As a leading influencer marketing agency, we feel it is our duty to educate brands on the industry. But not only on how to optimise your influencer marketing spend. We feel it is important for us to make you aware of the legalities involved also.

Britain’s Competition and Markets Authority (CMA) recently launched a probe into whether celebrities and other influencers are giving sufficiently indicating to their followers about paid promotions. The CMA is investigating whether influencers are transparent enough with their sponsored and promoted posts.

One of the co-founders of our influencer marketing agency, PMYB was invited onto Sky News to discuss the issue with George Lusty, the CMA’s Senior director for consumer protection.

The CMA recently wrote to some influencers to gather information about what they do to ensure that their followers clearly understand when posts are sponsored. They have also asked the public for their opinions via an online survey.

Once they have sufficient data, the CMA will be able to establish whether there is a genuine problem, or whether there are just a few people breaking the transparency rules. They will be able to see whether the bulk of influencers adequately identify their commercial relationships.

The CMA expects to give an update on its investigation in late 2018, once they have gathered sufficient data.


CMA demands tranparency in influencer promotion on social media


Who Are the CMA?

The CMA is the UK’s official competition and consumer authority. It is an independent non-ministerial government department. The CMA has responsibility for carrying out investigations into mergers, markets and the regulated industries, as well as enforcing competition and consumer law.

One of the CMA’s responsibilities is to enforce the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). According to these regulations, “it is a banned practice to use editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content or by images or sounds clearly identifiable to the consumer”.

The CMA can enforce the regulations through the courts, but ultimately, it will be up to the court to decide whether a particular term or practice infringes the law. The CMA has not indicated at this stage that it intends to take any influencer to court as a test case.

They work closely with the Advertising Standards Authority (ASA), who has already taken a close interest in the influencer disclosure of paid relationships.


What Concerns the CMA about Influencer Marketing?

It has been a legal requirement in the UK since 2008 that you have to clearly identify any paid editorial content promoting products. Although this law pre-dates influencer marketing, it is relevant to what happens today.

The CMA has regularly observed influencers not abiding by the rules. They have seen posts where influencers have promoted products or services, without explicitly admitting to it being a paid promotion.

George Lusty, CMA’s Senior Director for Consumer Protection”, is clear in his views. “Social media stars can have a big influence on what their followers do and buy. If people see clothes, cosmetics, a car, or a holiday being plugged by someone they admire, they might be swayed into buying it. So, it’s really important they are clearly told whether a celebrity is promoting a product because they have bought it themselves, or because they have been paid or thanked in some way by the brand.”

At the heart of the CMA’s view is this comment from their press release: “If [influencers] do not label their posts properly, fans or followers may be led to believe that an endorsement represents the star’s own view, rather than a paid-for promotion.”



What are “Bad Influencers” Doing?

According to the CMA, they have seen examples of posts which lack transparency. They look closely at posts appearing to promote or endorse products, without any indication of the payment.

Of course, some bloggers, vloggers, and other social media influencers will genuinely promote products they like, without any formal paid arrangement. These posts naturally give the influencer’s personal opinion about something they admire.

The problem area comes when you see similar posts from influencers that aren’t somebody’s personal opinion. In some cases, there are clear cases of paid influencer marketing presented as being an influencer’s honest opinion.

The problem of lack of disclosure became a topic of discussion in the USA just after the disastrous Fyre Festival in April 2017, which turned into a cacophony of errors. Big name social media influencers promoted the weekend as being a luxury weekend in the Bahamas. The reality, however, was very different, lacking even necessary food, water, and accommodation. Many patrons chose to go to the concert because their social superstars told them how great it was going to be. It was only afterwards that they discovered that the social messages were paid promotions, and in some cases, the celebrities knew nothing about the festival.

For the CMA to be interested, there must still be too many cases where UK influencers make posts promoting a good or service, but fail to mention that they have received payment. And then there is the whole grey area when a brand gives free product to an influencer who then writes glowingly about it.


Action Taken by America’s FTC

America’s equivalent to the CMA is the FTC. They took a close look at transparency in influencer marketing in 2017. They sent warnings to 21 influencers reminding them of their expectations about disclosure. The FTC made it clear that they expected anybody – celebrity sponsors, professional athletes, everyday micro-influencers – has to disclose any payments they receive for promotions.

While the letters do not appear to have resulted in any legal action, it has affected the way influencers operate. It is much more common now to see a clear indication on sponsored posts.

The FTC had guidelines in place long before influencer marketing became fashionable. They initially applied to old-style celebrity marketing, but are just as relevant to modern influencer marketing. The FTC has continually updated its guidelines to keep up-to-date with change. It took longer, however, for brands and influencers to alter their behaviour to match the guidelines and expectations.

We previously mentioned the 15 ways in which the FTC Influencer Guidelines have impacted influencer marketing. The changes are all positive. Brands and influencers have nothing to fear. As long as influencers are honest and transparent, their followers still respect their views and take heed of their posts.


Past CMA Interest in Influencer and Celebrity Marketing

The CMA has taken an interest in this type of activity in the past.

In 2016 they investigated online reviews and endorsements. As a result, four companies promised that their online advertising would more clearly be identifiable from blogger or journalistic opinion pieces.

