Developments in the regulation of digital advertising - #ad

Kate Hawkins: Hi, I am Kate Hawkins, Principal Associate in the Advertising Law team at Gowling WLG. During our recent Ad Law Seminar, I provided an update on some of the key developments we are seeing in digital advertising. Starting with the regular disposition when it comes to influencer marketing and the need for '#Ad'.

First, a bit of context. The advertising rules which will affect the consumer protection legislation have always been clear. Marketing communications must be identifiable as such. Meaning, consumers need to know if the content they are engaging with is a genuinely held impartial opinion or one that has been paid for.

This tends to get a little bit murky when it comes to influencer advertising as often paid for content looks very similar to genuine influencer content, making it difficult for consumers to know whether something is an ad or not. Asking consumers to play detective in order to figure out if they are being advertised to is not acceptable and this is the main issue that we are seeing with influencer advertising, transparency and ad disclosure.

And the reason this is still so important is that both the influencer and the brand will be held responsible for non-compliant content.

There has been some development in this space recently which I ran through during our seminar. Historically, the ASA had a two-stage test for advertising. Something will be an ad if money or monies were (which might mean event tickets, a trip, a hotel stay or free products) provided, plus the brand has control over the content. If it is not obvious from the content itself then that content needs to be labelled as advertising. But otherwise, if you did not have control over the content then you would not need this label to be applied. So, when it came to traditional PR activities, for example, sending someone free tickets or a gift or free products with the hope that they might post about it but with no strings attached, then that content would not need to be labelled as '#Ad'. The influencer in those circumstances could use hashtags like 'gifted' or 'thanks to'.

The CMA has now closed this loophole with some renewed guidance. So, wherever a brand incentivises an influencer to promote their brand or their product, or an influencer is otherwise personally or commercially connected to the brand, then any content posted by that influencer featuring or referring to the brand or its products will need to be labelled as advertising. Crucially, that includes where you just send an influencer those free products and do not explicitly ask them to post about it.

The ASA still applies its two-stage test, but it is worth noting that over time it has interpreted control more and more broadly. Control over content will now include things like asking an influencer to post in return for the free products, the tickets, the trip etc. and also providing key messages, branding or campaign hashtags to be used in their posts. It might also include where you prevent an influencer from posting that competitor products.

So, what happens if an influencer fails to label their content as advertising?

Well, the CMA can take action against both the influencer and the brand for breaches of consumer law. At the moment the CMA has to go through the Courts to enforce these breaches. So, we most commonly see businesses and influencers in trouble with the CMA accepting undertakings. But the Government has now proposed to expand the CMA's enforcement powers with the Digital Markets, Competition and Consumers Bill. Meaning the CMA will be able to take direct enforcement action and impose fines of up to 10%25 of worldwide annual turnover. With the Bill expected to be implemented this year, getting this right has never been more important.

The ASA can also step in. Publishing rulings when it is going to hold up complaints which can often lead to negative PR and the waste of time and costs associated with removing and amending that content.

So, what can you do? Both the CMA and the ASA have made it clear that '#Ad' or a variation of advertising will be the most clear label. They will not accept labels like 'supported by' 'affiliate', 'gifted' or '#my collection'. This has been made very clear, there are recent and regular ASA rulings.

I ran through a number of these during our session and I will pick up on a few here.

So, let us start with a simple example. Binky Felstead posted a number of images from Wimbledon with the caption "thank you Vodafone UK for being such incredible hosts" #FeelTheConnection #gifted. Vodafone was named in the complaint and explained to the ASA that they did not have a contractual relationship with Binky but they had provided her with tickets to the tennis and invited her to their hospitality suite. They had also encouraged her and all of their guests to share their Wimbledon experience by posting stories and photos and tagging their Instagram handle in those and also use the #feel the connection. But they did not have any conversations about specific posts or had any expectations that Binky would post at all.

