With great power comes great responsibility: Developments in social media influencer advertising

The influencer industry continues to grow and thrive around the world and in Ireland. A number of celebrity influencers boast over 500 hundred million followers, and an ever-increasing number have followings exceeding 100,000. Surveys indicate that young consumers are averse to marketing and advertising tactics like pop-ups and retargeting. In this climate, statistics[1] indicating that over 90% of brands plan to invest more in video content and more than 60% of marketers reporting that influencer marketing performs better than traditional marketing are unsurprising.

In 2018, Sean O’Reilly, RDJ Corporate Partner, spoke with Marie Boran at the Irish Times about the rise of Irish social media influencers and the issues it raises for advertisers. In the below paragraphs we report on the recent developments in social media influencer advertising.

In Ireland, influencer advertising and marketing is governed by the Consumer Protection Act 2007, the Consumer Rights Act 2022, and the Advertising and Standards Authority for Ireland (“ASAI”) Code of Standards for Advertising and Marketing Communications (the “Code”).

Who is an influencer?

The Guidance on Influencer Advertising and Marketing (the “Guidance”) developed jointly by the ASAI and the Competition and Consumer Protection Commission (“CCPC”) clarifies that an influencer is someone (human, virtual or animal persona) who promotes or recommends products or services on social media (being any platform where it is possible to generate and share content from one’s own profile for the purposes of promotion and recommendation) for a benefit (both monetary and non-monetary) and can include celebrities and other media personalities, content creators, bloggers and vloggers. Benefits might include free or discounted products and services, sponsored trips, event or experiences invitations, future business contracts, or receiving a percentage of the price of a product or service purchased through an affiliate link.

The Consumer Protection Act 2007

The Consumer Protection Act 2007 governs, among others, unfair and misleading commercial practices. A commercial practice is unfair if it would be likely to impair the average consumer’s ability to make an informed choice in relation to the product concerned and cause the average consumer to make a transactional decision they would not otherwise make. The Consumer Protection Act 2007 places a responsibility on influencers to label (as discussed in detail below) any posts which contain commercial content and to disclose gifted products or services. In this context, free products and services, temporary free use of a product, a paid trip or hotel stay are all considered gifts.

Use of the recommended advertisement labels does not automatically result in compliance with consumer protection law. If the post is misleading or false, or fails to comply with specific regulation (for example in relation to alcohol beverages or gambling) the CCPC has the authority to take enforcement action in the form of compliance notices, fixed payment notices, undertakings, prohibition orders and prosecution.

The Consumer Rights Act 2022

The Consumer Rights Act 2022 consolidated and updated consumer protection law in Ireland. It introduced new transparency obligations in the context of advertising. As a result, public content by marketers and influencers representing them is subject to scrutiny from the CCPC for compliance with conformity requirements.

ASAI Code of Standards for Advertising and Marketing Communications

The ASAI is an independent self-regulatory body financed by the advertising industry, which promotes and enforces industry standards for marketing communications in the public interest. The ASAI administers the Code (primarily in the interest of consumers) and investigates complaints of alleged breaches of the Code, focusing on the content of marketing communications in media and the design and execution of sales promotions. The Code summarises the essence of good advertising as “legal, decent, honest and truthful”. The Code applies to “marketing communications” defined as “advertising, as well as other techniques such as promotions, sponsorships and direct marketing”.

In 2021, the Executive of the ASAI published a Guidance Note on Recognisability of Influencer Marketing Communications (the “Guidance Note”) emphasising that where celebrities are sponsored by brands or paid directly to promote a brand’s products, it must be clear that their posts are marketing communications. The Guidance Note provided some useful clarifications in relation to product reviews distinguishing between cases where free products are provided by the marketer to the influencer with the requirement of a positive review and without a requirement for a positive review. The Guidance Note also touched on the expectation regarding posts in expiring media, multiple posts in campaigns and using multiple platforms in paid campaigns, noting that in each of these cases all individual posts and stories should be labelled accordingly. The Guidance Note also offered recommendations on the use of affiliate links.

Guidance on Influencer Advertising and Marketing

The Guidance provides that if an influencer benefits from mentioning a brand on their social media channels, the resulting content is commercial content, and this must be made obvious to viewers. In this context, “commercial content” is interpreted broadly to include, among others, advertisements, reviews, discount codes, affiliate links, dedicated pages on retailer websites, promotional and self-promotional content, sponsored competitions, and brand reports.

Where an influencer posts commercial content, it must be labelled as such. The Guidance requires influencers to use clear primary advertisement labels and/or a platform provided label (if available). In addition to the primary labels, the Guidance gives examples of secondary advertisement labels to be used only in conjunction with a primary advertisement label. The use of secondary advertisement labels must be limited so as not to confuse the audience of the content.

It is further recommended that the brand handle is also included in the post, where possible.

Labels must be clearly positioned, bearing in mind how content will be displayed across different platforms and devices with the desired result being the instant recognition of an advertisement by the consumer.

In addition to correctly labelling commercial content on social media channels, influencers should be cognisant of specific obligations such as those relating to advertising to children, alcoholic beverages advertisements, and health and beauty advertisements.

Failure by influencers to comply with the Guidelines and the Code may result in a consumer complaint to the ASAI. The ASAI regularly publishes the outcomes of recent complaints. Advertising agencies, marketers and media outlets, as members of the ASAI, face stricter sanctions as part of their membership.

Implications for Influencers, Marketers and Platforms

To avoid the reputational damage associated with being involved in consumer complaints and subsequent enforcement action, influencers and businesses which rely on influencers for advertising and marketing, and those which operate consumer-facing e-commerce platforms should review their current practices for compliance with consumer legislation. Creative teams should seek legal advice in relation to novel product presentation techniques, marketing strategies and design choices. Agreements between influencers or agencies representing influencers and brand owners must be scrutinised to ensure that they include obligations regarding compliance with the Code and Guidelines.

[1] The State of Influencer Marketing Report, prepared by Aspire.