, is quite an honor.

My presentation (embedded below) is entitled, “Leveraging Social Media in Regulated Industries,” and looks most specifically at the necessary challenges to marketing in the alcohol, wine and spirits industry, which is mostly a self-regulated category. But I also take a brief look at the obstacles faced by social media marketers in financial services, health care, insurance, pharmaceuticals and publicly traded companies. The point of the presentation is to offer advice to those beginning the challenge of working through the laws, guidelines and restrictions to leverage social media.

In essence, the four key tenants of brand behavior for social media success are challenged by guidelines and restrictions in these industries. Those tenants include:

  • Companies have to be honest.
  • They should be as transparent in their approach to consumers as possible.
  • Responsiveness is absolutely imperative.
  • Companies must engage their publics in conversations around their products and services.

While these philosophical shifts are seemingly monumental, hundreds of companies are making them. But what happens when the risk-averted culture of corporate communications of the past conflicts with the new way of doing business? What do marketers do when company policy, industry regulations or even prevailing law conflict with how consumers want to engage with a brands’ marketing?

Regulated industries have found themselves facing cultural shifts in the basic ways to market themselves thanks to the social web. Most companies in these industries are doing little to adjust and are quickly falling out of favor with consumers.

The big question is,” Why?”

Keeping in mind the four core tenants of acceptance in the social media space previously mentioned, here are some examples of what some regulated industries have to face:


There are national/federal regulations, not to mention industry and local/regional rules that are applicable to financial institutions and investment companies Worldwide. Some of those policies include advertising rules relevant to truth-in-lending and truth-in-savings and overdraft protection (U.S.), as well as rules governing financial advertising via email, telephone and regulations for the various investment and trading markets.

Sampling a variety of those, here are some financial-industry standards I’ve found that could hinder best practices of engagement in the social media space.

  • Bank logos/names must be visible at all times**
  • All marketing communications must contain clearly communicated forms of contact for the institution including phone number, email address or mailing address.**
  • Any offer, promotion, rate or deal must include all disclosures and stipulations in their entirety*
  • All marketing communications must be pre-approved to ensure compliance*

* – Industry or government-imposed regulations; ** – Those imposed by individual institutions (not always applicable)

Those are just a few. One financial institution I’ve researched has a compliance manual for marketing that is over 2,000 pages in length.


Drug manufacturers and companies that market in the United States are essentially neutered from open conversation with customers thanks to federal regulations. The big reason is that drugs cannot be marketed for anything other than its primary benefit. Ancillary benefits can not only not be referenced, but if a consumer pointed one out on an open conversation platform on a company website, the company is required to report the claim to the Food and Drug Administration which then launches an investigation into that company to ensure marketing regulations have been met.

Health Care

For health insurance companies in the U.S., rules similar to those of the pharmaceutical industry apply. There exists a government-mandated, complex and layered approval system companies must adhere to for communications with the public. One enterprising health care official I found is pre-writing hundreds of 140-character or less Twitter messages, anticipating dozens of potential responses and conversations around Medicare – a health coverage program of the U.S. government – to have them pre-approved by company compliance officials.

She told me, “We owe it to our customers to communicate accurate information to them. In the social media space that requires real time communications. The approval process is roughly 3-4 weeks long at my company. The only way we can provide real-time engagement under the current policies is to have pre-scripted statements approved for use on platforms like Twitter. We’re just going to have to a good job of anticipating the questions.”

Hospitals, clinics and other care providers must also protect the privacy of their patients and are often severely limited as to who can offer medical advice and in what form.


For non-health related insurance companies in the United States, the challenges are not much easier to contend with. All 50 states have separate regulations for home, auto, life and other insurance policies and giving out insurance advice is restricted to licensed insurance brokers in the state in question. So an agent in Ohio cannot give advice to a customer posing a question in Kentucky. Opening a corporate conversation about insurance then becomes quite tricky.

Publicly Traded Companies

Let’s not forget about publicly traded companies in general. The Securities and Exchange Commission in the United States governs how publicly traded companies can communicate with their investors and the public. Regulation Fair Disclosure mandates publicly traded companies disclose information to all investors (and the public) at the same time. This severely restricts what conversations you can have in the social space. Violating this can result in charges of insider trading and the like.

One company representative I spoke to in preparation for this reported three layers of corporate approval just to respond to a single blog comment.


The alcohol, wine and spirits industry is where I arguably have the most exposure and experience. In my role as social media overseer for Doe-Anderson’s clients, I’ve been engaged by Beam Global Spirits & Wine to counsel their brands, specifically in their whiskey portfolio, on social media and Internet marketing.

