This article was originally published by IAM, and has been republished with permission.
A few years ago, a top brand could not imagine an advertising campaign without a celebrity face. Today, marketing specialists tell us that the future is all about influencers – individuals who build a loyal online audience through social media platforms and blogs. The reach, viability and impact of this new form of marketing has led to its rapid growth. In Russia alone, $45.5 million was invested in influencer marketing in 2017, with most brand collaborations taking place on YouTube and Instagram. It is particularly effective in marketing luxury products to young people. According to a recent report, almost half of all Russian millennials use blogs and social media to learn about luxury brands.
Typical of new developments, influencer marketing has raised many questions among brand owners, as well as legal concerns. This is especially true in Russia, where laws support a broad interpretation of advertising and discourage indirect advertisements.
Risks and regulations related to indirect advertising
The main concern for most brand owners operating in Russia is how influencer-promoted content will be perceived by local legal authorities. According to the Russian law, an 'advertisement' is defined as "information disseminated in any form and on any medium addressed to the general public with the aim of drawing attention to, promoting, or forming or maintaining interest in a product, brand or company". Indirect advertising (ie, advertising not consciously perceived by consumers as such) is generally prohibited because it can be manipulative. The only exception is when the object of advertising does not attract attention and rather acts as a part of the background, such as some types of product placements in films or TV shows.
What constitutes indirect advertising is decided on a case-by-case basis by the Federal Anti-monopoly Service (FAS). This is entitled to issue orders to rectify violations, initiate and review administrative cases and impose administrative fines of up to $7,500. Further, its decisions can be appealed in court.
If the FAS identifies an indirect advertisement, the brand may share liability with the influencer in cases where they both take part in producing the social media content and, by extension, serve as the advertising producers. In cases of unfair and false advertising, both the brand and the influencer may be liable.
However, if the brand does not have a legal presence in Russia (ie, it is not registered as a business there), no administrative fine can be enforced.
In the absence of common administrative or court practice related to influencer marketing in Russia, there are certain tactics that brand owners can utilise to minimise risks:
- Since there is no mandatory pre-clearance procedure for advertisements in Russia, the brand, content producer and distributor should ensure that the content is compliant with Russian law prior to its release (for example, it is in the Russian language).
- The regulatory landscape is often complicated by the lack of formal contracts between brands and influencers, which are not required by law. There is also no legal requirement with regard to remuneration, and many influencers will agree to do a product review without being paid. However, formalising a relationship with the influencer can help to avoid a number of unpleasant situations, from unpredictable shifts in the influencer's promoted values to posts' non-compliance. It is thus wise to enshrine partnership terms in a written agreement whenever possible – even if no money is changing hands.
- Where there is a more formal product-for-review collaboration or co-produced content, the brand's risk of administrative fines and injunctions can be higher – including written disclosure of sponsorship in the post is recommended. The influencer's willingness to disclose the nature of their relationship with the brand (sometimes via hashtag #sponsoredadvertising/#направахрекламы) depends on their level of public exposure, as well as the brand's social media guidelines, which should underpin all collaboration agreements. Although there are no mandatory wording or positioning requirements, disclaimers should make it clear to consumers that the content in question is an advertisement.
- Online content resulting from the review of a gift received by an influencer, particularly one that does not come with an obligation to mention the product on social media, has a lower risk of being classified as indirect advertising. Endorsements in this context are generally considered more genuine and, when expressed by a trusted social media personality, have the potential to attract more customers. This is particularly true with respect to micro-influencers (those with fewer than 150,000 followers), who tend to have a highly engaged audience yet are also perceived by advertising authorities as private individuals rather than promoters.
All of this may seem like a great burden for brands. However, Russian enforcement authorities pay little attention to advertising through private social media accounts. This decreases the practical risk of liability for the brand and the influencer, at least for the time being.