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Class Actions & Derivative Suits

Is Digital the New Print in Class Action Notification Programs?

By Steven Weisbrot – February 19, 2015


This past October, at the ABA National Institute on Class Actions, I had the privilege of sitting on a distinguished panel concerning the ascertainability of class actions at the class certification stage. Due to the considerable doctrinal overlap, the conversation steered toward a discussion of how best to notify unknown class members of class certification or settlement. I recommended that the Rules Committee consider using a methodology to measure the effectiveness of digital banner advertisements and to explicitly endorse the use of banner ads in notifying unknown class members. Other panelists and attendees suggested that we should instead rely exclusively on print media and direct mail, as has been the prevailing methodology. What follows are both relevant considerations and practical advice for practitioners faced with the specter of notifying class members of their rights in light of the relevant legal standards and available methods.

 

Before We Can Look Forward, We Must Look Back

Federal Rule of Civil Procedure 23, by its very terms, requires that the court direct “the best notice practicable” under the circumstances, including individual notice to all members who can be identified through reasonable effort. Thus, there is no viable argument to diminish the use of direct mail in class action notice, and even if there were, it is not an argument that any reputable notice provider would endorse. Moreover, as it stands today, the Federal Judicial Center enunciates that “[t]he lynchpin in an objective determination of the adequacy of a proposed notice effort is whether all the notice efforts together will reach a high percentage of the class. It is reasonable between 70 to 95 percent.” The organization seems agnostic as to which media can be used in reaching those class members. Good news for digital advocates, indeed. The problem arises, as it so often does, in the details.

 

The Most Dangerous Phrase in the English Language: “That’s how it has always been done.”

By this time, if you don’t already know the answer, you may be asking how do media professionals quantify the percentage of unknown class members that the notice reached, in order to satisfy the Federal Judicial Center’s requirements? The answer is fairly straight forward, albeit a bit theoretical.

 

For example, let’s take a typical consumer case involving an over-the-counter consumer product—say a cosmetic sold in major big box stores. Assume that the plaintiffs’ attorneys have used all the discovery devices at their disposal to garner postal addresses but have come up largely empty-handed. Normally, the default method that notice administrators would employ in this situation to reach unknown class members would be to buy expensive ad space in well-known consumer publications.

 

The reason that this practice has become routine is not necessarily because of how effective it is. The reason this method has become the default is because of how easily it is measured and presented to a court, so it can be evaluated in light of the Federal Judicial Center’s requirement. This metric, known as “reach percentage,” has long been relied on and routinely guides courts as to whether a notice program should be considered effective in the eyes of the law.

 

What does reach percentage measure anyway? First, consider what it does not measure. Contrary to popular sentiment, reach percentage does not tell the court how many people read the notice. Reach percentage also does not tell the court how many people are likely to file a claim. Reach percentage does not explain why someone skipped over a particular notice or what language would have made that person more likely to continue reading. Reach percentage simply tells the court the number of people who were exposed to a particular message (in our example, a class action notice form).

 

What does it mean to be “exposed” to a particular message if, as previously noted, one need not have actually read the message to be considered exposed to it? In general terms, someone could be a subscriber to the magazine where the notice was published—that would be one way. It also counts as being exposed to the message, whether one actually read the notice, if someone were determined to be one of the potentially millions of people that the statistical subscription software, relied on by media planners, indicated were likely to read a particular publication. The subscription software uses such demographic considerations as the median age and income of readers. The software also uses each particular publication’s overall circulation and readers per copy ratio to determine how many people can be considered “exposed.”

 

What this means in practice is that if a magazine has a very large circulation, it is likely to garner a higher reach percentage under normal circumstances. Likewise, the number of people likely to read the same copy of a magazine (the reader-per-copy ratio)—People, for instance, which is routinely left in doctors’ waiting rooms or shared between friends—affects the overall reach percentage. Therefore, parties relying on a magazine with a large circulation, or a magazine that might typically be passed from person to person, would typically be rewarded with a higher reach percentage.

 

Consequently, because of how easily the reach percentage could be expressed and the ease with which one could, under certain conditions, influence reach percentage by relying on particular publications, placing expensive ads in large consumer magazines became the default response across an entire industry. This occurred whether or not it ultimately advanced the goal of notifying unknown class members.

 

Regardless of whether this methodology is an effective and precise way to reach unknown class members, its results can be expressed in an attractive metric known as the reach percentage, which allows for an objective measurement for evaluation. Thus, use of consumer magazines is the current undisputed “prince of the prom.”

 

Something New

The initial question thus presents itself: Why should we use digital banner ads in notifying class members of settlements? What if I told you that today we could implement a class action notification program that told us with absolutely certainty whether and how often unknown class members viewed a notice? What if I told you this notification program could be monitored and adjusted in real time for effectiveness? What if, when a notice provider saw a particular ad was working, we could serve up more of those exact ads to people we know are likely to act on them? Conversely, what if, when we saw an ad was floundering, we could pull it immediately and redirect it to a more appropriate audience? What if we knew which specific language resonated with potential claimants? What if we could immediately discern how a particular photo in an ad affected an individual’s likelihood to click on the ad? What if we knew, with certainty, how many people were reading the notice, where they were reading it, and how many times they needed to be exposed to it before filing a claim? What if I told you that notice providers can already do this and we can do it considerably more cheaply than it costs to run expensive print campaigns?

 

John Wanamaker, the namesake of the famous Philadelphia department store, is credited with uttering the famous ad-world aphorism: “Half the money I spend on advertising is wasted. The trouble is, I don’t know which half.” Given the advent of digital banner ads, Wanamaker’s conundrum has effectively been solved, and we now have the tools to determine what works and what doesn’t work at our disposal.

