The rise of influencer advertising on social media

With Instagram having over 1.3 billion users, it is one of the largest social media platforms in the world. Given its huge user base and the ability for a single post to be seen by millions of people, it is clear to see why brands are increasingly electing to promote their products in this way [1]. The term ‘influencer’ has grown in prominence over the last decade, and many individuals have forged careers through social platforms, working directly with brands to promote the latest trends, fashions and products to their followers and audience. There are a number of rules and laws that influencers need to comply with in relation to their posts, including the Advertising Codes (the CAP Code and the BCAP Code), the Consumer Protection From Unfair Trading Regulations 2008 (CPUT) and the Business Protection From Misleading Marketing Regulations 2008 (BPUT). Relevant bodies working in this area include:

• The ASA – works to ensure that adverts across media platforms in the United Kingdom comply with the Advertising Codes and has a role in enforcing the Advertising Codes.
• The Committee of Advertising Practice (CAP) – responsible for writing and updating the Advertising Codes, which set out rules that advertisers, agencies and media owners must comply with. The ethos of CAP is to try to ensure that all adverts created are responsible, and that any adverts that breach this standard, for example by being harmful or misleading, are sanctioned. There are various members of CAP, including representatives of advertisers, agencies, media owners and other industry groups.
• The Competition and Markets Authority (CMA) – works to protect consumers and ensure that they are getting the best deals when buying goods and services. It focuses on enforcing legislation in cases where there is likely to be widespread consumer detriment, often investigating particular industry sectors.
• Trading Standards – If an advertiser fails to comply with an ASA ruling in respect of non-broadcast advertising, the ASA may refer the issue to Trading Standards. Trading Standards can also take action directly in respect of breaches of the legislation underlying the Advertising Codes, without waiting for a referral from the ASA.

Whilst there have been articles in the mainstream media highlighting influencers being sanctioned, this is not typically the favoured result. For example, CAP, which is a self-regulatory industry code, operates educationally with the aim of ensuring that businesses are trained and advised correctly, so that their adverts remain compliant. The ASA, CAP and the CMA collaborate effectively, endeavouring to ensure that influencers are well educated on the rules. The ASA has produced guides to highlight the key provisions. However, in a trial conducted in September 2020 the ASA monitored the accounts of 122 influencers based in the UK, and of all their posts that were deemed to be ads, only 35% of these were labelled correctly. The ASA investigates and takes action against influencers following their own observations, however they can also act following a complaint from the general public, competitors or any other interested party. The ASA recently created a webpage dedicated to ‘Non-Compliant Social Media Influencers’[2]. On this page, the ASA names and shames influencers, including their Instagram handle, with a warning to the public, and to brands, that this individual has repeatedly posted non-compliant adverts. At the date of publishing, there are currently 7 influencers listed, with 13 being anonymously noted as being removed from the list, after changing their advertisements to be in line with the Advertising Codes. If an influencer on the list does not update the way that they label any advertisements, the ASA can take further steps. This can include a range of sanctions, such as ASA-funded targeted advertising, labelling the influencer as non-compliant or the threat of legal action. The ASA may refer an advertiser to Trading Standards, who are ultimately able to seek an injunction through the courts in addition to seeking penalties for breaches of the CPUT and the BPUT. In most cases, this would be resolved instead by the influencer providing an undertaking not to re-offend, hoping that by doing so they would avoid costly litigation and adverse publicity. It would be detrimental to an influencer’s reputation if they were to be highlighted as non-compliant, either via targeted adverts or through publicised legal action. It may impact a brand’s decision about whether to work with them and may cause them to lose followers across platforms. In terms of highlighting some of the key rules and steps that influencers should take in order to ensure that any advertisement stays within the rules:

Firstly, we would recommend that all influencers are familiar with the UK Code of Non-broadcast Advertising and Direct & Promotional marketing (CAP Code). This is the rule book for non-broadcast advertisements, sales promotions and direct marketing communications. It reflects and supplements rules contained in legislation.

