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UK government agency spotlights disclosure in online ads and sponsored content

Advertisers that breach consumer protection law online when working with influencers are under greater scrutiny than ever.

The UK Competition & Markets Authority (CMA) has sought undertakings from UK advertising agencies that they won’t breach consumer protection legislation when working with social media influencers.

The case relates to the clear disclosure of paid advertising and sponsored content, and seeks to ensure that consumers are aware when content is funded by an advertiser.

The CMA secured the undertakings following an investigation under its consumer enforcement powers.

This is the third online marketing case investigated by the CMA in as many months.

It’s an area that has traditionally been the domain of the Advertising Standards Authority (ASA) but as media converges the CMA is becoming increasingly assertive in this space.

The CMA regulates sponsorship and upholds the law protecting consumer rights. The Advertising Standards Authority regulates advertisements under the Committee of Advertising Practice (CAP) codes.

Advertising versus sponsored content

I sought out a comment from my Ketchum colleague Scott Guthrie who leads earned and paid influencer marketing out of our London office.

“A piece of content doesn’t become an advertisement just because it’s paid for. To be an ad the content has to be paid for and controlled by the brand. A brand paying an influencer to post an image is an ad. A brand asking an influencer to create some content based on a creative brief will be sponsorship,” he said.

The CMA’s investigation found two marketing companies, Starcom Mediavest and TAN Media, arranged for endorsements in online articles and blogs on behalf of MYJAR, a short-term loan provider, without making it clear that they were advertising.

The activity was carried out as part of their search engine optimisation (SEO) activities.

MYJAR, Starcom Mediavest and TAN Media have all provided undertakings to the CMA that they will ensure all advertising and other marketing in articles and blogs is clearly labelled or identified as such, so that it is distinguishable from the opinion of a journalist or blogger.

Penalties for bloggers and brands

It’s a critical issue for both brands and bloggers. Bad behaviour risks a penalty from Google, and an enforcement notice from the ASA or CMA.

A blogger yesterday responded to my tweet about the CMA announcement reporting that when SEOs are buying paid links they’ll typically pay more if the blogger doesn’t use obvious disclosure.

Guthrie has clear guidance for influencers.

“Influencers are influential because they consistently create compelling content that is relevant and resonates with their select audience. If they shill too many brands or start promoting brands which seem at odds with their values, influencers will lose their authenticity, and shortly after, their ability to influence their following,” he said.

Best practice guidance from the CMA

In this recent case the CMA has also written to agencies, brands and publishers to warn them that helping to arrange or publish advertising or other marketing that is not clearly distinguishable from the opinion of a journalist or blogger may result in them breaking the law.

The CMA has published best practice on its website so that all businesses, marketing companies and publishers are able to comply with consumer protection law.

The CMA announced in February that five online review sites have agreed to improve their practices following concerns raised by the CMA.

The CMA also announced in March that it had taken enforcement action against a marketing firm that in 2014 and 2015 had written over 800 fake positive reviews for 86 small businesses. These were published across 26 different websites containing customer reviews.

Further reading

If you’re working in the area of paid influencer marketing you may want to check out these blog posts by Scott Guthrie.

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Stephen Waddington

Partner and Chief Engagement Officer, Ketchum and Visiting Professor in Practice, Newcastle University.

3 Comments

  1. Hi Stephen

    It’s good to think that someone is taking action, but do you think they will be able to police it effectively? Especially with livestream and video product placements?

    Thanks for the great articles, btw :-)

    Jon

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