We are all familiar with celebrities and social media stars using their social media accounts to promote brands and products. For some, it is their main source of income and they can make millions in endorsement and sponsorship deals. Major TV and sports icons can command hundreds of thousands of pounds per post, which may sound extraordinary but the reality is that this is fast becoming one of the primary means for marketing to young people.

The problem with influencer marketing is that the commercial relationship is not always appropriately disclosed, making it difficult for consumers to distinguish between editorial content and advertising.

In response to this, the Competition and Markets Authority (CMA) has now launched an investigation into the failure of influencers to properly declare the promotional or paid-for nature of some of their social media posts.

Regulatory scrutiny on these issues is nothing new; the CMA conducted similar work in 2016 in relation to online review and endorsements. Similarly, the Advertising Standards Authority (ASA) announced earlier this year that it had launched a project exploring consumers’ ability to recognise ads online and the adequacy of labelling.

What does the law require?

Currently, the most relevant laws which seek to prevent this behaviour are contained in the Consumer Protection from Unfair Trading Regulations 2008 (CPRs), as well as in the CAP code.

The law requires, among other things, that: (a) all marketing communications are clearly identifiable as marketing; (b) marketers must not falsely claim or imply that the marketer is acting as a consumer; and (c) marketers must make clear that advertorials are marketing communications. 

The key is transparency; Consumers must understand when they’re viewing advertising rather than genuine editorial content. This is particularly important when applied to the social media accounts of individuals who may use their account for a mixture of personal posts (at the gym, eating out, or humble-bragging) and paid-for posts. 

To help consumers understand when they are seeing top-quality editorial selfies and when they are seeing promotional posts, back in 2012, the industry came up with simple identifiers: #Ad – to be used where the influencer receives money or other benefit for the post and the marketer has some degree of control over the content; and #Spon – to be used where the influencer receives money or other benefit for the post, but where the marketer has no control over the content. The ASA has warned about using ambiguous labels such as “brought to you by” and “thanks to our friends at”.

Both advertisers and influencers have historically been unenthusiastic about using the identifiers, on the basis they consider that it dilutes the message and because influencers are sensitive not to appear insincere in their posts. That said, we have found that with the proliferation in influencer advertising, consumers are becoming more familiar and comfortable with seeing the #Ad / #Spon identifiers.

Practical considerations

Influencers and advertisers have been critical of the increased scrutiny on influencer marketing on the basis that they consider that the requirements are not sufficiently clear. The CAP code rules and the ASA’s guidance are purposefully broad and non-specific in nature, recognising that there is no one-size-fits-all approach. This can make it difficult applying the rules to the various social media platforms, the functionality of which can vary significantly.

For instance, it is generally accepted practice to include the marketing label/identifier for influencer marketing in the following manner:

Twitter: anywhere in the tweet Pinterest: at the beginning of the text Facebook: at the beginning of the post (unless the post is very short) Instagram: on the image itself and in the accompanying post

Additionally, the platforms themselves have started to take their own steps to tackle this problem. In response to being singled out by the ASA in 2017, Instagram has now developed a ‘paid partnership’ tagging tool to enable influencers to communicate that they are working in collaboration with a brand.

These platform-specific nuances can make it difficult for influencers to understand their disclosure duties and there have been a number of celebrities who have been caught out by the rules and received adverse adjudications from the ASA.

As the primary party responsible for ensuring compliance with the disclosure requirements, there is increased pressure on advertisers to educate the influencers they work with of their disclosure responsibilities and it is recommended that the specific disclosure requirements are expressly set out in the advertiser’s contract with the influencer. 

The investigation

The CMA has reportedly contacted numerous social media influencers (including influencers based outside the UK, but targeting followers in the UK) to elicit information about the deals they have in place with brands. The CMA has also asked members of the public to provide details of their experiences interacting with this type of content, with particular interest in people who have purchased products as a result of such practices. 

The CMA investigation is considering the extent to which influencers are clearly and accurately identifying any commercial relationships, and whether people are being misled. "It is really important they are clearly told whether a celebrity is promoting a product because they have bought it themselves, or because they have been paid or thanked in some way by the brand," said George Lusty, senior director at the CMA.

Although there has been no timeframe set by the CMA for the investigation, they expect to provide an update at the end of 2018. In any case, it is clear that they intend to take appropriate action where they find that there has been a breach of the law. The CMA has the power to seek enforcement orders from the courts, as well as being able to name and shame influencers and advertisers not playing by the rules.

With both the CMA and the ASA paying particular attention to this topic this year, the message to advertisers and influencers is quite clear and it will become incumbent on them to ensure their influencer marketing practices are compliant.

Client Alert 2018-180