updated on 01 June 2021
QuestionUnder the influence: why is there a DCMS inquiry into influencer marketing and what can we expect?
The Department for Digital, Culture, Media and Sport (DCMS) has launched an inquiry to examine the power of influencers on social media. This comes after an Advertising Standards Agency (ASA) investigation monitored the Instagram accounts of 122 UK-based influencers over a three-week period in September 2020. The Investigation revealed that of the 24,000 posts surveyed, around one-quarter were adverts. Of those posts, it was revealed that only 35% were clearly labelled as adverts, in clear contravention of the UK advertising code. Further, a Competition and Markets Authority (CMA) investigation revealed that more than 75% of influencers attempt to hide their advertising disclosures within posts, which again is not in line with the UK rules regarding advertising.
'Influencer’ is a broad, umbrella term often given to numerous types of online content creators that have the ability to influence the opinions or purchasing behaviours of a particular audience. Influencers span across multiple subject areas and scales (from micro influencers to celebrities) and create their content for many different purposes. Influencers can monetise their content through various means including on-platform monetisation, off-platform monetisation and influencer marketing.
Influencer marketing is the primary subject of the DCMS' investigation. This is where a brand pays the influencer to promote their brand, product or services within their content.
Under the CAP Code, influencers must disclose when they have received payment from a brand. It is important to note that payment does not necessarily mean cash and is defined broadly. Free products, discounts or any other type of incentive can be classed as payment for the purposes of the CAP Code. Further, the regulations will apply only in situations whereby the advertiser has some form of ‘editorial control’ over the content. Again, this is a wide-reaching term and can include any form of direction with regard to the post, no matter how small.
The focus of the inquiry is to:
In addition, the inquiry will take an in-depth look into hidden advertising, buried disclosures and the concern that while influencers are useful to advertisers in reaching potential target markets via social media, there is a lack of transparency concerning the promotion of products or services which could be harmful to consumers.
The investigation into the power of influencers is interesting and off the back of the recent ASA and CMA investigations suggests that the DCMS has taken the view that influencers may have gone unchecked for too long and therefore may require reigning in.
A losing battle
So why is social media so ripe with mislabelled or misleading influencer marketing posts that a government inquiry is underway?
There is a plethora of regulation aimed at ensuring transparency in influencer marketing, namely the ASA’s CAP Code and the Consumer Protection Regulations. The regulators have been releasing a steady stream of guidance (issued jointly with the CMA), updates, investigations and subsequent ASA rulings, however this has not seemed to quell the amount of posts that contravene the requirements dictated by the regulations.
One potential reason for the continued breaches could be that the current system of regulation requires the influencers to self-regulate. Under this system the ASA provides the guidance, but it is the individual's responsibility to ensure that they are compliant. Many influencers, particularly micro influencers, do not have large management teams or easy access to legal advice. As such they may be unaware of their obligations or simply lack the requisite knowledge or understanding of the regulations to ensure they have been accurately followed.
Alternatively, the lack of observance to the regulations could arguably be partly down to the perception that the ASA is somewhat ‘toothless’ when it comes to enforcement. While an influencer can be ‘named and shamed’ by the ASA and in the press, it has to be weighed up against how much will this really affect their public following amongst their target demographic. Provided an influencer still retains a large following, brands will likely not be deterred from engaging with them.
So, what can we expect?
While it is difficult to predict what the end result of this inquiry will be, there are some options that the DCMS could recommend and subsequently implement. As mentioned above there is already a significant amount of regulation in this area, however refinement of the existing regulations or the introduction of additional stricter regulations is a significant possibility.
Due to the current system of self-regulation not working as well as anticipated (even with the regular updates and guidance produced), we may see a shift of responsibility of ensuring compliance to the advertisers and platforms. We have already seen this in practice with the CMA securing an undertaking from Facebook to do more to prevent hidden advertising being posted on its Instagram platform.
In addition, imposing stricter sanctions on advertisers and brands could help to ensure that more responsibility is being taken by them with regard to any influencer they engage and subsequent content that is produced.
Another problem area the DCMS may identify and look to rectify is the gulf between the ASA's and CMA's enforcement powers, which has created an environment in which influencers can post with relatively little risk of serious sanction. With the ASA's enforcement powers being relatively limited and the CMA's potentially too extreme, the DCMS Committee will need to look into how it can work with the CMA and the ASA to enforce the current laws and codes and use them as a more effective deterrent to the influencers who contravene them. Therefore, we may see the powers of the regulators being expanded so as to bring appropriate sanctions in respect of posts that do not adhere to the regulations.
While this inquiry is likely to spark some change in this area, it’s extremely unlikely that influencer marketing as a method for brands to promote products and services will slow down. With around 500 hours of video uploaded to YouTube every minute and Instagram breaking one billion subscribers in 2020 (a number which is still steadily growing), the opportunity for brands to market products directly into the handsets of consumers is just too good not to be used.
Tom James is a trainee solicitor at RPC.