The recent furore surrounding the endorsement of Bud Light by transgender comedian Dylan Mulvaney has highlighted the prominent part that social media influencers play in many firms’ marketing strategies.
The Influencer Marketing Hub has forecast that the global influencer marketing sector will turn over $21.1bn (£17bn) this year, representing a year-on-year growth of 22%. Nearly a quarter of the marketing chiefs responding to its survey said that they would be devoting more than 40% of their annual budgets to influencer marketing.
But, as uptake has increased, so has the number of controversies and complaints. Many of these have concerned the lack of clear labelling on the commercial content that many influencers upload.
Why the regulators are getting tough
In 2021, the Advertising Standards Authority (ASA) published an analysis of more than 24,000 Instagram Stories. Of the 5,700 it considered to be marketing material, nearly two-thirds weren’t obviously identifiable as such. The watchdog described this situation as “unacceptable”.
Kate Hawkins is a principal associate at law firm Gowling WLG, where she specialises in advertising law. She reports that “compliance with labelling requirements remains low. In many of the published ASA cases, non-compliance was obvious because the content didn’t use the #Ad hashtag. But what the ASA has been seeing must only be the tip of the iceberg. There will be many more ads that haven’t been brought to its attention, including those where the non-compliance is less obvious and potentially more misleading to consumers.”
As a result of such cases, the UK Competition and Markets Authority (CMA) published guidelines late last year setting out criteria relating to ads and paid promotions by influencers.
It expects platforms such as TikTok, YouTube, Twitter, Snapchat, Pinterest and Twitch to give users tools to label commercial content and report suspected hidden advertising. They must provide better guidance to content creators about what to label as a paid-for endorsement.
The CMA also expects the platforms to use the advanced tech at their disposal to identify suspected hidden advertising and to take effective remedial action when such cases are unearthed.
Influencers, meanwhile, are to make it clear whenever they’re receiving a payment for posting content and when they’re doing so on behalf of a brand that they own or are employed by.
By “payment”, the CMA is referring to any form of reward, including free or discounted goods and services or even loans. It means anything offered on more favourable terms than those available to ordinary consumers.
Where this is the case, posts should use the hashtags #Ad or #Advert, rather than less clear ones such as #gift, #gifted or #spon.
Crucially, the CMA holds brands responsible for ensuring that such content is labelled as advertising when it results from their marketing and is being published on their behalf. They must check the posted content themselves for compliance.
The CMA says that it has “worked hard to ensure that both brands and influencers clearly understand what’s required of them under consumer legislation. Just last year, we issued three detailed guides – one for brands, one for influencers and one for social media platforms – to help them stay on the right side of the law. We know that most people and businesses want to do the right thing by their followers and customers. These guides help them to do just that.”
Tailored guidance for specific sectors
The main set of rules covering influencer marketing is the CMA’s committee for advertising practice (CAP) code. Complaints are adjudicated by the ASA. If it makes a ruling that influencers or brands ignore, they may be found to have broken the law and face enforcement action by trading standards authorities, which could lead to a criminal prosecution.
The CAP code contains special guidance concerning the use of influencers in specific sectors, with new rules on gambling ads introduced last year. Gambling and lottery adverts must not “be likely to be of strong appeal to children or young persons, especially by reflecting or being associated with youth culture”. Here, the rules specifically mention the use of influencers.
Gambling firms cannot use: top-flight footballers or those with a significant following among under-18s on social media; sportspeople popular with under-18s; or participants in reality TV shows popular with under-18s, such as Love Island.
The Financial Conduct Authority regulates advertising in financial services. It reports that it’s seen an increase in the use of social media influencers to promote investment products to younger users. The watchdog says that one influencer promoted unauthorised traders to their followers at least twice, using their personal profile and without mentioning that they were the sole director of a regulated firm with permission for secondary credit broking. The FCA negotiated with that influencer to stop these promotions.
What about social ads in other countries?
But it’s not only UK regulations that brands must worry about.
Take it from Thomas Walters, co-founder and European CEO of global influencer agency Billion Dollar Boy, whose firm recently supported cosmetics brand Garnier by “launching an augmented-reality filter in the Nordics”.
This campaign, he says, was “uniquely challenging, because some markets in that region have strict laws on filters that affect the user’s face. So that the filter was compliant in all target markets, we adapted our approach and explored filters that provided an immersive experience to communicate the efficacy of the product without falling foul of regulations.”
The new rules and guidelines have been broadly welcomed by agencies and their clients. A recent influencer campaign for Amazon, for instance, involved videos of several activities – ordering the product live, opening the box and sharing anecdotes – all of which had the potential to break the rules.
“When working in the gaming space, and especially with a brand as familiar as Amazon, we find that our audiences are mostly young, trusting and impressionable,” says Marvin Winkelmann, managing director of talent management agency AFK. “In such cases, we find that having clear regulations and guidance such as the CAP code to be a great measure for protecting against misleading consumers.”
A call for even clearer guidance
Despite the progress the CMA has achieved, some people would like to see even more specific guidelines. Among them is Sanchit Sareen, EMEA director of influencers and creators at impact.com, a partnership management platform.
He recommends more efforts to raise awareness and address “scenarios that might not relate to a straightforward campaign with the ultimate goal of commercial growth”. What he has in mind are “topic-based influencing, where multiple brands are mentioned; and de-influencing, whereby creators review certain products in a negative light.”
Others are concerned that the guidance on the use of certain terms such as ‘ad’, ‘sponsored’, ‘PR’ and ‘gifted’ still isn’t as clear as it could be.
“The inconsistency surrounding ‘gifted’ partnerships is calling out for clarity. Many content creators and social media users find this confusing,” says Georgina Greenspan, managing director of agency Eat the Fox. “While both traditional media and influencers are required to label paid partnerships and adverts, only influencers are required to label gifted partnerships.”
Control over the use of influencers is set to get tighter. The UK government has confirmed that the CMA will be given the power to decide independently whether consumer protection law has been breached and issue fines.
“The only real bite available to the ASA is to name and shame brands and influencers who fall foul of the code rules. It’s done this by publishing its rulings and detailing the non-compliance on its website,” says Hawkins, but she adds that the authority “has made it clear that these offenders will be held under monitoring. Further non-compliance may result in more sanctions.”