Influencers and the Law
What you should know before using influencers or celebrities for advertising
So, you or your company can and do use influencers or celebrities to promote your products and services and drive up sales, but you (and they) need to think about a few key points before you or they start posting. Read on…
As is now well established, bloggers, influencers and social media personalities can of course usually influence consumers by creating a buzz around a product that soon spreads quickly through social media and other avenues. It has now been clearly established though that you need to be sure that you are not misleading your audience in any way. If you are using influencers, celebrities or social media personalities, you need to be clear that the content is clearly shown as advertising and this covers situations where content creators (such as influencers) have been paid to post content, or where they have received a gift or in any way given an incentive to post content.
You have to be very clear that wherever an influencer has been paid or provided with an incentive to post ads, endorsements, sponsorships, competitions, prize draws, discount codes, own brand promotions or product placements or indeed reviews (including those about gifts received) they all need to be clearly labelled as an advert. It is important to note that this applies to both formal agreements, such as written contracts or other agreements, and equally to less formal situations including verbal agreements or where influencers have merely been provided with an incentive to promote or review a product.
It is vital to comply with the rules because otherwise you could undermine or devalue a valuable brand by being seen to flout the rules. If you do not follow the rules, you or your company are very likely to be in breach of consumer protection law and also breaking industry rules on advertising. The basic rule here is to use labels that are easy to understand from the audience point of view and which are transparent and unambiguous. You should therefore use labels that are clear on their face to show that content is an ad or advert, and do not try and dress that up as anything else. The key point is that the audience should be clear straightaway that the content is an ad, if indeed it is. They should not have to ponder the content or scroll or be led elsewhere for more information.
So what about influencers who either own their brand or co-own it and use social media accounts to promote their products – how does the law apply to them?
The key case here was the ASA ruling on Prettylittlething.com Limited T/A Prettylittlething.com where the ruling was made recently in July 2022.
In short, an Instagram story from influencer Molly-Mae Hague’s account showed her wearing a long brown dress. There is then text which stated “You can actually shop it now on PLT – Couldn’t not make it available for you guys too” and this was then followed by a link to the website “PRETTYLITTLETHING.COM”. The complainant who took up the case with the Advertising Standards Authority challenged whether the ad did not make clear its commercial intent.
In this case Prettylittlething.com Limited confirmed in its response that Molly-Mae Hague was indeed Creative Director at Prettylittlething and that a contractual agreement existed between those two parties. It was also said that the contractual agreement between them included a requirement to comply with applicable laws and regulations relating to marketing and advertising. Prettylittlething.com Limited understood that the disclosure had been omitted by mistake and it said that Molly-Mae Hague had been reminded of the requirements of the CAP Code to prevent any similar mistakes in the future. It was also put to the ASA by her advisors that Molly-Mae Hague had left off the disclosure by mistake and that this would be used in the future.
The thrust of the ASA finding was that the ad must not appear again in the form complained of and Prettylittlething.com Limited and Molly-Mae Hague were both told to ensure that their future ads were clearly identifiable as advertisements and that the commercial intent was clear to the audience such that identifiers were clearly and prominently displayed to anyone looking at the material. There are in fact lots of rules that might apply to the situations depending on the particular circumstances, but you certainly need to pay particular attention to the UK Code of Non-Broadcast Advertising and Direct & Promotional Marketing (the CAP Code) and the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). For your note, the CAP Code is enforced by the Advertising Standards Authority whilst consumer protection legislation is enforced by the Competition and Markets Authority.
Further considerations when entering into influencer agreements
In addition to the key points above, further considerations to help support arrangements with influencers include:
- Be clear on the services to be provided by the influencer. Avoid ambiguity and ensure the agreement is clear as to what services need to be performed by the influencer.
- Legal compliance: it is important that the influencer's posts do not fall foul of regulatory codes or relevant consumer laws to avoid both ASA and/or CMA sanction and negative publicity. The agreement should explicitly require the individual(s) to acknowledge and comply with relevant legislation, while setting out methods for achieving compliance.
- Exclusivity: promotion by an influencer of a company’s brands or products may lose its value if the influencer goes on to promote a competitor's brand or products shortly after. Exclusivity should be balanced against the beneficial impact of the influencer maintaining an active and high profile and posting frequently. The agreement could explicitly prevent the influencer from providing promotional services for any other similar products and/or to specified direct competitors. In addition, event appearances could be limited to those approved by the company. Any exclusivity provisions will have to be carefully considered to ensure they are compliant with relevant laws.
- Brand reputation: extending a degree of control to the influencer carries the risk that a company’s brands or products will be exposed in new and unexpected ways. If the influencer were to promote other products that run contrary to the ethics of the company’s brand and products, the company’s image may become damaged. Editorial control can help mitigate these risks along with the reserving the power for the company to review all posts, offer high-level guidance and/or demand that posts be removed.
- Payment terms: being clear on payment structure is advisable (e.g. payment per post, set amount per month or another structure based on success of the post). Being clear on whether expenses are included, and the approval process is also worthwhile.
- Intellectual property rights (IPR):the influencers’ posts will involve the creation and use of IPR, including the post itself, accompanying images or words and the influencers’ image and name. It is strongly recommended that the agreement clearly details who owns these rights and their wider use. This might involve allowing the company to re-use posts through its own social media accounts and on its platform. The agreement could also give explicit permission for the use of images in wider marketing campaigns. Without such permissions, the company risks being severely restricted. The agreement should also look to cover what will happen to the IPR and any posts on termination or expiry of the agreement.
- Success: consideration of service expectations and what constitutes success may be prudent.
- Term and termination: the agreement should be clear on the commencement and end date, along with whether the provision is a one-off post or a longer-term relationship. The company should look to have strong termination rights for reputational damage, failure to comply with applicable legislation and breach of terms etc.
Learn more about digital transformation.