All around the world, the spirits industry adheres to very specific guidelines to uphold extremely high standards in their marketing communications to ensure they are communicating only to their target audiences of legal purchase age (LPA) and above. There are a variety of associations and organizations that set forth these guidelines for the industry. All of the major spirits companies voluntarily join and/or make up the memberships of these organizations, which serve as self-regulatory agencies. Some of these include the European Forum on Responsible Drinking, The European Union which has applicable policies, The Scotch Whisky Association, the Distilled Spirits Industry Council of Australia and many other similar organizations throughout the world. In the United States, the applicable self-regulatory body is the Distilled Spirits Council of the United States or DISCUS.

When a spirits company markets in a country that doesn’t have applicable standards, they use those set forth by these organizations anyway. It is absolutely imperative that these companies uphold those high standards and market only to the target audience of consumers of LPA and above. This notion is important to consider since the social media space has global implications. The web tears down our geographic and political boundaries.

The focus on legal purchase age consumers and above is, in essence, the guiding principle of marketing in the spirits industry. One method companies use to help ensure that is by choosing not to advertise in any medium whose demographic makeup is not at least 70 percent legal purchase age consumers and above. This is the DISCUS standard. Beam Global Spirits & Wine is not satisfied with that. Its standard is 75 percent LPA and above. This means for much of last year, MySpace was off-limits for Beam Global brands. What’s more, if a medium’s audience dips below the standard, its brands won’t go back there until it has been compliant for three straight months.

I’m happy to report that in my experience with Beam Global Spirits & Wine, the notion of upholding those high standards and marketing to legal purchase age and above consumers isn’t only a standard the company complies with, but rather a behavior embedded in the DNA of the organization. It has made me proud to work with them.

Looking at the DISCUS standards and the organization’s Code of Responsible Practices for Beverage Alcohol Advertising & Marketing, a document you can download on their website at http://www.discus.org. Here are some highlights of the types of guidelines social media marketers must work with:

  • Alcohol advertising and marketing intended for adults of LPA who choose to drink
  • Should not advertise or marketed in any manner directed or primarily appealing to persons below LPA
  • Advertising/Marketing Communications should only be placed in mediums where at least 70% of the audience is LPA+ (Beam Global – 75%)
  • No depiction of children or objects/images/cartoons that would appeal to children
  • No Santa Claus (Yep, it is its own rule.)
  • No rite of passage messaging
  • Actors must appear 21 but must be at least 25
  • Nothing that depicts anti-social, illegal or irresponsible behavior
  • No indecent images or language
  • No religious themes
  • No overt sexual activity, promiscuity or sexually lewd images or language
  • Websites must have a legal purchase age verification gateway

Notice that last entry. This technology requirement results in two internet marketing facts of life for the spirits industry most people don’t have to face. First, the gateway hinders the ability of search engines to adequately and accurately index the site. (This can be worked around with some coding tricks but most spirits company websites are not properly indexed by search engines.) More importantly, the gateway puts a navigation road block up between the website visitor and the website’s content. This can be frustrating because the social web insists that content be free and easy to obtain. But it is good for the spirits industry because it wants very much to ensure the only people consuming the content are those who are of legal purchase age and who want that content.

The LPA gateway on websites was a conscious guideline agreed upon by the industry because, frankly, it was the right thing to do. The industry website’s search engine results and user experience are often not ideal as a result, but it is the right thing to do to uphold the high standards of the industry.

Before we go further, it is important to point out that across all regulated categories, like the alcohol, wine and spirits industry, the rules, regulations and policies we’re talking about are actually in place to help these companies achieve honesty, fairness, appropriateness and ensure accountability to their respective audiences. This presents a challenging irony about regulated industries. The guidelines are in place to keep them honest, transparent, responsive and, in some cases, even conversational. But many struggle with those approaches. Why?

It’s not the policies, regulations or rules that hinder the company’s participation in social media. It’s the checks and balances to ensure that compliance that complicate the process.

Simply put, it’s not the rules, but the policing of them. From this perspective the solutions to achieving effective social media engagement in regulated industries is to fully educated and integrate your compliance staff to understand and look for compliant and appropriate ways to leverage social channels on behalf of your brand, company or organization.

Note that I am not arguing that policing be relaxed, rather that the policing agents better understand the opportunity and acceptable standards in the social media environment to identify appropriate communications opportunities while respecting the standards of compliance. Certainly, there may be antiquated policies that need revisiting with regards to this new world of communications, but the point is to make brands more consumer-friendly, not bend the rules.