The key take away here is even when a brand has no expectations or does not have a contractual requirement that the influencer will post content, by providing free tickets along with some guidance as to what hashtag should be used, that brand will be seen as having editorial control over the content and it will bring it within the ASA's remit. Because #gifted is not enough to make the content clear that it is advertising, this kind of post will breach the rules.

Next up is Myleene Klass. I am just going to focus on the reel that is on the left here, but she was the subject of three upheld ASA rulings in November 2022 all because she was not clear enough in her posts that they were advertising.

So, Myleene asked various celebrities whether something important that they should have been taught at school was not. The video ended with Myleene holding a copy of her book. This book was written by Myleene and available for purchase so by posting about it on her social channels she was promoting her own book, hey presto, advertising. But the ASA did not think that the post itself made this fact clear. So, with item identifiers such as '#Ad' or something similar the post was found to be misleading.

The key take away here is even when it is your own brand or your own product you still need to make it clear that it is advertising if it is not otherwise obvious from the context.

Turning now to affiliate arrangements. The Mail Online posted a number of articles featuring affiliate links that were very similar to the one that is shown on the screen. The Mail Online explained to the ASA that this article was genuine editorial content written by their professional journalists. But ASA disagreed. They considered it was unlikely that the Mail Online would have chosen to publish content about these copycats in the absence of the affiliate arrangement.

Given the content was wholly concerned about the promotion of these products which could be purchased via the affiliate links in the article, this was advertising and should have been obvious as such. I would just point out that the caption at the top of the article now includes the wording "shopping contains affiliated content". This was not in the articles that the ASA considered and arguably it does make it more obvious that this is advertising but we suspect that the ASA would prefer an advertisement feature of something similar as a label.

As a last example, the ASA upheld a complaint about the Booksy App recommended listings which you can see at the bottom of the image here. The complainant felt that the listings were misleading as they were not obviously identifiable as advertising. In order to be listed as Booksy recommended these businesses had paid for the Booksy Boost service. With that in mind the ASA concluded that the venue entries that appeared here were paid for search listings so there were ads for the purposes of the advertising code rules. As such they needed to be identifiable as marketing communications and the commercial intent made clear. In the absence of any identification that the entries were paid for media they were considered to be misleading.

So, this ruling serves as a warning that the ASA is applying its guidance restrictively. Where the context is less clear, and in particular where advertising is paid for by third party brands, and not differentiated from other promotional content, then it is highly likely that the ASA will expect the brand to label the content appropriately and where you are hosting third party ads on your website or platform it will be your responsibility to make sure that these are obviously identifiable as third party ads and that they are labelled appropriately.

I ended the session with a bit of a horizon scan. Summarising what we expect to see in the coming year when it comes to influencer marketing.

Very briefly, we expect to see the regulators continue to encourage the use of '#Ad' as the accepted identifier for advertising. We are also expecting to see the ASA scale up its monitoring work using their machine learning capabilities. This technology is transforming the ASA's ability to add pace and scale in identifying problems and taking action, meaning the ASA does not need to wait for a complaint to be made about influencer content before investigating it.

The talk also highlights the brands who work with influencers, enabling the ASA to either contact them and provide guidance or otherwise sanction a brand if they repeatedly fail to comply with the rules.

So, I think we can expect to see even more rulings in this space as the ASA are more and more proactive about identifying misleading content.

We might also see an increased focus on non-human influencers, whether they be pet influencers, virtual or AI influencers to whom the rules also apply.

Finally, with the expansion of the CMA's powers under the DMCC Bill, empowering them to take direct enforcement action with larger GDPR style fines on the table we suspect this will act as a deterrent for businesses and change the risk appetites of the brands who previously adopted a more risk-based approach to compliance.

Those are the key takeaways from our update on #Ad. If you would like to discuss any of this further or if you have a specific Ad Law query that you would like to talk to us about then please do reach out to myself, Dan Smith or Zoe Pearman.