The Hungarian Competition Authority recently closed the review of the first decision on social media marketing, namely on the use of appropriate tags in sponsored content.
Back in 2016 the Competition Authority started investigating social media marketing practices of certain dominant Hungarian influencers, including musician Kasza Tibi. During the investigation, the authority particularly assessed the posts and content published on the musician’s official Facebook page as of 1 August 2016 promoting certain telecommunications services, where the nature of such promotion was not made clear for the consumers. The case is known as the #kaszatibi decision.
Although in this case the Competition Authority was rather permissive and did not set out any fines for unfair commercial practices, it has set out principal guidelines that are to be followed.
Guidelines of the Hungarian Competition Authority
In the light of these guidelines any paid social media post – irrespective of the type of consideration – communicated by an influencer may only be lawful if the followings are met:
- it is communicated simply, clearly and unambiguously,
- in a way where it is emphasised, easily noticeable, and is necessarily and conspicuously understood by the consumers that
- such content is not an independent, neutral opinion or offer, but it is (also) paid or there lies some other direct economic interest.
The Competition Authority made a distinction between “advertisement” and “editorial content”, and that paid and “hidden editorial content” is considered as advertising and thus contrary to Hungarian consumer protection law.
In the authority’s reading “influencer” means: any person, who in a digital environment is capable of influencing the consumer’s opinions; and who - as an ad hoc partner or a dedicated brand ambassador - publishes online content to its website, social media site or any other online platform; irrespective of the content being its own or a guest post. An influencer generally has a steady number of engaged followers. This includes any public figure – youtubers, bloggers, vloggers, other persons sharing online content (via Facebook, witter, Instagram, Youtube, Snapchat etc.). Most importantly, there is no expectation to have an exact number of followers to qualify as an influencer - the rules apply to everybody.
The Competition Authority stated that this applies when influencers are given any presents or services in exchange for the post or offer; as well as if that person is promoting its own company or services/products thereof (if such connection is not apparent from the commercial practice or is not well known).
It is noteworthy that in the 47 page decision, the Competition Authority provided examples and guidelines from other jurisdictions, including the ones of the International Consumer Protection and Enforcement Network, the Interactive Advertising Bureau, the Danish and Norwegian Consumer Protection Ombudsman, the UK Competition and Markets Authority as well as the Advertising Standards Authority and the German practice.
In line with the German approach, it is in general not sufficient to use the tag “sponsored” or “sponsored by”. Nor it is sufficient to use #pr, #ad, #promotion, as these have no clear meaning to the Hungarian consumers.
An important take out from the decision for companies using influencers as marketing tools is that the Competition Authority expressly declared: not only the owner of the social media page, i.e. the influencer, is responsible for the lack of appropriate tags and signs in influencer advertising, but also the company, whose products/services are being promoted, as well as any other persons acting as contributors in publishing or preparing such post/content.
Apart from setting standards for social media marketing activity, the authority ordered the musician, together with the telecommunications company whose services he promoted, to provide training and organise events to raise influencer awareness and to promote the importance of applying correct tags and signs for paid/sponsored content. It also set out model clauses to be used in social media marketing contracts to avoid unlawful commercial practices. The authority provided one year for the respective parties to certify that all these obligations have been fulfilled as set out. Nevertheless the authority – for now – did not set any fines for such unfair practices.
After all this, now was the time for the Competition Authority to lead a review and see whether these obligations were actually satisfied. On 27 March, the authority made its final decision and closed the matter confirming successful completion of all obligations.
Guidelines of the Advertising Self Regulatory Board
Apart from the Hungarian Competition Authority, the Advertising Self Regulatory Board (in Hungarian: ÖRT) – which does not issue legally binding opinions – was also busy helping its members to navigate through the maze of different provisions and international approaches.
In general, the ÖRT creates and enforces the ethical rules for advertisements by means of self-regulation, and prepares detailed guidelines and opinions in connection with applicable laws and regulations on several areas, including unfair commercial practices and social media marketing.
As opposed to the Competition Authority, the ÖRT in its guideline inter alia applied the practice of the USA Federal Trade Commission (FTC) as a starting point and came to the following conclusions that are also in line with the Competition Authority’s standpoint.
The ÖRT defines influencer marketing as a consumer to consumer (C2C) communication activity, but it highlights that this does not preclude the application of the legal provisions applicable for trade practices for commercial content.
The ÖRT provides clear definitions on what is considered advertisement, sponsored content, product placement, offer, influencer, product and consideration pursuant to the legal provisions and guidelines in effect and attempts to transpose the traditional meaning of these terms to the social media context.
It made a clear distinction between the categories “advertisement” and “sponsored content”. The differentiator here is the amount of control a company whose products/services are promoted has over the content, namely if such company
- gives precise briefing on the number and type of posts or the platform to be used;
- prescribes the type of content being posted - article, review, experience or opinion;
- signs off the content prior to publication.
In case of strong control as listed above, the content shall be published as an advertisement with the appropriate hashtags.
According to the ÖRT it is not an advertisement to engage an influencer to provide news and content on a certain brand/company/service/product, as long as it is the own opinion of the influencer, and the brand/company has no control over the content. Nevertheless here the tag “sponsored” or “sponsored content” could be used.
In addition to the guidelines of the Competition Authority the ÖRT provided the following practical advice:
- reference to an advertisement shall be emphasised and easily noticeable, which means that it is unavoidable, easily readable, understandable. This is fulfilled if such reference is apparent without the need to click further;
- the indication shall directly relate to the specific content and not only to the company in general;
- when applying hashtags the reference to #advertisement must be placed first (e.g. on Instagram);
- for the consumer the meaning of the word "advertisement" or "paid content" has the same meaning, which means that these references may be used freely;
- reference shall be used on all platforms (depending on the options available on the given platform);
- clear distinction to be made between an "advertisement" and "sponsored content";
- detailed information as regards the nature of the economic relationship (available via click through or similar) as well as clear indication in the "impressum" or "bio" that the page contains advertisements or sponsored content.
According to the above, although it seems that the Competition Authority is not favouring fines and hard enforcement momentarily, it is useful to keep in mind that 2 years have passed since the first decision on this topic, and based on active enforcement in other jurisdictions a stricter approach may be expected.
In order to make sure you comply with the basic guidelines of the Hungarian Competition Authority and the recommended practice of the ÖRT, here are some tips on how you can do social media marketing right as an influencer:
- use the appropriate # as the first tag, being #advertisement or #sponsored content as the case may be, also in Hungarian language;
- the indication for the economic link between the influencer and the brand/company must be visible, i.e. not only after clicking on "more";
- indication on “advertisement” or “sponsored content” must directly relate to the specific content and not as a general statement;
- don’t forget to update the “bio” or “impressum” section of the page with appropriate reference to such connections.