Clifford Chance

In 2016, the UK regulatory authorities published guidance requiring influencers to take measures to ensure that their online and promotional activities were transparent by disclosing any existing commercial relationships or arrangements with brand owners. Despite the guidance, some of the biggest influencers continue to fall foul of UK advertising and marketing regulations, which can have adverse consequences for both the influencer and the brand.

This article seeks to explain the relevant rules and how influencers and brand owners can better protect themselves when collaborating together.

The key issues

• Both influencers and brand owners continue to be reprimanded and sanctioned by the ASA for improper disclosure of commercial relationships, even in instances where the brand owners had no knowledge of the offending social media posts.
• It is critical that any and all existing commercial relationships between an influencer and brand owner are clearly disclosed and made apparent to consumers in the context of any social media posts or activities that seek to advertise, endorse or promote a brand owner's product and/or service.
• Social media platforms are taking action to create a more transparent social media environment. For instance, Instagram has agreed to a package of commitments to help tackle the problem of hidden advertising by its users on its platform.

Introduction

Guidance was first released in 2016 outlining how UK influencers should disclose their commercial interests with brands. However, the largest and most popular influencers continue to be investigated, reprimanded and sanctioned by the ASA for improper disclosure on social media. Recent case studies show that brand owners can also be issued with warnings in relation to content they had no prior knowledge of, which can lead to reputational damage and adverse consequences. It is therefore more important than ever for influencers and brand owners to be aware of their marketing and advertising obligations on social media.

Influencers are individuals with strong social media presences who regularly create and share content with their fans and followers. By virtue of the "influence" they exert over their large social media followings, brand owners often engage and collaborate with influencers to create sponsored content promoting their products and/or services. This could be by way of monetary payment, benefits in kind or a commission-based structure. These brand collaborations constitute a form of advertising and are therefore subject to regulations enforced by the UK's advertising and marketing authorities: the Advertising Standards Authority (ASA) and the Competition Markets Authority (CMA).

Influencers fall foul of UK advertising guidelines

Zoe Sugg, known as "Zoella", is one of the UK's most prominent influencers with over 9 million followers on Instagram. She was issued with a warning in early 2020 for improper disclosure of an affiliate link leading to ASOS' website. An affiliate link is a link through which an influencer can earn commission via any qualifying sales without having contacted a representative of that particular brand. This is distinct from sponsored content where the brand owners usually have some sort of editorial control.

Although Zoella had labelled the post with the word "affiliate", she had placed the notifying text at the very bottom of the image where it was obscured, difficult to find and unclear. The ASA stated that the placement of the notification was inappropriate as it could easily be missed by the consumer. Moreover, use of the word "affiliate" by itself was insufficiently clear in indicating to the consumer that there was a commercial relationship between Zoella and the brand owner. Instead, the word "ad" should have also been used and the notification should have featured more prominently on the image.

More recently in November 2020, Emily Canham became the first TikTok influencer to be reprimanded by the ASA for the improper disclosure of a commercial relationship with a brand owner on the social media platform. Canham shared a video with her 700k strong following that included a discount code to ghd straighteners, without disclosing that she had a commercial relationship with the brand. Canham had previously contracted with ghd to create a certain amount of social media content, however, the post in question did not actually form part of that agreement. Although Canham had not specifically been compensated for that video and ghd had no prior knowledge of it before it was published, the ASA considered this to be a breach of their disclosure/transparency requirements. The post has since been removed.

What is important from both of the above-mentioned cases is that the ASA issued warnings to both the influencers and the brand owners, despite the fact that the brand owners had no prior knowledge of the offending posts. This highlights how crucial it is for brand owners to ensure that they have studied the ASA guidelines and taken active steps to ensure that any influencers they have any commercial relationship with are aware of their disclosure requirements too. In both of the above-mentioned cases, the ASA published formal rulings on their website, which led to reputational damages for the influencers and brand owners regarding the ethics of their actions.

ASA regulations explained

Influencer marketing is within the remit of a number of different bodies and guidelines in the UK but the most important is the UK Code of Non-broadcast Advertising Direct & Promotional Marketing (the CAP Code), which is enforced by the ASA.

Under the CAP Code, influencers must disclose when they have received payment from a brand owner. The term "payment" is wide-reaching and includes monetary compensation, commission, a loaned product or service, a free product or service (whether requested or unsolicited) or any other type of incentive.

