Influencer Marketing: Understanding Disclosure Best Practices

From the Instagram model advertising gifted products to the geek blogger paid to review video games, influencer advertising is now everywhere. Digital marketing is rapidly evolving (the world even saw its first CGI influencer earlier this year), and regulators are adapting accordingly. The Competition Bureau (the “Bureau”) and Ad Standards, the advertising industry’s self-regulatory body, have both recently published enlightening guidance on influencer marketing best practices. The key take-away: conspicuous disclosure. 

Legal Framework Overview  

According to the Bureau’s June 2018 Deceptive Marketing Digest (the “Digest”), influencers are individuals using social media (blogs and social networks) with a certain level of popularity that gives them the ability to influence the choices of their followers. While micro-influencers may have niche audiences of around 1,000 subscribers, top-tier influencers will usually reach more than 100,000 followers. Advertisers often compensate influencers to create or share content about their brand, for example by giving them free products, gifts, money or exposure. As prescribed by the Bureau in its Digest, such compensation should be disclosed.

In Canada, false or misleading representations and deceptive marketing practices are regulated by the Bureau through the Competition Act (the “Act”), which provides for both civil and criminal enforcement regimes. Although the provisions of the Act do not expressly refer to digital marketing, the Bureau considers that the Act applies to all forms of marketing, including influencer advertising. In fact, as explained in the Bureau’s Digest, advertisers, marketing agencies, and individual influencers share the responsibility for the representations made on social media. Consequently, the Bureau considers that material connections between advertisers and influencers should be disclosed, given the degree to which they may impact the way viewers assess the advertised products.

In addition to the Act, the Canadian Code of Advertising Standards (the “Code”) provides a voluntary self-regulation process for the advertising industry, pursuant to which competitors, interest groups, and consumers can complain about an advertiser’s conduct. The Code, which is administered by Ad Standards, requires advertisements to be clear and accurate and prohibits deceptive testimonials and endorsements. According to Ad Standard’s Interpretation Guideline on testimonials, endorsements and reviews, this includes the obligation for advertisers and influencers to disclose all their material connections. If an advertiser refuses to participate in a complaint procedure or neglects to comply with a decision, Ad Standards will advise the media exhibiting the ad. It may also make a public declaration and notify the Bureau and other regulatory authorities.

Disclosure Best Practices

On September 13, 2018, Ad Standards updated its Disclosure Guidelines for influencer marketing. Based on a review of legal and self-regulatory guidance around the world (including the United States’ Federal Trade Commission’s Endorsement Guides), the Disclosure Guidelines explain how influencers should properly disclose their material connection with an advertiser. No matter the platform or the type of content posted, disclosure should always be clear, conspicuous and broadly understood. Here are Ad Standards’ main recommendations:

  • In a post, widely accepted disclosure hashtags to disclose a material connection should be used, such as #ad or #sponsored, but influencers should avoid ambiguous acronyms or mentions like #brand or #collab.
  • Disclosure hashtags should appear at the beginning of a post and should not be buried in a long list of other hashtags.
  • A disclosure should catch the viewer’s attention and be located where it will not be missed.
  • A disclosure should be as close as possible to every advertised message, and should not be available only via a link to another page or section of a website.
  • For videos, the disclosure should be mentioned at the beginning, in text and in audio, and should also appear in the video’s description.
  • Disclosure should be in the language of the endorsement and should specifically identify which products or brands are being promoted.

It is important to note that professional athletes and testimonials that are made with no material connection are not subject to these disclosure requirements.

While these best practices mainly focus on the Canadian legal framework, the Disclosure Guidelines can also be useful to advertisers targeting consumers throughout different countries. The web being a global platform, a post from a popular influencer may have an international reach. For example, Ad Standards ruled in 2017 that a sponsored Twitter post targeting UK consumers was subject to the Canadian disclosure requirement since it was accessible to Canadians. In addition to Canada, many jurisdictions now require influencers to disclose their connections with advertisers. For instance, the Advertising Standards Bureau of Australia recently reviewed an Instagram post promoting a vehicle brand, and noted that the mention “#ad” is a sufficient disclosure of a material connection between an influencer and an advertiser. Likewise, this September, the United States’ Federal Trade Commission sanctioned a company who had failed to disclose financial ties with people who posted positive reviews on an objective information website.

Finally, both the Bureau and Ad Standards recommend that advertisers monitor and train their influencers. A good compliance program should specify what endorsers can and cannot say, especially regarding performance claims. Influencers should be informed of their responsibility to disclose their material connections conspicuously. In addition, advertisers should regularly look at what has been posted by their network of influencers, and request periodic reports.

Please see our webpage for more information on McCarthy Tétrault’s Retail and Consumer Markets Group.

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