INFLUENCERS ON SOCIAL MEDIA: TO TRUST OR NOT TO TRUST? IS IT (SUBLIMINAL) ADVERTISING?

In the current age of growth for social media and declining TV viewership numbers, companies are developing marketing practices based on collaboration with persons that exert influence over ‘followers’ through social media such as Facebook, YouTube, Twitter, Instagram and similar platforms. Typically, social media influencers are cinema or music stars but the title of influencer includes “common people”, lifestyle and fashion bloggers, and “famous for being famous” personalities, such as Gianluca Vacchi or Chiara Ferragni. The only required preconditions for being an influencer is that a person can raise trust in his/her online audience, increasing engagement and ultimately driving consumer actions, by posting texts, reviews, videos or pictures, having the purpose of praising fashion clothes, recognizable cars or restaurants.

The issue of the “hidden” endorsement: any legal response?

Although social media influencers can get paid significant sums of money for sponsor products and positive reviews, sometimes the endorsement deals between brands and influencers are not disclosed to the audience.

The questions are two: does such an “endorsement” amount to advertising? If yes, is this advertising “hidden”, when it is not immediately recognizable as such?

This lack of disclosure may lead also to a misleading and negative impact on followers (and potential consumers), since they may believe that the influencers are providing their honest, unbiased opinion about a product when indeed their endorsement has been paid by the businesses.

Disclosing the connection is thus very important to the fairness and truth about the advertisement.

Clearly, as the social media crosses international boundaries, there is no a unitary legal response to these questions, since not a single jurisdiction kicks in. For specific cases in UK and US see here[1]

EU has not implemented a specific regulation in this context. Yet, it must be considered that the general principles of the Directive 2005/29/EC – concerning unfair business-to-consumer commercial practices – apply to any advertising message, regardless that it has been transmitted on typical mass media or the social media.

With regard to misleading advertising, article 14 of the Directive 2005/29/EC, that amended Directive 84/450/EEC, expressly provides as follows: “Member States shall ensure that adequate and effective means exist to combat misleading advertising and expressly qualifies, as a commercial practices which is in all circumstances considered unfair, “using 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 by the consumer (advertorial)” (see Annex I point 11).

In Italy the rules provided for by the Directive 2005/29 have been implemented by the Italian Consumers Code (Legislative Decree No. 206 of September 6, 2005).

In addition, Legislative Decree no. 145/2007 applicable to the B2B advertising provides for a general principle of law, applicable to any kind of advertising regardless of the media used for the dissemination, i.e. “the advertising must be clearly recognizable as such” (see. Art. 1, para. 2., and art. 5, para. 1).

However, based on the information publicly available nor the rules of the Consumers Code nor those under Legislative Decree no. 145/2007 have been applied to influencers and to their “hidden endorsements”.

On the other hand, it should be pointed out that the Italian Advertising Self-Regulatory Authority (“Istituto dell’Autodisciplina Pubblicitaria”- “IAP”), a private body that monitors advertising to ensure compliance with the rules set forth in the Self-Regulatory Code for Commercial Communications (“CAP”), has focused on the influencers’ endorsement and it issued in June 2016 a Digital Chart” (http://www.iap.it/digital-chart/), a paragraph of which expressly refers to “Endorsement”.

Hidden endorsement included in influencers’ posts may be subject to article 7 CAP, that provides that: “Marketing communication must be clearly distinguishable as such. In the media and in the marketing communication when news and other editorial matter are presented to the public, it should be ensured that the marketing communication is readily distinguishable as such”.

Remarkably, the “Digital Chart” provides for a list of recommendations – for influencers and sponsors/advertisers – applicable to Endorsement, which is not considered as a “commercial communication” when it amounts to genuine and personal opinions/comments expressed in pursuance of the constitutional principle of “freedom of expression”.

Therefore, according to the Digital Chart, a disclosure is needed whenever an endorser is given an incentive (financial or otherwise) and opinion of the influencer is not strictly personal, and where knowledge of that incentive would affect the online audiences’ credibility that give to the influencers’ statements. The suggested practice to disclose the relationship between the company and influencer is to use the #hashtags with the name of the brand in relation to any sponsored photo or post.

Conclusion

Followers’ (rectius consumers’) trust represents a vital commodity that the influencers can easily exploit to advocate a brand because of positive reviews or promotional posts.

The evolution of marketing tools and media, used for the dissemination and divulgement of advertising, would need a specific also reformation of the laws applicable to on-line marketing campaigns, including those which involve the “endorsement” of an influencer.

It would be hopeful that – as IAP did by issuing the Digital Chart and as social media did by implementing specific obligation for influencers to tag their branded content[2] – the EU or national legislator or the competent Authorities take a peculiar position on the influencer activities or better on the marketing campaigns based on the endorsements released by the influencer,to assess whether they can be compared to advertising, and thus, subject to the general rules applicable to the advertising.

[1] In 2015 the UK Advertising Standards Authority stated that Mondelez UK breached CAP Code (the UK Code of Non-broadcast Advertising) rules 2.1 and 2.4 (Recognition of marketing communications) because it paid five popular U.K. YouTubers to do an “Oreo Lick Race” on their YouTube channels without ensure that the videos made their commercial intent clear to the viewers engaged with the content (see https://www.theguardian.com/media/2014/nov/26/youtube-ad-oreo-banned-advertising-lick-race).
On July 2016, Warner Bros reached a settlement with the US Federal Trade Commission for a case of deceptive advertising related to influencers. In fact, for promoting the video game “Middle Earth: Shadow of Mordor”, Warner Brothers paid YouTube game enthusiasts to post positive gameplay videos, failing to disclose that it was a paid endorsement. As a part of the settlement agreement, Warner Brothers is now committed to clearly disclose any material connection with any influencer promoting its products on social media.
[2] See (http://www.facebook.com/business/help/1569634613356213