Social Media Marketing campaigns are under observation of Trade Authorities – this also applies to Sports Influencers
Together with celebrities from the movies and TV and a young generation of stars on YouTube and other social media platforms such as Facebook, Instagram or Twitter professional athletes have become a substantial multiplier in the online advertising market. They are called “Influencers” because they reach an enormous number of people which follow their social media activities. Text messages, pictures and videos posted by these Influencers through their social media appearances are watched by millions of followers. Not surprisingly, the advertising industry identified these followers as consumers and the social media communication as an easy way spread advertising among them. An effective method to influence consumers is to transport commercial messages “incidentally”. This is why social media postings of sports celebrities, that appear to be private or spontaneous, often refer to products or sponsors by dropping names or slogans, or even placing items in pictures.
Whoever spreads such ads to the public – be it in online- or offline-communication – must be in line with the regulations on surreptitious (hidden) advertising and the statutory requirement to clearly identify any such commercial purposes of the communication. But only a very few Influencers follow these requirements at all and even a significant part of those who use ways of labelling advertisings in social media communication do it the right way. Not long ago, it seemed that no one felt bothered. Meanwhile, however, national and international supervisory authorities have become active. They watch social media activities and initiate legally cases where they find cases of hidden advertising.
II. Recent Legal Cases on hidden Advertising by Influencers
- The YouTube-Star “Flying Uwe”, a fitness guru, was the first (German) influencer who was sanctioned for unmarked social media advertising in Germany. In June 2017, the State Media Authority of Hamburg fined him with a penalty amounting to EUR 10,500. Flying Uwe recommended food supplements to its 1.3 million followers in his videos, without indicating that he was paid by the producer.
- On a motion by a German Association against Unfair Competition the Court of Appeals of the city of Celle (OLG Celle) recently issued an interim injunction against a famous German drugstore chain for insufficient labeling of an influencer’s advertising on Instagram (OLG Celle, 8.6.2017 – 13 U 53/16). The influencer was paid by the drugstore to advertise discount opportunities at the drugstore to its Instagram followers. Reference to the commercial character was only made by a hashtag “#ad” placed at the end of the post among a chain of other hashtags. The court found that this way the commercial character was not sufficiently identified which constitutes a violation of the German regulations on surreptitious advertising in Sect. 5a para. 6 of the Unfair Competition Act (UWG). The drugstore chain was convicted to cease and desist from spreading not sufficiently marked advertisings through Influencers.
- By motion of the said Association against Unfair Competition the Court of first instance of the (German) city of Hagen (LG Hagen, 13. 9. 2017 – 23 O 30/17), a fashion blogger was ordered to refrain from referring to products without indicating that it is about commercial communication. The blogger had posted pictures on Instagram including hyperlinks to sellers of cosmetics, without indicating the commercial purpose behind.
Not only in Germany but also on other countries surreptitious advertising activities of social media stars have been prosecuted.
- Some years ago, the UK Advertising Standards Authority (ASA) called on football-Star Wayne Rooney to comply with the rules on hidden advertising. During these times Rooney was constantly tweeting messages with the slogan #makeitcount of his sponsor Nike without adding any kind of labelling that was suitable to inform recipients of the commercial background. This was obviously the first and only time an athlete was approached on improper influencer marketing.
- The US Federal Trade Commission recently sent warnings of caution to many influencers and advertisers on how to implement its advertising labeling obligations. Two known YouTube-Stars were even brought to trial for missing advertising labels. Both committed to refrain from commercial communications without adequate labeling.
III. Prohibition of Surreptitious Advertising
The German decisions were based on the German Unfair Competition Act (UWG). The prohibition of surreptitious advertising is stated in Sect. 5a para. 6 UWG. According to the law, a person is acting unfairly who conceals his commercial intentions when communicating to consumers. The reason behind such legislation is the assumption that advertising, which is not recognizable to the target group as such, improperly influences their decisions to buy products. Consumers would be taken away the opportunity to adjust to the commercial character of the action and to evaluate the pros and cons of buying a product which they would do when being confronted with advertising that is apparent to them (see also the decision of OLG München, 9.6.2011 – 29 U 2026/08).
Having a case of hidden advertising requires that someone acts in a commercial way. Using social media to communicate to people is not necessarily “commercial”. Even if a top athlete is communicating to his fans via social media he is not acting for business purposes per se, just because he is famous. There is no reason why pictures from holiday trips or everyday’s life of athletes and even pictures shot during the Olympics should not be regarded as private. However, if such messages are used to promote third party’s products the communication may become commercial. In each case it must be evaluated, on the basis of the objective external circumstances, if there is a commercial context. Indications may be whether the influencer receives money or similar benefits (e.g. a free of charge flight or hotel accommodation) for doing so (which are clear cases of advertising), or whether products or companies are given prominent and constant appearance in social media communication.