The CMA considers the current investigation to be a follow-up to their 2016 investigation.



Other UK Organisations Who Monitor Influencer Marketing

The CMA isn’t the only organisation in Britain concerned about undisclosed cases of influencer marketing. In March this year, The Advertising Standards Authority (ASA) raised concerns about promotions lacking transparency. It has made it clear that it views promotions must be appropriately labelled.

The ASA started a project in March this year, which examines whether online browsers can recognise online ads as ads. This includes looking at how ads are labelled. They discussed influencer marketing and the effects of brands working with celebrities and influencers, “the effect of which has sometimes been a blurring of the lines between advertising and editorial content.” The ASA statement continued, “That, in turn, has led to confusion and frustration amongst consumers, as well as uncertainty amongst influencers and online publications, about when and how content should be labelled as advertising.”

One case that concerned the ASA involved Made in Chelsea star Louise Thompson.  Louise a post wearing and commenting on a Daniel Wellington watch. She didn’t disclose her connection with Daniel Wellington. In response to the ASA complaint, Daniel Wellington stated that its contract with Louise required her to use phrases such as “#sponsored” or “#ad”. Clearly, she had forgotten to do so with at least one post.

Louise has learned from her experience. Her more recent paid partnerships are clearly labelled as such when viewed in an Instagram app. Although that tag seems to disappear when you embed her posts as we have here.

A spokesperson for Incorporated Society of British Advertisers (ISBA) has said that “To maintain trust, advertising or commercial messages must be clearly labelled and brands have to take responsibility for this in commissioning and briefing the influencers they work with.”


Should You be Worried by This Investigation?

This is merely an investigation at this stage. The CMA is checking the “state of play” when it comes to the transparency of paid promotions. But they clearly have a reason for their concern. Why else would they have written to a range of influencers to “gather more information about their posts and the nature of the business agreements they have in place with brands”.

Instagram certainly made things simpler after the 2017 FTC investigation. The introduction of the Instagram Paid Partnership feature makes it very easy for influencers to disclose sponsored posts. When an influencer makes a paid or sponsored post, he or she uses a subheader that states “Paid Partnership With” that links to the sponsor’s account. This term shows up at the top of their post, below the influencer’s name. It makes things transparent to the influencer’s followers, yet it doesn’t overpower the content, making it look like an ordinary ad.

Influencer marketing is maturing as an industry. Like many industries, influencer marketing started out unregulated, lacking consumer protection. As it evolved and became a mainstream method of marketing, it was inevitable that a network of rules and regulations would be developed, to ensure that everybody plays fair.

Now, more than ever, it is essential that everybody who engages in influencer marketing obeys the rules. There’s nothing to worry about really – you just need to ensure that you encourage influencers and celebrities promoting your brand to disclose when they’re getting paid.


An Investigated Influencer

Well-known beauty and lifestyle influencer, Lydia Millen, received one of the ASA’s letters earlier this year. She wrote a blog post about her experiences with the ASA investigation. Lydia was initially horrified when she received the first email from the ASA. She had never deliberately misled her followers. At worst, she had made a video reviewing a product that somebody had sent her for free with no obligation to promote.

The main reasons for Lydia’s feeling of foreboding was a feeling of uncertainty and a lack of knowledge of how the ASA worked.

In the end, though, Lydia found that dealing with the ASA was not something she needed to fear. She found the whole encounter extremely informative.

Lydia was frustrated by a ‘lack of consistency’, however. She found that people flagged a number of her posts for not reporting sponsorship. Yet she claims that they accepted near identical posts by other influencers as being ethical. “My frustrations were only intensified when working on multiple campaigns alongside other creators who simply refuse to disclose and still do not disclose to date only to find I am being reported, and they are not, despite clear attempts of declarations being made on my part, often on multiple times for the same piece of content.”

This led to a lengthy meeting between a group of top UK influencers and representatives from the ASA. Situations, whereby an influencer is paid, are clear-cut – the influencer must disclose it. Other situations where an influencer promotes something by choice (without payment) may be considered to be less so.



So, Is This Good for Influencer Marketing?

Overall, openness and clarity are positive steps for everybody involved in influencer marketing. If a company feels that they need to mislead consumers, then it needs to look closely at its product(s).

Consumers are beginning to see through dishonest influencers, and the trust element is what keeps influencer marketing authentic. We reported recently about a study involving Label Insight. They looked into the importance of trust in consumer relationships. The study found that consumers want brands to be completely transparent in their branding and marketing. Brands need to make comprehensive and accurate information available to all. But, consumers, do not currently trust that brands will supply this information. Brands need to address these issues to keep consumers onside and meet expectations effectively.

56% of those interviewed claimed they would stay loyal to brands that continue to offer fully transparent information. 39% said they would turn to another brand if they didn’t feel assured they were being provided full transparency.

This demand for trust follows through to influencer marketing. It is not just the CMA and ASA that want honest disclosures. Consumers demand it too. 91% of the consumers surveyed say they will verify any information they doubt. It won’t take them long to spot inaccuracies presented to them by influencers. Every such statement gnaws away at an influencer’s credibility, and indeed at whether he or she continues to hold influence.


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