Influencer Marketing: New CAP Guidance

Apr 27, 2023

With 4.26 billion yearly users globally, it is undeniable that social media plays a significant and important role in both our personal and professional lives.  

Gone are the days where consumers need to physically shop and businesses are instead investing in digital marketing strategies as an advantageous approach to both B2B and B2C transactions. Small and bigger companies alike are pushing for a greater presence through online social media to boost sales and subsequent profitability. Particularly on apps such as Instagram and TikTok, digital marketing has risen substantially as companies often promote their businesses on these platforms – particularly through the use of paid/branded sponsorships and influencer marketing.

Research shows that companies have reported obtaining a ‘higher calibre and quality of consumer’ through the use of influencer marketing, but as with any commercial relationship there are risks that need to be considered. Celebrities and influencers can now boost brand awareness, reputation and sales through paid promotions through posts or going ‘live’. However, the laws around influencer marketing is heavily regulated and there has been an increasing amount of activity within this area. Businesses considering investing in influencer marketing should be aware that both themselves and the influencer can be held accountable should there be a breach of the regulations.

The main components to influencer marketing include the Consumer Protection from Unfair Trading Regulations 2008 (“CPRs”),  Competitions and Markets Authority (“CMA”), the Advertising Standards Authority (“ASA”) and the Advertising Codes (“CAP Code”). Their underlying principle is to ensure that consumers are granted with both protection and transparency when purchasing goods through influencer marketing to afford them the same levels of consumer protection to more traditional methods of advertising.

On the 23rd March 2023, CAP published further updates to their ‘Influencer’s Guide’ which sets out guidance for influencers and businesses working with them. Broadly, these updates include:

  • A widened definition of “influencer” to now include “any human, animal or virtually produced persona that is active on any online social media platform, such as Facebook, Instagram, Snapchat, TikTok, Twitch, YouTube and others”.
  • New clarity about who is in scope when an influencer is incentivised to create content, now explicitly including anyone who is “directly connected to a brand e.g., an owner, employee, shareholder, director or have any other commercial or personal interest (i.e. family and friends)”.
  • New clarity that if an influencer is promoting their own products or services on their own personal channels, they still needing to ensure the audience can recognise up front that it is an ad.
  • New clarity on what hashtag disclosures are not acceptable, with examples, such as #PRstay or #myedit or #mycollection.
  • Clearer visuals on what a properly disclosed post should look like (particularly pertaining to TikTok which is popular with young influencers presently).
  • More clarity on affiliate marketing, specifically identifying certain affiliate marketing, such as ‘Amazon Associates’, or through affiliate networks like ‘Awin’, ‘Skimlinks’ and ‘LTK’.

Further, CAP has also provided influencers with a new ‘self-help tool’; a flow diagram to help influencers quickly distinguish whether a post needs to make clear that it is in fact an ad.

In the past, CAP has published a quote “naughty list” which condemns influencers who have been non-compliant in following the correct protocols when advertising on their social media platforms. The ASA have noted that advertisers who persistently break the rules can be referred to Trading Standards for enforcement which can include unlimited fines, imprisonment for up to two years, court orders etc.

It is therefore prudent for companies to ensure that the correct due diligence has been conducted before using an influencer to promote their goods and/or services to avoid landing in hot water. This is to ensure that the influencer themselves follows and has sufficient understanding on how to use the guidance provided by CAP and in turn, ensures that any marketing materials have has been created in a way that is clear to a consumer that it is an advertisement. There are many ways in which added protections can be implemented for businesses, including influencer agreements with specific carved out warranties for failure to comply to the CAP rules etc.

If you are interested in undertaking influencer marketing and want to discuss ways in which you can protect your business, please contact with the Head of Regulatory, Mark Chapman, at mark.chapman@herrington-carmichael.com.

This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

Mark Chapman

Mark Chapman

Partner, Corporate and Commercial Law

Olivia Larkin

Olivia Larkin

Solicitor, Corporate & Commercial

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