Secondly, influencers should be aware that ‘payment’ is defined very widely, and can include any form of monetary payment, a commission, a free loan of a product or service, receipt of a free product or service (even if this was not requested) and any other incentive that an influencer may receive. Therefore, all posts related to the payment should be disclosed and labelled in a clear manner.

Influencers receive deals in a large variety of ways. This can include paid for advertisements, sponsored posts, and gifted or loaned items. When a brand gives an influencer a payment, any post that endorses or promotes the brand, or any of the products/services the brand offers, is subject to consumer protection law.

The CAP code states that all advertisements should be ‘obviously identifiable’ and to ensure that they are compliant with relevant consumer law, the CMA requires them to be ‘clearly identifiable’. Some influencers try to be compliant, by using, for example #ad on their posts. However, if this is buried in a sea of other hashtags, or at the end of an extremely long caption, this has been held to be insufficient, as not all consumers will be aware that the post is an advertisement. Further, when posting stories on the Instagram platform, each and every story that includes the advertisement should be clearly labelled, not just the first picture or video in the sequence. Some influencers have been criticised by the ASA for using particularly small fonts, or similar colours to that of the background of the post.

The ASA and CMA have presented a set of appropriate labels, which influencers may wish to adopt (these labels can be used with or without the #):

• • • Ad
    • Advert
    • Advertising
    • Advertisement
    • Advertisement Feature

The above labels were described as the most appropriate and identifiable to customers [3]. However, they must be used clearly and as set out above, trying to disguise them in posts where they can easily be missed will not be compliant. The CMA found that three-quarters of influencers buried their disclosures within their posts’[4]. Using #Ad on a post does not make it immediately compliant.

Warnings have also been given around other labels that are used by Influencers, highlighting that these may not be obviously identifiable to a consumer. These include, ‘Gifted’, ‘Sponsored’, and ‘In association/partnership with’. Coupled with this, caution should be taken when using abbreviations of lesser known words, as these are more likely to fall foul of the rules. For example, using ‘aff’ instead of affiliate, or ‘spon’ instead of sponsored.

Ultimately, the onus is on the influencer to ensure that their advert is clear enough so that it can be recognised as an advertisement by a consumer, without the consumer needing to take further steps to realise, such as clicking ‘see more’ in a caption or viewing the influencer’s Instagram biography or description.

However, brands should also exercise caution, as non-compliance by an Influencer, even if the brand has a contract confirming the influencer’s agreement to comply with applicable laws and codes, can lead to sanctions for the brand alongside the influencer.

This highlights the importance of compliance, as brands may be reluctant to partner with influencers who have been identified as non-compliant in the past, for risk of fines, sanctions and reputational damage.

Thirdly, in relation to social media posts, an influencer’s relationship with a brand should be transparent, and stated in a way that is easy to understand, timely, unambiguous and prominent. Influencers should also be careful not to give the impression that they are a genuine customer of a brand they are promoting, if they are not. An example of this may be claiming to have personally purchased a product from a brand when it has actually been gifted.

With further regulation proposed in this area [5] including the proposal that the CMA will have direct fining powers for breaches of consumer protection law without the need to go to court, it will be increasingly important to ensure that the legal requirements are understood and that influencer posts are compliant. For expert legal advice, please contact our commercial team. [1] Department for Digital, Culture, Media and Sport (DCMS) report “Influencer culture: Lights, camera, inaction” (9 May 2022) 75% of brands surveyed had a budget for influencer marketing in 2022. [2] https://www.asa.org.uk/codes-and-rulings/non-compliant-social-media-influencers.html [3] ASA guidance ‘Influencers’ guide to making clear that ads are ads’ (6 February 2020) {4} DCMS announcement 26 March 2021 of inquiry in relation to influencer culture:https://committees.parliament.uk/committee/378/digital-culture-media-and-sport-committee/news/153483/dcms-committee-to-examine-the-power-of-influencers/ [5] DCMS Committee report “Influencer culture: Lights, camera, inaction” (9 May 2022) and draft Digital Markets, Competition and Consumer Bill as announced in the Queen’s speech 10 May 2022. >