 

Targeting—Not Exposing

One of the primary differences between digital and print media ads relates to targeting. We have already discussed how media planners can use subscription software to decide which print publications best expose their intended audience to a class action notice. On the other hand, digital planners have a plethora of advanced targeting options available to them that allow laser-targeting of their intended recipients and the ability to determine whether they actually read the notice. What follows is an extremely general primer as to some of the most important methods that class action practitioners need to be aware of.


Contextual targeting. This breed of targeting ensures that content of the digital banner ad directly correlates to the content of the web page the user is viewing. For example, a user on a sports-related website could be served ads by, for example, a sports ticketing service, like Stub Hub. Moreover, to notify class members in the previous example about the settlement involving a cosmetic product, a notice administrator could post notice on a page where cosmetics are typically sold. It has been reported that ads running on sites with related content were 61 percent more likely to be recalled than ads running on sites with unrelated content.


Behavioral targeting. Behavioral targeting looks at a user’s online behavior and creates an online profile for that user. These anonymous profiles (no names, addresses, email addresses, or telephone numbers are stored) allow digital planners to deduce age, gender, and possible purchase interests, and to link that information to an Internet provider address. The information is aggregated and stored so that digital planners can access this treasure trove of data to target specific demographic profiles. So if someone’s online behavior indicated that that person was viewing an abundance of new parent websites, purchased a bassinet, reviewed women’s maternity fashion online, and had purchased nail polish, it would be reasonable to assume the user is female and either a new parent or an expecting parent. That user’s Internet provider address would be stored according to the user’s demographic profile and could be targeted in the future with banner ads should a class action involving baby products, for instance, require publication notice. This is similar to using targeted consumer magazines but with the added bonus of being able to tell if the notice was actually read. You can read more on this below.


Geo-targeting. Much like it sounds, geo-targeting is a method of determining the geolocation of a particular Internet user and serving up ads relative to that user’s location. Similar to the information gathered via behavioral targeting, this information is also anonymous and linked to a particular Internet provider address. In the contextual targeting example above, where the user was viewing a sports website and was served an ad for sports tickets, if geo-targeting was concurrently being employed, that ad would have offered up tickets for the specific team playing in the city where the user was located. This technology is particularly useful in state-specific class actions or cases with state-specific subclasses.


Returning to our cosmetics settlement example: If that settlement were limited to a certain state’s purchasers, we could cause advertisements for the settlement to appear only on cosmetic-related web pages within those states. This significantly cuts costs and reduces waste as compared with print publications, and it also helps contain a defendant’s reputational damage to those states where consumers were actually affected.


Measuring Effectiveness

When a print ad is published in a popular consumer magazine, it is impossible to know how many people actually saw that ad. Not so with digital advertisements. There are many metrics that can be monitored to determine the effectiveness of a particular ad or series of ads. However, make no mistake, this is a complex task, and the metrics go by many different names. Here are some examples that you may encounter:


Total impressions. Total impressions, by far, is the most cited metric as it relates to class action notice campaigns. It indicates the number of times a banner ad is placed over the course of an overall campaign. However, the weakness of using total impressions as a proxy for a campaign’s effectiveness is similar to that of using reach percentage—we do not know how many people actually read the ad or notice.


Click-through rate. The click-through rate is the ratio of clicks to impressions. In other words, it is the number of clicks that an ad receives divided by the number of times your ad is shown (total impressions). This metric is incredibly useful in determining which ad within a series of ads is most effective. In practice, notice providers can cause a number of ads to run simultaneously (known as “A/B testing”), each with slightly different wording or pictures. If the click-through rate is higher for some ads than others, we know it makes sense to continue serving the effective ads, while phasing out the less effective ads.


Number of conversions. A conversion happens when someone clicks on an ad and then takes an action that you have previously defined as valuable. In our Stub Hub example, a conversion would occur when a user actually purchased tickets to a sporting event. In our case, a conversion would be defined as when someone views the long form notice on the settlement website. Conversion rate is unequivocally the most accurate representation of the reach of a particular notice plan because it objectively documents how many people actually saw the notice.


Putting the Pieces Together

Notification of unknown class members is not only science; it is an art. Therefore, a notice provider must craft the right message and the right media mix to best reach class members.


A reputable notice provider should analyze the demographics of a particular class, such as class members’ likely gender, age, and education (among other demographic and geographic considerations) before crafting a notice plan. Also, class psychographics should be accounted for when attainable; these include consumers’ attitudes about social issues, known brand usage, personal interests, and shopping habits. Last, the degree to which an audience uses a particular medium relative to the general population should be considered. Is this a class of young people who are likely to spend a lot of time on the Internet? Or does it comprise people who spend a disproportionate amount of time watching TV or listening to the radio? Notice providers must account for all of the above considerations in light of tight budgetary constraints.

 

In sum, the days of consumer magazines being the default notice method across an entire industry should be firmly and permanently put behind us. Digital banner ads offer vast, increased targeting abilities and more accurate measures of a notice program’s success. Neither option, however, is ideal in every situation. In fact, oftentimes, using the two media in conjunction with another will achieve optimal results. It is crucial to use a reputable notice provider that scrutinizes class members’ demographics, psychographics, and media consumption habits, and who will recommend the right mix of media options, instead of reflexively falling into timeworn habits. Accepting that media delivery need not automatically follow old patterns will increase a settlement’s chance of success and will allow counsel to deliver the best notice practicable.

 

Keywords: litigation, class actions, settlement, notification, digital media


Steven Weisbrot is executive vice president at Angeion Group in Philadelphia, Pennsylvania.


 
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