All brands in the world, large and small, are using social media influencers (Influencers) to promote their products and services to a more targeted audience than traditional mass marketing methods.
The popularity of using Influencers in marketing is growing every day. Many brands have started to use Influencer marketing as part of their core marketing strategies; hence, we will continue to see more authorities around the world regulating this industry, in order to protect consumers from fraudulent or misleading practices.
Brand owners are also starting to take a position. Recently, a well-known consumer goods brand owner announced that it has tightened up its policies on how the company engages with Influencers – no longer working with any Influencer that purchased followers.
Regulators in several jurisdictions are enacting or considering new rules to regulate advertising/promotional content posted by Influencers. In short, there is a lot of interest in this area.
The Colombian Consumer Protection Authority (Superintendence of Industry and Commerce or SIC) has also been working on an approach that would allow it to apply controls over the world of Influencers. The Authority's approach is to achieve a self-regulatory code, through the collective agreement of all stakeholders, with principles that improve transparency in the influence-marketing sector and safeguard the rights of the consumers.
The SIC, for now, is not intending to promote new legislation be issued by Congress. The SIC will instead call interested parties to participate in discussion panels (the timing for this process has yet to be announced) in which advertisers, Influencers and marketing agencies can debate this topic. Through these panels, the SIC wants to get a better understanding of the stakes of the interested parties and then draft ''non-binding'' guidelines. However, it is not yet clear if there will be consequences for not adopting such guidelines. The Colombian authority is watching what is happening elsewhere, before launching a regulatory initiative.
Some of the relevant examples of regulation are seen in the United States of America, the United Kingdom and in Peru.
The Federal Trade Commission (FTC) revised its Endorsement Guides in October 2009 to keep them up-todate with current marketing techniques, such as blogging and advertising, forcing Influencers to reveal clearly any brand endorsements in their posts to their followers. The FTC can impose hefty fines against brands and Influencers that fail to follow these rules. For example earlier this year the US Securities and Exchange Commission announced a settlement with two prominent US celebrities, one a former professional boxer and the other a DJ and record producer, for "failing to disclose payments they received for promoting investments." They paid a combined penalty of USD 700,000.
In addition, the Advertising Standards Authority (ASA), which is the UK's advertising regulator, issued guidance to Influencers – Influencer Guide – in September 2018 on how to make their ads clear. Brand owners who use Influencers in the UK have to make sure that Influencers are following the rules in the guidance. Ultimately, not only the Influencer but also the brand owners can be liable for breaches of the regulation.
To identify what counts as an advert, the ASA has indicated that all of the following amounts to advertisement: when a brand has paid an Influencer specifically for a post or space on their social media, or when an Influencer is posting about their own products, services or events. In addition, affiliate-marketing counts as an advert, when an Influencer provides a discount code for a product, (e.g. a make-up line) and it will earn money from such sale. Finally, a post will qualify as an advert if the brand owner has control over an Influencer's post. The authority will assume there is control for example, when the owner is entitled to approve the post before it is published, to determine the contents of such post or pays the Influencer – in money or kind to publish its products in the post.
Our recent client alert here reviews the UK's Competition and Markets Authority announcement in January 2019 that it had secured formal commitments from named Influencers, as well as the publication of additional guidelines "guide for social media endorsements" issued in co-operation with the ASA.
In Latin America, authorities have also started to implement regulations related to Influencers.
In Peru, the Instituto Nacional de Defensa de la Competencia y de la Protección de la Propiedad Intelectual, Peruvian Competition Authority, (INDECOPI), issued a regulation for advertising content disseminated by Influencers, in order to make the information that they transmit to their followers transparent. The aim is to protect consumers who are the target of said contents, or of products and services that these Influencers could promote.
According to the law issued by the INDECOPI, an Influencer is under the obligation to inform clearly, if his or her post qualifies as commercial advertising. The Influencer can inform of this situation for example by including in its posts #Ad, #Publi or #SponsoredPost. The authority wants to make sure that consumers do not confuse an announcement with a report. An advert is an evident declaration of an interested party that has received payment or consideration for such announcements. The law requires that Influencers clearly inform consumers that they are viewing sponsored marketing. Hence, when advertising is publicized under the guise of news, journalistic opinions or recreational material, it must expressly and conspicuously mention that it is an advertorial or a contracted advertisement.
This is a topic to watch carefully for future regulatory developments worldwide.