Advent of digital media has given rise to significant issues around volume of advertisements. For consumers, to distinguish between advertisements promoting influence on public opinion or the ones making commercial benefits is difficult. For E.g., one cannot consciously recall the implication while undertaking purchases because a popular face was endorsing it, making claims about the product which influenced your purchase decision.
Research reveals, around 65% of audiences form brand opinions bases on strong influences by a YouTube influencer they follow. The modern-day influencer is someone having audience access and capable of swaying the purchaser’s decision through knowledge, relationship, and robust word of mouth marketing strategy, with the audience. This includes virtual influencers, fictional characters with all pragmatic characteristics that of humans.
To regulate influencers and their practices, there are the new Advertising Standards Council of India (ASCI) influencers guidelines 2021.
Daniel Wellington, a Swedish watch brand company entered the Indian market solely through the social media influencers route. It works by sending its products to the popular influencers who, in turn promote and help in the profits and sales to the company.[i]
Will regulating influencers make any sense?
Well, yes, it does. Influencers worldwide are regulated on the content they promote/ advertise/ endorse, the brand they associate themselves with either for free or for some consideration. India does not have a legal document regulating social media influencers, until now.
The new guidelines talk about measures to police the modus-operandi of influencers and makes indirect approaches for the brands which engage these popular faces. For instance:
- In case of advertisements, the social media posts must have a disclosure label identifying the post as an advertisement.
- In case of any material connection (monetary compensation, discounted or free products etc.) between the advertiser and the influencer, a disclosure will be required.
- Disclosures to be upfront and at prominent spaces of the social media handles to not be missed.
- For picture or video advertisement without any text, the disclosure label needs to be superimposed over the picture or video, ensuring its visibility.
- For videos lasting 15 seconds or less, the label must stay for at least 3 seconds, for longer than 15 seconds but less than 2 minutes, the disclosure label to stay for 1/3rd duration of the video, and if longer than 2 minutes, the label to stay for the entire duration of the clip promoting brands or features, benefits, etc.
- In the case of live streaming, label to be disclosed at the beginning and the end. If it gets converted into a post, disclosure is a must in the text/ caption.
- The disclosure should be in English or in the language of advertisement and the label that could be used include advertisement, sponsored, collaboration, partnership, free gift, etc.
- Disclosure of material connection lies upon both the advertiser and the influencer. Further, abiding with the ASCI code shall be the advertisers’ responsibility and influencer to make appropriate disclosures.
- In case of dispute by the influencer claiming the content not to be an advertisement due to no material connection, a declaration by the influencer stating no material connection duly signed by the senior member of the advertiser’s organisation is a must. In case of non-traceability of the advertisers, proof of purchase by the influencer shall be considered as evidence to refute the connection.[ii]
Would it also include celebrities?
Influencers include celebrities in addition to popular social media faces. Although celebrities are regulated by ASCI guidelines for celebrities, 2017 which includes people from entertainment, sports fields, or other well-known personalities who are compensated for their appearance. The influencers’ guidelines resonate with the guidelines for celebrities. The exception being Drugs & Magic Remedies Act, 1954, The Drugs & Cosmetic Act, 1940 & Rules 1945 along with advertisements mandated by law to issue a health warning.[iii] Therefore, celebrities with a significant number of followers or receiving compensation would also be regulated by the new guidelines.
How will it impact brands & intermediaries?
Brands commit to influencers for their brand’s growth and profit. Influencer marketing has helped various start-ups to establish a base in the already populated digital markets. Instances include clothing brand Bewakoof.com which partnered with 9 TikTok influencers to promote its merchandise through app download and purchase of its products, which helped it to achieve over 25,000 app installs and generated revenue for the brand. Himalaya with the help of social media influencers, launched a campaign #WipesOnTheGo to launch their facial wipes through extensive postings on the influencer’s social media platforms and blogging to share the reviews of the product to give insights to the followers. This helped Himalaya to build awareness among the targeted audience in a short span.
Regulation would mean extra caution while sharing promotional insights by the influencers with the customers. Evident display of disclosure labels might also cut off the circle of trust and the authenticity of the content shared between the influencers and their followers.
Alteration in the influencer-customer relationship would affect the content -consumption by the customers and also have a direct effect on the number of users, average time the users spend on the social media platforms i.e., the intermediaries. Instagram, for example, is the most successful social media platform with over 50,000,000 Indian users. YouTube records around 225 million Indians who actively use YouTube every month and was also expected to increase to 500 million by 2020[iv], suggests huge potential for a market base.
Conclusion
Internationally, there have been instances to highlight the possible abuse through influencer marketing without any disclosure labels.
- The Kardashian/ Jenner family was notified in 2016 by the Trust in Advertising (TINA.org) for contravening the advertising guidelines to disclose over 100 of their posts which were paid advertisements.[v]
- Lord & Taylor, a clothing brand was sued in 2016 by Federal Trade Commission (FTC) on grounds of deceptive marketing and non-disclosure of paid advertisement promotional posts on Instagram. It paid between $1,000 -$4,000 to each influencer for the promotion which included wearing the clothes and posting pictures without disclosing the commercial interest involved.[vi]
Regulation is a must at every level. The guidelines will ensure compliance at the ground level i.e., influencers level. For advertisers including different brands and companies, there is an already-existing Code of Advertising Practice, 1985 (ASCI Code). Stepping up, the Consumer Protection (E-Commerce) Rules, 2020 specifically regulates the e-commerce entity and ensures that the sellers on the e-commerce entity warrant description, images, and other content pertaining to goods or services on their platform which together with the advertising guidelines solidifies the intent of consumer welfare. Since social media platforms such as Instagram also act and practice as an e-commerce platform, the role of data and competition regulators would be quintessential as the digital market possess the potential data breach risks associated with the consumers data and the brands/ companies would necessarily require surveillance to ensure prohibition of anti-competitive agreements amongst different entities and influencers at both horizontal and vertical level and to curb abuse of dominance by the dominant entities.
The digital markets interface is looking a space to watch on how these guidelines will evolve the influencer marketing dynamics.
This blog is only for information purposes. Nothing contained herein is, purports to be, or is intended as legal advice and you should seek legal advice before you act on any information or view expressed herein. Endeavoured to accurately reflect the subject matter with legal analysis, without any representation or warranty, express or implied, in any manner whatsoever in connection with the contents of this. This isn’t an attempt to solicit business in any manner.
[i] The impact of Social Media Influencers on Sales – EDUINDEX NEWS
[ii] guidelines-for-influencer-advertising-in-digital-media-final.pdf (ascionline.in)
[iii] ASCI Releases Guidelines For Celebrities In Advertising – BW Businessworld
[iv] Ultimate Guide to Influencer Marketing In India – Influencer.in
[v] Ad or Not? Kylie Jenner | Truth In Advertising
[vi] FTC’s Lord & Taylor case: In native advertising, clear disclosure is always in style | Federal Trade Commission