Influencer marketing that misleads the public is on the Canadian Competition Bureau's (the Bureau's) list of key priorities for the foreseeable future. Brands and marketing agencies that work with influencers (as well as influencers themselves) should abide by the best practices set out below to reduce the risks of getting wrapped up in a Bureau investigation for misleading advertising.
What is influencer marketing and why is the Bureau concerned about it?
"Influencers" use social media platforms such as Instagram, Twitter, or YouTube, to develop and share content with their followers or subscribers, namely: consumers. Influencer content can include product review videos of anything from power tools to cosmetics, carefully curated lifestyle and fashion photos, and compilations of desirable products, like the most comfortable face masks (#pandemic) or the best Christmas gifts for the foodie in your life.
The difficulty with this form of marketing, according to the Bureau, is the average consumer may not be able to determine whether an influencer that endorses a particular product or brand is being compensated in some way to do so. If he or she is, the Bureau's view is that such content may engage the deceptive marketing provisions of the Competition Act if the fact of the compensation or benefit is not disclosed.
Given these concerns, the Bureau undertook an industry sweep at the start of 2020 – sending letters to 100 brands and marketing agencies in a wide variety of industries reminding them to comply with applicable advertising and competition laws.1 The Bureau also released influencer marketing guidelines, updated its Deceptive Marketing Practices Digest to reflect online influencers,2 and included both digital services and online marketing as key sectors for enforcement work in its annual plan for 2020-2021.3
The Bureau's priority focus on influencer marketing likely reflects the emergence of this form of advertising as a force to be reckoned with. In fact, more than one-third of Canadian adults under 35 report having made a purchase based on an influencer's recommendation.4 This number will only increase as a record number of consumers are expected to shop online this holiday season to respect physical distancing measures.
What should be done to comply with the Bureau's guidance?
DO disclose all connections to relevant brands and products
In all posts, stories, and other online content that promotes a particular brand, product, or service, influencers should be clear about their "material connections" to the company in question. A material connection can include: receipt of payments or commissions; receipt of free, loaned, or discounted products, services, travel or tickets; or a personal or family relationship.
Disclosures must be:
- Clear: Unambiguous, obvious terms like #gifted or #ad and a mention of the brand or product in question are preferable to ambiguous terms like "partner" and "ambassador." Linking or tagging a brand or posting a discount code is likely not sufficient to ensure disclosure of a material connection is clear.
- Prominent: The disclosure should not be buried in a long caption or list of hashtags and should be reasonably noticeable to consumers.
- Visible: Viewers should be able to see the disclosure on all devices without clicking or expanding. Verbal disclosures may be acceptable in some limited instances depending on the social media platform in question, but should generally be accompanied by written or visual disclosures, which are preferable. The text of visual disclosures should be large enough to be easily read by viewers on the medium in question
- Inseparable from the content: The disclosure should travel with the post when shared. For example, an Instagram story with the hashtag #giftedbycompanyA appearing in text on the post's image would maintain the disclosure when screenshot or shared by another user. On the other hand, a disclosure appearing in the written caption of a YouTube video may become separated from the video when shared or copied to other platforms, so a disclosure appearing in the video itself would be preferable.
- Appropriate in the circumstances of the post: Prior to posting any content, the Bureau recommends that influencers review the context of the post and consider whether, in the circumstances, the connection to the company in question will be clear to new viewers/subscribers. As such, influencers should not assume, on the basis of past disclosures, that a viewer will be able to discern the connection without a clear disclosure.
DON'T create misleading content
In addition to disclosing all material connections to the company in question, influencers should base any reviews, opinions or testimonials on actual experience and should ensure that representations are:
- Honest; and
- Not false or misleading.
For example, influencers could discuss their personal opinions after having used a cosmetics product, but should not make broad or generalized assertions that cannot be backed up. They might indicate that a product successfully covered their blemishes, but should not unequivocally promise it will cover all blemishes, unless such a claim is specifically endorsed by the company and based on adequate and proper testing. Brands should regularly verify that influencers are not making performance claims on their behalf unless these criteria are met.
Health claims are especially sensitive and typically need to be based on the product's Health Canada-approved label. Influencers must stick to what has been approved and not exaggerate health benefits. The Bureau is working closely with Health Canada to crack down on unlicensed and unsubstantiated claims related to COVID-19 prevention or treatment.5
Companies should also avoid "astroturfing," which includes sponsoring fake consumer reviews or testimonials or any other commercial representations that appear to be the genuine and authentic experiences of impartial consumers, but are not. Astroturfing includes requesting that company employees post their own positive reviews to inflate the average rating of the company online.
DO communicate regularly with influencers about your policies and expectations
Companies that regularly advertise or promote their products or services through influencers should develop or maintain influencer marketing policies covering the above-noted points and include reference to them in any contracts. All influencers affiliated with the company through receipt of paid sponsorships or free or discounted products, services or trips or other compensation or benefits should receive the policy at least biannually, as should employees and any agents the company engages for advertising.
It may also be appropriate for companies to include reminders about best practices every time they send a product or perk to an influencer.
Companies should regularly review posts by influencers to ensure they comply with best practices. The influencer's conduct can be made a material condition of the marketing arrangement. Morality clauses in digital marketing agreements allow for the unilateral termination of an agreement should a contracting party engage in reprehensible behavior that may negatively impact its public image and by association, the company's brand.6 This way, should an influencer put out content that is problematic from a competition compliance standpoint, the company can take action to limit the fallout. As with any contractual relationship, providing clear guidelines as to marketing expectations can make the difference between a good and great influencer relationship.
Conclusion
The influencer advertising market is unlikely to shrink anytime soon and neither influencers nor brands will want to cut themselves off from the potential revenues associated with it, but they should do so wisely. Specifically, influencers will need to disclose all material connections and avoid creating misleading content, which may have the added bonus of increasing their legitimacy in the eyes of their followers.
Meanwhile, brands should work with influencers who are following such best practices and should develop a social media policy and circulate it to employees, influencers, advertising agencies, and other relevant parties. They should also actively review compliance with the policy and should consider incorporating morality clauses into their contractual agreements with influencers.
In other words, if you want to do it for the 'gram, don't forget the Bureau.
Footnotes
1. Honest Advertising in the Digital Age, Remarks by Josephine Palumbo, Deputy Commissioner, Deceptive Marketing Practices Directorate at the Canadian Institute 26th Annual Advertising and Marketing Law Conference, January 22, 2020; available online at: https://www.canada.ca/en/competition-bureau/news/2020/01/honest-advertising-in-the-digital-age.html (the Palumbo Remarks).
2. Influencer marketing and the Competition Act, available online at: https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04512.html; The Deceptive Marketing Practices Digest - Volume 4, available online at: https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04372.html#sec01.
3. 2020-2021 Annual Plan: Protecting competition in uncertain times, July 6, 2020, available online at: https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04533.html.
4. See the Palumbo Remarks.
5. Competition Bureau cracking down on deceptive marketing claims about COVID-19 prevention or treatment, May 6, 2020, available online at: https://www.canada.ca/en/competition-bureau/news/2020/05/competition-bureau-cracking-down-on-deceptive-marketing-claims-about-covid-19-prevention-or-treatment.html
6. Read more about morality clauses and online brand management on Norton Rose Fulbright's Brand Protection Blog at: https://www.thebrandprotectionblog.com/online-brand-management-avoiding-toxic-social-influencers/.
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