The overall circumstances may prove a business purpose when posting on Twitter, Instagram or Facebook. If a professional footballplayer is posting a selfie immediately after a winning match in the stadium and inevitably the jersey sponsor and its manufacturer’s logo and in the background a perimeter advertising board is part of the picture, this is no case of sales promotion. The same applies if the player is posting a picture showing him in front of a fashion store where he just bought new shoes. If, on the other hand, the player, in the dressing room, demonstratively places his football boots with the manufacturer’s logo in front of the camera and spreads the photo via his social media channels, the commercial purpose is close at hand. A picture of an athlete relaxing in a business seat on his return flight from an away-match may be not considered as advertising just because the picture also shows him wearing headphones showing the manufacturer’s brand. Other, if these headphones are featured prominently on several posted pictures.
It becomes strikingly clear how naturally athletes do promote their sponsors, when looking at an interview that Manuel Neuer gave to the German football magazine “kicker”. Neuer parroted obviously memorized claims of his sponsoring partners: “I choose partners, behind whom I stand. It has to match with me. Allianz, for example, stands for safety, as I do being a goalkeeper. Coke Zero stands for ‘zero goals against’ that I always want to achieve, Sony for the sharp eye, that I also need.”
2. No Duty to identify Advertising if the Commercial Purpose is obvious
The commercial nature of a communication is concealed if the average informed consumer does not recognize that a product or a company is being advertised. If ads are accommodated in alleged private postings without identifying them, the commercial character is obscured, which is unlawful. However, the obligation to identify advertising within a communication is limited to cases where the commercial purpose is not obvious. This is the case if the average consumer, at first glance and without any doubt, recognizes that he is facing advertising (see German Federal Court of Justice, BGH, 31.10.2012, – I ZR 205/11). The hurdles to qualify a communication as being obviously commercial shall not be too low. The fact that athletes recommend certain products does not yet clearly reveal a commercial purpose.
In the “Manuel Neuer” case it seems the commercial purpose could not be more apparent. However, on the downside, Neuer was expressly asked by the kicker journalist to explain by which criteria he was selecting his sponsoring partners. Thus, the claims appeared to be editorial context where the consumer does not expect commercial communication.
3. How to label advertising in social media communication
Insofar the commercial character does not appear directly out of the circumstances of the communication, a labeling of advertising is required. Clear and binding rules on how the labeling must be made, do not exist.
To determine the clearest way of identifying advertising communication in social media, the specific social platform and the knowledge and the habits of its average users must be taken into account. Whereas a single hashtag #ad at the end of a text message could be a suitable way of labelling, the information gets lost if the hashtag is part of a “cloud” of hashtags. Especially the aspects of “where” and “how” to provide labelling are relevant:
- The wording: not any term that is used to describe advertising is appropriate to identify the commercial character of communication. Whereas the English term “advertising” might be regarded as widely common among social media users the shortened form “ad” might be not. The terms “sponsored” or “sponsored by” as well as “commercial” should suffice.
- The place: also important is where the label is placed. The more conspicuously the label is placed (e.g. at the beginning of a text, above a picture), the more does it meet the requirements.
Meanwhile, in reaction to the recent persecution of unmarked advertising on social media the Platforms provide options to identify posts with advertising. Facebook offers to label advertising content as “branded”. The note appears above a posted picture. Instagram provides the term “paid partnership,” which can be easily detached above the post.
In case of unfair surreptitious advertising, all persons involved in an influencer marketing campaign can be considered as legally responsible. This is, above all, the influencer himself and the advertised company. If a social media agency is involved, which is mostly the case if the influencers are athletes, the agency might as well be held liable. As a result these parties have to face claims for cease and desist as well as damage claims and fines.
VI. Contractual regulations
In view of the liability risks, it is recommended to all parties involved to take precautionary measures against claims for surreptitious advertising activities by setting up contractual arrangements. From the sponsor’s point of view, indemnification clauses are recommendable in order to compensate the sponsor for costs it incurred by third party claims as a result of the failure of the influencer to label commercial communication. The same is to be recommended to the influencer if he gives his social media accounts into the hands of an advertising agency. It is also advisable to provide the influencer (or the agency) with guidelines on the use of social media.
An increase of jurisdiction on influencer marketing cases is to be expected. Influencers from sports will be watched the same way as Youtube stars. Agencies who take care of athlete’s social media accounts or who support these athletes when they use their accounts should ensure that the athlete is guided on how to use social media and be compliant with legal regulations. It could also be wise to obtain or to provide the athlete a permanent legal advice on a short-notice-basis as the requirements on how to label advertising content may change the more court decisions on influencer marketing cases will be made. In case of doubts, advertising content should be identified.