Influencer #Ad’s Investigated: CMA tightens rules on Instagram advertisements

October 27, 2020

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2 min read

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What's going on here?

The Competition and Markets Authority (CMA) is tightening rules on social media influencers and celebrities in the UK who post advertisements or endorsements without telling their followers they have been paid to do so.

What does this mean?

UK Consumer Protection law requires social media posts to clearly label that they have received some form of sponsorship from the business they are promoting if this is the case. This is because many consumers can and often do feel deceived when they purchase products, only to realise that the influencer does not actually personally use the product but was instead paid to showcase it. However, in 2019 the CMA found that 16 celebrities from Ellie Goulding to Megan McKenna were not properly tagging their posts, and as such these 16 celebrities made a formal commitment to clearly state this in future. However, the CMA has now taken this one step further by investigating Instagram last week (on 16 October 2020). Facebook Ireland (the operators of Instagram in the UK) responded by committing to a suite of new measures to address this issue. These measures include prompting users to confirm if they have been incentivised to promote a product, extending the ‘paid partnership’ tool to all users and using algorithms to spot posts that may breach the law.

What's the big picture effect?

From the advent of television (and with it, television advertisements) in 1955, legislation and organisations such as the Advertising Standards Agency (ASA) and the CMA have worked to protect consumers. However, as marketing moves into the digital age, the line between what is personal opinion and what is sponsored content becomes ever murkier. As little as 10 years ago it was all but impossible to not know you were viewing an ad as your favourite show would have been rudely interrupted. In today’s social media world however, scrolling through 10 photos on Instagram, it can be impossible to work out which posts are your favourite youtubers personal opinions and which they have been paid to promote.

Whilst many social media sites do fall foul of these laws, Instagram as a site with roughly 850m regular users and a largely youthful demographic (one of the most sought after demographics for advertisers) is one in particular that has to ensure it acts in accordance with the law. This is also of importance as the figures show just how big business ‘#ad’ can be. Instagram itself is projected to increase its revenues by 47% this year to $13.9bn and up to $18.2bn in 2021. This massive revenue is matched by top influencers such as Dwayne ‘The Rock’ Johnson who can earn as much as $1m a post. Particularly in the Covid age that has seen a spike in online shopping, the importance of protecting younger and more susceptible consumers has never been clearer.

Report written by Hari Majumdar

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