Paris, New York, Milan… and Decentraland?

The first Metaverse Fashion Week, launched in 2022, provided a great example of the new advertising opportunities available to participating brands such as Dolce & Gabbana. But how does metaverse advertising differ from other types of media, and what legal issues should brands consider as they venture into this exciting new sphere?

What does a metaverse advertising campaign look like?

Metaverse campaigns take many forms and are certainly evolving. Some have opted for hybrid events like his Gucci Garden, an interactive virtual exhibition that mimics the physical experience in major cities. Tommy Hilfiger’s metaverse popup allowed users to purchase his NFTs of clothing and redeem them for their physical counterparts. Others use the metaverse as a brand promotion tool. At Nikeland, users play games and wear avatars. Balenciaga has created a wearable NFT for avatars. Avatars can model their work in Fortnite and put it on billboards.

Whose ad rules apply?

The first step in understanding advertising rules in the Metaverse is understanding which country’s regime applies. The decentralized nature of the metaverse can make this difficult to solve. However, existing regulations around online advertising are relevant, such as the UK regulator Advertising Standards Authority (ASA) 2021 Online Money Transfer Guidance. It lays down various principles that can be migrated to the metaverse environment, such as:

• Paid advertising targeted to UK consumers is within the scope of the ASA. Aspects such as currency and language are used to establish targeting, but in a metaverse scenario (where product prices may be in cryptocurrencies) targeting can be difficult to determine.

• Free advertising falls within the scope of ASAs whose advertisers are based in the UK. Given the cross-border nature of Metaverse advertising, it is likely that regulators will increasingly need to work with their counterparts in other jurisdictions, such as through the European Advertising Standards Alliance, when working with Metaverse advertising. I have.

What are the main obligations of metaverse advertising?

Existing rules apply to advertising in the metaverse, but new contexts may change how they apply and their importance. Key risk areas for brands to keep in mind include:

• Make your ads recognizable as ads. The immersive nature of the metaverse may increase the risk that consumers will not be able to distinguish between advertising and non-advertising. Content that appears on advertising spaces that mimic the real world, such as billboards, is less likely to be mistaken for other content. However, when NFTs, clothing, advergames, and avatars appear in the metaverse, it can be difficult to incorporate text-based labels, making it unclear what is and is not an ad. there is.

• Influencer advertising has been a focus of regulators for some time ( DLA Piper Influencer Marketing Guide) Avatar influencers are no exception. How do I #ad my avatar?

• Advertisements that claim to reflect how real-life clothing items, such as those displayed on avatars, fit or look may give rise to misleading claims. Again, there is the issue of where and how disclaimers can be effectively incorporated.

• Ads for age-restricted products must be treated with particular care to avoid violating targeting restrictions. For example, in the UK products such as gambling, alcohol, high fat, high salt and high sugar (HFSS) foods and cosmetics should not be directed at children. In the context of the Metaverse, the proliferation of young audiences, the use of avatars, and the interconnected and decentralized nature of the platform pose new age verification and targeting challenges.

• Brands with gamified ads should consider their rules around in-game purchases (especially clear terms and avoid putting undue pressure on users).

• Additional obligations apply as brands releasing NFTs need to be aware that NFTs may be treated as crypto-assets (in the UK, the investment risk should be clarified and (See ASA guidance, including requirement not to take advantage of inexperience).

Overall, the problems posed by advertising in the metaverse are nothing new, but the medium certainly raises risks in some areas (particularly its immersive nature, its appeal to young people, and its relationship with NFTs and games). ). Regulatory caution for the foreseeable future.

Based in London, DLA Piper Partner John Wilkes has extensive experience in a variety of domestic and international intellectual property matters, advertising and marketing law, breaches of confidentiality and data protection. He can be reached at john.wilks@dlapiper.com. Hannah Potter is an apprentice solicitor currently seconded to a client.