Companies are increasingly using influencers and bloggers to tap into the trusting relationship these actors have with their followers. Recent announcements from the Danish Consumer Ombudsman, giving notice of an impending check-up on covert advertising, indicate that such companies should be cautious in not overstepping the regulation in this grey-zone area. It is primarily the companies’ responsibility that content posted by influencers and bloggers complies with the Danish Marketing Practices Act.
SoMe platforms, such as Facebook, Instagram, Twitter, and YouTube, have become ever more pervasive. One ramification of this has been the rise of SoMe influencers and bloggers who make a living by posting content featuring brands and/or trademarks related to specific companies. These influencers have access to a loyal audience and can persuade such audience by virtue of their authenticity and credibility. Brands engage with one or more influencers, who have reach within their industry. The engagement usually entails some sort of payment to the influencer often in the form of a fee or material good(s) in exchange for posted content with a mentioning of the brand in question.
The issue of covert advertising
This sort of engagement is of high interest to companies not only because of the above-mentioned reach and credibility of the actors, but also because the content will be posted in a format that match other (unpaid) content on the platform upon which it appears. This will naturally mean that the paid-for advertisement might not be perceived as such making the recipients more susceptible. Albeit this is unsurprisingly appealing for companies at first glance, herein lies a potential to deceive consumers through covert advertising and with it a risk of incurring liability.
The Danish Marketing Act prohibits covert advertising meaning that all advertising must distinctly appear as such. The decisive criteria for whether content posted on social media needs to distinctly appear as advertisements is whether the post is induced by a commercial intent. Such intent will clearly subsist when an influencer is paid (in money or material goods) by a company. A commercial intent can also exist through a tacit agreement, e.g. in cases where a company offers one of its products to an influencer in the hope that this will result in a post featuring said product in a positive setting.
How to comply
While compliance with the Danish Marketing Act requires advertising to distinctly appear as such, the regulation does not prohibit the use of influencers to market products on SoMe platforms. It simply entails that content induced by a commercial intent must either distinctly be marked as such or the commercial nature of the content must appear clearly from the context of the post.
Whether content distinctly appears as advertising is an overall assessment. There are many ways to be in compliance with the regulation. Companies must take wording, layout, font size and placement, the motif of the image/video, and the relevant SoMe platform into account when assessing if content distinctly appears as advertising. The target audience is also of relevance; when targeting children and young people the wording must be easily comprehensible. The younger the target audience, the stricter the standards.
According to the Danish consumer ombudsman, content targeting adults that is distinctly marked with the wording “Advertisement” and “Advert” will adhere to the regulation, while the wording “In collaboration with…” will not. The influencer’s tagging of the sponsoring company, e.g. by tagging @[company name] or #[company name] in the content, will not suffice either. This leaves a very narrow playing field for influencers and companies to operate in. If an influencer receives a product as a gift, a distinct marking with the wording “This product is a gift” or “I have received this product for free” will be in compliance. However, this applies only when there has been no prior (explicit or implied) engagement with the company. Otherwise such markings will not be adequate.
As for content targeting children the wording “Advertisement” and “Advert” will positively be in compliance if marked very distinctly according to the Danish Consumer Ombudsman.
Companies should keep in mind that above mentioned examples constitute a compliance “safe-zone”. It is, however, not the only way to adhere to the regulation. The decisive criteria are whether the audience will realize that they are seeing an advertisement when they see the content at first glance, as the audience should not have to search for this information.
It is crucial for companies engaging in this form of advertising to understand that the sponsoring company carries the primary responsibility for ensuring that content posted by its influencers is marked distinctly as advertisement. Should the company fail to do so, it will risk incurring liability which may result in a fine and the issue of a press release from the Danish Consumer Ombudsman. The size of the fine will be based on the particular facts of the case, including the severity and extent of the breach as well as the intended or gained profit.
We advise companies engaging in influencer marketing to ensure that any agreement with influencers is put in writing and that it contains provisions explicitly stating that the influencer must make sure that any content is clearly marked as advertising. However, since the company is the primarily liable entity, this should not be the only measure taken. It is further recommended to specify the scope of the engagement, including wording, layout, font size and placement, the motif of the image/video, as well as periodically checking-up on posted content in order to take action if the content constitutes covert advertising.