By Paul Herbert, Partner at Goodman Derrick LLP,

Influencer marketing is an increasingly common component of brands’ marketing strategies. Its inherent effectiveness is that it is seen as a more natural form of marketing and can allow brands access to previously inaccessible audiences. However, those very qualities can also create problems, particularly around transparency. Brands need to be aware of the rules and traps to avoid potential negative impact on their reputation.

Influencer marketing is now routinely used across a wide variety of sectors, from fashion, luxury goods, hotels, travel and even automotive. The most common forms include:

• Affiliate Marketing – the use of hyperlink/discount codes on the Influencer’s social media page so they are then paid on a per sale or click basis.
• Advertorials – involve Influencers working with a brand to create content for the Influencer to post on social media.
• Brand Ambassadors – an Influencer is paid to represent a particular brand.

Influencer marketing is regulated by the Competition and Markets Authority (CMA), the Advertising Standards Authority (ASA) and the Committee of Advertising Practice (CAP) – the body responsible for writing the various Advertising Codes. It is governed by the CAP Code and the Consumer Protection from Unfair Trading Regulations (CPRs). More recently the CMA and ASA have produced specific guidance: “An Influencer’s Guide to making clear that Ads are Ads”.

The main issue with Influencer marketing is that if the marketing is not clearly identifiable as such, consumers may be misled into thinking the Influencer is giving an impartial opinion as a consumer.

The CAP Code requires:

• That all “marketing communications must be obviously identifiable as such”; it recommends that labels such as “Ad” and “Advert” are used, which should be prominent and obvious; and
• That “marketing communications must not materially mislead or be likely to do so”; a misleading communication may include hiding material information or exaggerating claims.

The CMA Guidance also requires Influencers to make clear if they have received any kind of reward e.g. gifts, money, free services or the loan of a product and any relationship they may have with a brand.

For the CAP Code to apply there needs to be both payment and control by the Advertiser. Payment is not limited to money: freebies are also caught, as is being paid as a brand ambassador. Control can include anything from a brand setting out what a post should contain to having the power to request changes, eg where a brand pays an Influencer to post a picture on Instagram with their product and stipulates specific hashtags.

Where Influencers are receiving money or freebies but the brand has no control over what the Influencer produces the CPRs would still apply. Correspondingly, if you’re not paying an Influencer – be aware, there may still be an element of control which could stymie the communication.

An example of Influencer marketing gone wrong concerned an Instagram post of Louise Thompson (of Made in Chelsea). It included a picture of Louise wearing a Daniel Wellington watch and cuff (with the advertiser’s Instagram page tagged) and captioned: “Sippin’ on yummy coconuts 3x size of my skull! Wearing my @danielwellington classic petite Melrose 28mm watch and matching cuff… you can get 15% off using the code ‘LOUISE’.”

In response to complaints (correction – 1 complaint!) the ASA held this to be in breach of the CAP Code as it was not clearly identifiable as a marketing communication, and notably, failed to use the identifier #ad.  The ASA were satisfied that the relationship involved both payment and a sufficient degree of control to bring it in scope.

Tips

• Be prepared – ensure that any agreement with an Influencer clearly identifies their obligations such as the inclusion of identifiers (e.g. the hashtag #ad) and makes clear that the Influencer’s content will be an advertisement/sponsored post.
• Be alert – keep tabs on what your Influencers are posting, one wrong post could have a detrimental impact on your brand.
• Be aware – different platforms have different features and requirements e.g. on Instagram you can use hashtags and captions to make your followers aware of advertising, whereas on YouTube the video title and the description bar can be used.

Detractors decry Influencer marketing as renting out opinions for cash but it does have a place in the marketer’s toolkit as long as the influence element does not eclipse the equally important transparency element.

Paul Herbert is a Partner at Goodman Derrick LLP, the London law firm www.gdlaw.co.uk

Photo by Artem Beliaikin on Unsplash