The specific challenges these guidelines pose general fall into two major categories. First, user-generated content of any kind – comments, images, videos and more – when placed on the websites of regulated industry companies, immediately become marketing messages of said company. This isn’t as much by legal definition as it is industry or company definition set forth to ensure they are always in full compliance with applicable guidelines. A comment on the Jim Beam website made by John Smith of Leeds may have been posted my Mr. Smith, but is the responsibility of Jim Beam and Beam Global Spirits & Wine.

The second major area of challenge for social media marketing in regulated industries is the need for immediacy in response and conversation in the social web. As we’ve discussed, nearly all of these companies have review and approval processes in place to ensure compliance with the various rules and guidelines the companies must respect. Twitter, for instance, is very much a here-and-now platform where conversations occur in real time. There is little to no opportunity for review and approve time lines.

So how do regulated companies approach social media successfully? Here are my thoughts, based on experience with Beam Global Spirits & Wine, as well as two health care, one insurance and one financial institution client work over the last three years:

  1. Get buy-in from above.
    Without C-level support of social media initiatives, challenging the status quo will almost always be met with resistance and hesitation. Keep in mind the CEO is often going to have to convince a board of directors as well. Make yourself available to them, proactively reach out and offer learning.
  2. Work closely with the compliance staff or legal team.
    Help them understand the ground rules of engagement in the social media space in general and within the communities of specific platforms as well. The more they understand best practices, see examples of what other companies are doing (hopefully in different categories, not your competition) the better they can approach compliance with new media marketing in mind.
  3. Educate, educate, educate.
    The biggest hang ups most executives and compliance or legal staffers have with social media is they don’t understand or know the tools well. In my experience, most people outside the technology world think a corporate blog allows random people to post articles on the front page of your company’s website, above the fold. They also aren’t aware that the moderation and pre-approval of comments, images, videos and other user-generated content is very much acceptable to consumers, so long as clear policies are stated and the company is allowing constructive criticism to come through as well.
  4. Approach review and approval as a team.
    Beyond the previous misconceptions, the next most frequent concern companies have is whether or not they have to staff their blog comments section or company forum 24 hours per day, seven days each week. The answer is, “no,” but it always helps to have multiple individuals responsible for moderation activities working as a team to ensure there’s always someone available.
  5. Develop short review timelines with definitive outcomes.
    After explaining the need for urgency to the compliance and legal teams, there’s a pretty good chance they will agree to a 24-48 hour response time on certain items for approval. One should always assume that no response means the item is not approved, but a quick response is not difficult to elicit when you have buy-in. In the case of Southwest Airlines one communications staff and one executive management team member are assigned to approve all blog posts or sensitive comment responses on NutsAboutSouthwest.com. I’ve been told while they shoot for 24-48 hour turn around, they can respond in as quickly as 10 minutes if need be.  Similar approaches can be had with your legal or compliance teams with the appropriate education and agreement that social channels are valuable methods of communication for your brand.

This approach has helped Beam Global Spirits & Wine extend the company’s industry leadership into the realm of social media to go with its similar status in other areas of the alcohol, wine and spirits industry. Some of the social media efforts the company has engineered in the last two years include the use of Twitter to cover the Baja 1000 off-road race in support of Beam-sponsored driver Robby Gordon, “The Stuff Inside,” which is thought to be the first social media-based campaign in the spirits industry, the first-ever spirits industry blog and the industry’s first user-generated content video contest in Jim Beam’s “The Remake” which ended just this week.

As you can see, it is entirely possible to leverage social media marketing and the social web as a company in a regulated industry. But it does take some special attention, effort and patience. To start your company moving on the social web, keep the following points in mind:

  • Regulations and guidelines are not impediments. They are necessary and opportunities to innovate in the social media space.
  • Your legal and compliance teams are on your team. Just help them understand the environment and they will help you.
  • Bureaucratic systems can be nimble if you build consensus. Get buy-in from everyone and the team will accomplish the effort together.
  • In the end, you can market through social media while still being compliant with the rules and regulations of your industry.

Those are my thoughts. I’m interested in hearing more examples of challenges in the above and other regulated industries from those of you working in them. I’m also interested to know if you have developed other thoughts on how to work through the challenges to accomplish social media successes in those industries. The comments are yours.

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About the Author

Jason Falls
Jason Falls is the founder of Social Media Explorer and one of the most notable and outspoken voices in the social media marketing industry. He is a noted marketing keynote speaker, author of two books and unapologetic bourbon aficionado. He can also be found at JasonFalls.com.

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