Influencer Marketing - New Possibilities Come with New Challenges
30 January 2020
Influencer marketing is a dynamic and creative alternative to targeted advertising. However, companies that use influencer marketing as part of their marketing strategies should keep in mind that they are primarily responsible for ensuring that the influencers they collaborate with post in accordance with the law. While the assessment of marketing is always conducted on a case-by-case basis and there are no universally applicable rules for how influencer marketing should be labelled, recent self-regulatory praxis and case law have shown that it is better to be safe than sorry.
The Booming Industry of Influencer Marketing
Companies have always relied on advertising and endorsements to boost sales. Traditionally, celebrities have played a major role in promoting products. However, the growth of the social media platforms and the rise of influencers outside of the traditional celebrity sphere have revolutionised the concepts of marketing and consumer trust.
Influencers provide a unique marketing opportunity, as they connect with their audiences on a personal level. Long-time followers value an influencer’s opinion, meaning that an endorsement from an influencer may carry more weight with a consumer in contrast to more conventional endorsement marketing models, hence making the consumer more likely to purchase the promoted product.
In fact, a recent study has shown that for children and youngsters between 6 and 16 years old, influencers are the second-biggest driver to buy products (25%), only outdone by their friends (28%). This means that for the younger generations, influencers have become more effective than traditional celebrities (6%) and their own families (21%) at driving purchase decisions. Consequently, for today’s youth, entertainment and shopping are so intertwined that influencer marketing may be a necessity for companies aiming to reach this group of consumers.
Requirements for Identifying Commercial Content
As influencer marketing is in many ways more dynamic than traditional forms of advertising, it has proven more challenging to regulate. A key point of issue is the more discreet nature of influencer-created commercial content, which can lead to difficulties in discerning such content from non-commercial content. The fundamental rule in many jurisdictions worldwide, including Sweden and Finland, is that the recipient of marketing must be able to, generally and even at a quick glance, easily identify the commercial nature of such content. It must also be clear who is responsible for the advertisement, i.e. to whose benefit the product is being advertised. For instance, if an advertiser collaborates with an influencer, the influencer should label the content they publish or otherwise disclose the collaboration so that it is immediately apparent that they have created the content as part of a collaboration with a specific advertiser.
The difficulty is that influencers often create commercial content using the same look and tone as they would in regular personal posts, which, while being part of the charm of influencer marketing in the first place, also raises legal concerns. In this year only, the Swedish Marketing Ombudsman and the Finnish Council of Ethics in Advertising have found dozens of instances of influencer marketing on social media to be noncompliant with the requirement that commercial content must be easily identifiable as such regardless of the form and the medium used.
There are no universally applicable rules for the format influencers have to use when identifying posts as commercial in nature. However, the Swedish and Finnish consumer authorities, among others, have published guidelines on how influencer marketing should be labelled in different social media channels. Despite the close ties between the two jurisdictions, however, there are differences between the authorities’ guidelines.
The Swedish guidelines instruct influencers to label a blog post with the text “advertisement”’ (in Swedish: “annons” or “reklam”) at the beginning of a post and at the end a post. In addition, the commercial nature of the post should be disclosed in the heading and at the beginning of the actual content. Furthermore, the Swedish guidelines advise influencers to use a different font and colour for the advertisement label and to use the hashtags #advertisement (in Swedish: “#annons” or “#reklam”) and #companyname. However, in view of the recent case law, it is unclear if solely the hashtag #collaboration (in Swedish: “#samarbete”) or #incollaborationwith is sufficient as it does not disclose that there is an advertisement or paid collaboration behind the post in question.
The Finnish guidelines also recommend the use of the term “advertisement” (in Finnish: “mainos”), but they state that it is also acceptable to use the term “commercial partnership” (in Finnish: “kaupallinen yhteistyö”), which is perhaps more popular in practice. In the context of blog posts, this label should be placed at the beginning of the post and optionally also at the beginning of the title (e.g. “ADVERTISEMENT: [title]”), and it should be in the same language as the content of the post. In addition, the advertiser’s name or trademark should be displayed in the same context. The use of a different font and colour for this information is also advised. Separate detailed recommendations are provided for Instagram, Instagram Stories, YouTube, and podcasts.
