Influencer marketing: The double-edged sword

Influencer marketing is not a new concept. For over a century well-known public figures have been paid to endorse brands and products, with the view that it will result in increased sales. In the fifties, Marilyn Monroe was used as a brand icon to sell everything from face cream to shampoo to Coca Cola and the first Royal Charter, the ultimate badge of influence, was issued in 1155 by King Henry II.

However, social media has transformed the influencer landscape. Now the need for external fame is no longer a key factor in becoming an ‘influencer’ and the barrier to entry is almost non-existent. This has resulted in the number of influencers skyrocketing and many of them use prize promotions and giveaways to gain attention and audiences. But few know how to run them properly and this has led to many negative rulings against them by the ASA for breaches of the CAP code (and potentially consumer protection law).

Whilst in the past celebrities would endorse products to supplement their main income of film, TV or music, the majority of modern-day influencers now rely almost entirely on paid posts and sponsorships to make a living. They are now more guided by the bottom line than their affinity to the promoted brand, and few have agents that have a full understanding of the laws and regulations in this area of the media space.

With the ASA and powerful Competition Markets Authority (CMA) now looking at brand and influencer partnerships with increased scrutiny, brand marketing managers need to be more mindful than ever of the negative impact on their brand when campaigns are run flippantly. 

A study by the ASA found that consumers struggle to differentiate advertising from non-advertising on social media despite the rules that paid for posts should be clearly labelled, via #ad or similar. So, it’s not surprising that regulators are increasingly active in this area with the CMA actually forcing a dozen leading influencers to sign legally binding agreements to abide by the rules or face prosecution.

Keeping on the right side of regulators

This may lead you to believe the industry wide misconception that the burden of compliance falls solely on the influencer, and the promoting brands are off the hook. This is wrong. It is true that whilst the formal, legal responsibility lies with the influencer, brands will certainly get dragged into the negative publicity and suffer reputational damage when a regulatory light is shone on unlabelled or incorrectly labelled paid for content. There is nothing that the Daily Mail likes more than to rubbish a brand for a marketing mishap. Marketing managers would therefore be wise to review the ASA’s regulatory framework. This provides a clear set of guidance for brands and influencers on how to stay compliant with the CAP Code.

Choosing the right influencer

With influencer marketing now worth £896m it is a significant area of marketing and although technically anyone can be an influencer, brands need to take time and conduct due diligence to ensure their choice of influencer aligns with the brand and that nothing the influencer has said or done will backfire and cause both financial and reputational issues further down the line.

Prize promotions – the winning method

Whilst asking an influencer to run a prize promotion on your behalf can be an extremely effective method of mass engagement, brands need to pay attention to the legals to ensure the promotion is valid and compliant. Does the post feature the key terms, can you extract all of the data, will the winner selection be fair and random and be overseen independently and fairly – not by the influencer. If it’s a competition, have you considered the time and cost of judging what could be many thousands of entries. All must comply with the regulations, primarily the CAP Code rules overseen by the ASA.

In summary, Marketing Managers need to ensure that they are keeping up with the evolution of influencer marketing, which is built on trust – the trust that the consumer has for the words of the influencer. If this trust is lost, the industry risks decline. By maintaining transparent and open relationships, influencer marketing can be transformative for brands, and its impact has the potential to be groundbreaking.

Top Five Tips for Successful Influencer Marketing

• Choose wisely – conduct thorough due diligence
• Sign a contract – covering what the influencer will do for you, and what they will not (eg rubbish your brand, post wild statements etc)
• Approve – check every post before it is released
• Label Posts – use #ad or similar
• Running a prize promotion? – make sure it is CAP compliant terms, closing date, independent winner selection

PromoVeritas is a leading promotional compliance agency helping brands and businesses run successful promotions that comply with all legal requirements building trust with their customers and protecting their reputation.

Written by Jeremy Stern, former European Promotions Director of Coca-Cola, and CEO and founder of promotional compliance agency PromoVeritas

Published on 16 May 2024