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Johannesburg - Small business owners are going to have to have to adopt a more responsible approach to marketing their businesses when the New Consumer protection Act (CPA) comes into effect in 2011.
While technology such as bulk e-mail, SMS and affiliate marketing make it easier for small businesses to compete with bigger players, this has also led to abuses which the CPA aims to curb.
Dr Pieter Streicher, MD at BulkSMS.com says that the CPA as well as the Personal Information Bill are likely to prove a threat and an opportunity for businesses using SMS marketing.
"To ensure customers opt-in to communications, and then stay opted-in, companies will have to come up with creative ways to provide value to consumers and engage with them in a real conversation," he says.
He cautions those already using SMS marketing. They will need to ensure that their customer communications systems are in order, or risk not being able to contact a customer legally.
Affiliate marketing, which sees third party agents acting as sales and lead generators are also likely to come under increasing scrutiny.
The appeal of these channels is that they are results driven as the advertising company only pays for leads or sales which meet certain criteria.
The systems are popular with online retailers and financial services companies, particularly those operating in the insurance sector.
In the quest for increased numbers of leads, this however, has led to agents misleading would-be clients about who they represent.
Under the CPA, agents will need to clearly indicate who the leads are being generated for and what will be done with that information, especially on e-mail lists.
Marketers who spoke to Fin24 said that one of their chief gripes was the concept of what constituted an "opt-in" subscriber.
In the US, a subscriber needs to "double opt-in" when it comes to registering for a mailing list whereas in South Africa the approach appeared to be that an e-mail address could be added to a list and it is the consumers responsibility to "opt-out".
The CPA may have some expensive surprises for real estate agents and developers.
Starting at the end of March, developers will be bound to water tight contracts and estate agencies can face hefty fines for using ambiguous terms like “cozy” and “immaculate” in advertising.
“I can imagine that if we weren’t such a large firm, we’d be worrying about it,” said RE/MAX CEO Adrian Goslett.
Goslett said the group hired consultants and had to re-look their agreements with their franchisees to make sure the it is operating within the scope of the Act.
A possible blow to the smaller real estate agencies is the stipulation that if a property is of inferior quality or there are major defects like broken plumbing, the buyer has the right for six months from transfer to return the property to the seller without penalty and at the seller's expense and risk.
Banks will also be more critical of what developers deem will be their “bankable sales” when they look at their risk as buyers have the right to cancel the sale agreement and return the property to the seller.
It is important to note is that the Act only applies to sellers who act in the ordinary course of their business, like developers or real estate agents, says Webber Wentzel’s Trudie Broekmann.
Real estate owners and developers should brush up on their understanding of the Act, says Broekmann. At this stage the Act has not been interpreted or tested by a court, so it is unclear how it will be interpreted.
“If you include a picture of the house’s view instead of the house itself, is than then an infringement of the Act’s stipulations on advertising? We don’t know yet and expect a few curve balls,” said Goslett.
- Fin24.com
While technology such as bulk e-mail, SMS and affiliate marketing make it easier for small businesses to compete with bigger players, this has also led to abuses which the CPA aims to curb.
Dr Pieter Streicher, MD at BulkSMS.com says that the CPA as well as the Personal Information Bill are likely to prove a threat and an opportunity for businesses using SMS marketing.
"To ensure customers opt-in to communications, and then stay opted-in, companies will have to come up with creative ways to provide value to consumers and engage with them in a real conversation," he says.
He cautions those already using SMS marketing. They will need to ensure that their customer communications systems are in order, or risk not being able to contact a customer legally.
Affiliate marketing, which sees third party agents acting as sales and lead generators are also likely to come under increasing scrutiny.
The appeal of these channels is that they are results driven as the advertising company only pays for leads or sales which meet certain criteria.
The systems are popular with online retailers and financial services companies, particularly those operating in the insurance sector.
In the quest for increased numbers of leads, this however, has led to agents misleading would-be clients about who they represent.
Under the CPA, agents will need to clearly indicate who the leads are being generated for and what will be done with that information, especially on e-mail lists.
Marketers who spoke to Fin24 said that one of their chief gripes was the concept of what constituted an "opt-in" subscriber.
In the US, a subscriber needs to "double opt-in" when it comes to registering for a mailing list whereas in South Africa the approach appeared to be that an e-mail address could be added to a list and it is the consumers responsibility to "opt-out".
The CPA may have some expensive surprises for real estate agents and developers.
Starting at the end of March, developers will be bound to water tight contracts and estate agencies can face hefty fines for using ambiguous terms like “cozy” and “immaculate” in advertising.
“I can imagine that if we weren’t such a large firm, we’d be worrying about it,” said RE/MAX CEO Adrian Goslett.
Goslett said the group hired consultants and had to re-look their agreements with their franchisees to make sure the it is operating within the scope of the Act.
A possible blow to the smaller real estate agencies is the stipulation that if a property is of inferior quality or there are major defects like broken plumbing, the buyer has the right for six months from transfer to return the property to the seller without penalty and at the seller's expense and risk.
Banks will also be more critical of what developers deem will be their “bankable sales” when they look at their risk as buyers have the right to cancel the sale agreement and return the property to the seller.
It is important to note is that the Act only applies to sellers who act in the ordinary course of their business, like developers or real estate agents, says Webber Wentzel’s Trudie Broekmann.
Real estate owners and developers should brush up on their understanding of the Act, says Broekmann. At this stage the Act has not been interpreted or tested by a court, so it is unclear how it will be interpreted.
“If you include a picture of the house’s view instead of the house itself, is than then an infringement of the Act’s stipulations on advertising? We don’t know yet and expect a few curve balls,” said Goslett.
- Fin24.com