Case Law Starting to Emerge
Although there has been a recent deluge of selfregulatory praxis from the Swedish Marketing Ombudsman and the Finnish Council of Ethics in Advertising, case law in the field of influencer marketing is still mostly lacking in these jurisdictions. The only court ruling to date was handed down by the Swedish Patent and Market Court in January 2018, and it was upheld, for the most part, on appeal in December 2019. The ruling concerned the identifiability of a popular Swedish influencer’s commercial blog and Instagram posts. In this case, the Swedish Consumer Ombudsman filed a claim against the influencer’s company and the media agency that arranged the collaboration, but for some unknown reason not against the company whose service the influencer had advertised. In their rulings, the courts stressed that for influencer marketing to be fair and in compliance with the Swedish Marketing Act, a consumer must be able to identify a commercial post as marketing, generally even at a cursory glance, so that they can then choose whether they want to read or view the entire post. In the first of the two blog posts at issue in the case, the influencer had added the indication “in collaboration with” (Swedish: “i samarbete med”) at the end of the post in a small font that did not differ from the font used for the rest of the post and without indicating who the collaboration was with. In the second blog post, the influencer had placed a pink banner with the text “sponsored post” (in English) in a small font below the title and subtitle of the post, as well as the text “in collaboration with” (in Swedish) and the name of the advertiser at the very end of the post. In the Instagram post, the influencer had used the hashtag “#collaboration” (in Swedish: “#samarbete”) at the end of the text field.
The Patent and Market Court of Appeal found that all three posts were contrary to the requirements concerning the identifiability of marketing, whereas the lower instance considered the second blog post compliant with the requirements. According to the Court of Appeal, due to the formulation and placement of the abovementioned labels, it was not possible for the average consumer to tell, at a cursory glance, whether any of the three posts were commercial in nature. As this was likely to impact the average consumer’s ability to make a well-informed commercial decision, this was found sufficient grounds to prohibit all three posts.
In addition, the Court of Appeal agreed with the lower instance on the fact that the advertiser had not been identified in a sufficiently clear way in any of the posts. However, as this in itself was unlikely to impact the average consumer’s ability to make a well-informed commercial decision, the Court of Appeal found, contrary to the lower instance, that this did not constituteadditional grounds for an injunction regarding the posts.
As regards liability, the Court of Appeal upheld the finding that, of the defendants, only the influencer’s company could be held liable for the posts. According to the Court of Appeal, even if the media agency had arranged the collaboration and had an active role in the formulation of the posts (for example by suggesting copy), the influencer’s company had been able to make the final decisions on the formulation and publication of the posts. There was insufficient evidence to support the finding that the media agency would have been in such a position to “substantially contribute to the marketing practice” and
thus, they could not be held liable. The Court of Appeal prohibited the influencer’s company, under penalty of a fine of SEK 100,000 (approximately EUR 10,000), from publishing similar, insufficiently labelled commercial posts in the future. The ruling is final.
Influencer marketing is all about authenticity and connecting with your audience on a personal level. Influencers cultivate followers by being relatable, while presenting an image that others look up to at the same time. Followers want to do the things that influencers do and have the things that influencers have. This dynamic creates an excellent marketing opportunity. However, influencer marketing has recently been subject to a greater legal scrutiny. Thus, in order to structure a successful business plan for influencer marketing, it is critical to understand consumer legislation and advertising and marketing regulation in the jurisdictions in which you aim to carry out such marketing.
- Keep in mind that in the context of influencer marketing, the advertiser always has the primary responsibility to ensure that the audience is able to, generally even at a quick glance, easily identify the commercial nature of the content and know to whose benefit the marketing is being carried out. However, at least a professional influencer may also be held liable for the fulfilment of these requirements.
- To help fulfil their obligations, advertisers should obligate the influencers with whom they collaborate to label their posts correctly and further instruct them on how to do so. It is always advisable to enter into a written agreement concerning any commercial partnership and to include the relevant obligations and instructions in such an agreement.
- In general, in Sweden and Finland, commercial posts should be marked with “advertisement” at least at the beginning of the post, in the same language as the content of the post (in Swedish: ”reklam” or “annons”, in Finnish: “mainos” or “kaupallinen yhteistyö”). Where technically possible, the font and colour of this label should be such that the audience can clearly distinguish it from the content of the post, and the advertiser’s name or trademark should always be displayed in the same context.
- Note that requirements other than those mentioned in the previous point may also apply depending, for instance, on the jurisdiction and media, so always check the relevant local guidelines, case law, and market practice. The Nordic consumer authorities have issued a joint position (2016) on covert marketing in digital media. In addition, the Swedish and Finnish authorities have each published their own guidelines. The Swedish guidelines (2015) are only available in Swedish, whereas the Finnish guidelines (2019) are also available in English.
- Other issues to consider in the context of influencer advertising include the question of whether the advertised product and the content of the advertising are appropriate for the audience that the influencer generally reaches (e.g., cosmetic surgery services should not be advertised to those aged under 18, and this age group should not be directly encouraged to buy anything), how to avoid the relationship between the advertiser and the influencer being seen as an employment relationship (if that is not the parties’ intention), and how to ensure that all applicable taxes are also paid when the influencer receives payment in kind (e.g. free goods or services) instead of a monetary compensation.
More articles from the first edition of Hannes Snellman Fashion Law Review are available here.