Both the ASA and the CMA advise using labels such as "ad", "advert" or similar in order to disclose such payment. Other terms such as "gifted", "sponsored" and "affiliate" are also frequently used by influencers but the ASA deems these terms riskier and recommends the use of such terms in isolation is avoided. Appropriate language disclosing any commercial relationship must be used in connection with any social media posts that seek to advertise, promote or endorse a brand owner's services and/or products. In addition, such language must also be used upfront so that consumers notice it before engaging with the content. Inserting the "ad" label at the end of a lengthy caption or hidden amongst other hashtags would likely be considered a breach of the disclosure rules.

The ASA will usually only take action in instances where an influencer has been "paid" and the brand had "editorial control" over the content. Unless an influencer is completely free to say whatever they want, whenever they want, then the brand is likely to have editorial control (e.g. pursuant to the terms of a Talent Agreement) and the content will be designated an "ad" by the ASA. If the editorial control element is missing, then the content is outside of the ASA's remit but will still be caught by the CMA who require that disclosure of the commercial relationship be clear.

A large number of influencers can be classed as relatively normal individuals who happen to have large social media followings, as opposed to celebrities with management teams and legal counsel. As such, many influencers will be unaware of their obligations under the advertising and marketing regulations and the potential reputational damage that can arise from breach of such regulations. Accordingly, it is imperative for brand owners to be aware of the relevant advertising and marketing regulations and to ensure that these guidelines are clearly conveyed to any influencer that they are currently working with or intend to work within the future. The fact that ASOS and ghd were issued warnings in relation to posts they had no prior knowledge of should serve as a stark warning to all brand owners.

Do social media platform providers fall within scope of the UK advertising regulations?

In October 2020, Instagram committed to take additional steps to tackle "hidden advertising" on its platform following an investigation by the CMA. The social platform provider first introduced its own "paid partnership" feature in 2017, which allowed relevant brand owners to be tagged in connection with any content they have sponsored. However, for a long time this feature was only available to a limited number of influencers.

As part of the new package of changes, Instagram will (i) make the paid partnership feature available to all users, (ii) prompt users to confirm if they have been incentivised to promote a product and/or service, and (iii) use its technology to identify when a user has not clearly disclosed that a post is an advertisement, promotion and/or endorsement. For instance, if an influencer uses the hashtag "ad" without also using the paid partnership feature, a warning notification will appear asking that the user tag the appropriate brand. This feature is designed to make it difficult for users to ignore the CAP Code but it does not go further than that. The problem is that brands usually need to manually approve these tags and if they have not authorised an influencer's account to do this ahead of time then the ad will remain live without the appropriate tag until the brand approves it.

It is important to note that use of the "paid partnership" feature by itself would not constitute adequate disclosure and influencers will still need to be alert and take active steps to ensure they follow the ASA's guidelines for disclosure as outlined above.

Instagram is the first social network to have agreed anything of this nature with the CMA but it may be that the other platforms do so too in the future.

Beware of products subject to more stringent regulations

There are a number of product categories regulated by the CAP Code that are subject to more stringent marketing regulations. For instance, alcohol, gambling services, medical products and supplements will be subject to additional regulatory frameworks governing their advertisement, promotion and endorsement to the public. This means brand owners may have to look further than the CAP Code for guidance as these products may be regulated by other regulatory authorities, professional bodies and applicable law.

For example, before creating content and promoting a medical device, both influencers and brand owners should consult the Medical Devices Regulations 2002, the ABPI Code and any guidance from the UK medical regulatory authority, the Medicines and Healthcare products Regulatory Agency (MHRA).

Ultimately these additional marketing requirements have the same fundamental aims that underpin the marketing rules applied to other products: consumers, especially young and vulnerable consumers, must be kept safe and any marketing claims must not be misleading.

Conclusion

Although the issued guidance does not cover every situation that may arise in the context of a influencer-brand relationship, it is clear that if any sort of "payment" exchanges hands then the relationship needs to be clearly disclosed.

The UK marketing and advertising authorities have always sought to protect consumers from misleading advertising and their guidance in relation to influencer marketing has not changed. However, recent case studies highlight how easy it is for a brand to suffer reputational damage due to an influencer's non-compliance with the disclosure rules, whether intentional or not.

The above highlights how important it is that brand owners take protective measures to ensure that the influencers they work with are compliant with the CAP Code and other applicable laws. This may include providing the influencer with appropriate training and/or ensuring that there are positive obligations on the influencer in the Talent Agreement to comply with the CAP Code (e.g. prescribed wording for the disclosure notification).