Canada Cracks Down on Paid Social Media Endorsements
Social media has become a key part of modern society, and businesses have picked up on its usefulness as a marketing channel. With more and more consumers turning to the internet to inform their purchasing decisions, businesses have been using social media marketing and content marketing as a way of branding and promoting themselves.
One of the latest trends in online marketing has been the use of key individuals to drive a brand’s message to its consumers. For example, instead of marketing directly to its target market, the makers of the latest fat-burning tea might choose to pay an influential celebrity figure, let’s say Kim Kardashian, to post a picture on her Instagram praising the benefits of the tea.
With social influencer marketing quickly gaining popularity among brand marketers, consumers have voiced concerns around influencer marketing standards and compliance with advertising guidelines. At the same time, bloggers and influencers in Canada have been left to navigate this new form of marketing in the dark as Canada’s advertising guidelines have been playing catch-up to the United States.
Until recently, Canada’s advertising guidelines did not provide any rules or regulations around influencer marketing. This changed earlier this year with the announcement of a crackdown on sponsored bloggers and social media influencers. The new guidelines by Advertising Standards Canada, which are expected to come into effect in early 2017, will require full disclosure of any paid endorsements or mentions of products or services by an influencer.
The guidelines closely reflect the disclosure rules enacted by the United States Federal Trade Commission in 2009—although it seems that the FTC is now trying to tighten its rules in response to many influencers skirting them by burying their disclosures in a sea of hashtags.
First: Who is Advertising Standards Canada?
Advertising Standards Canada (“ASC”) is a national not-for-profit advertising self-regulatory body. It created the Canadian Code of Advertising Standards, which has become a well-publicized industry standard for acceptable advertising in Canada. The Code sets out a number of different types of standards relating to accuracy of advertisements, misleading advertising, and so on.
But the current language used in the Code doesn’t quite cover social influencer marketing, as it is a relatively new phenomenon. This led the ASC to implement new rules and regulations relating to bloggers, celebrities, and other social media influencers who make endorsements or mention products or services in their posts in exchange for payment or other type of consideration.
What Are the New Guidelines?
The ASC's new guidelines on paid social media endorsements will require endorsements or testimonials to disclose any material connection between the endorser, review, or influencer and the brand that makes the product or service available. If there is a connection, it must be clearly and properly disclosed in proximity to the representation of the product.
The rules will apply to blog posts and posts on Twitter, Instagram, Facebook, Snapchat, and whatever turns out to be the next social media trend.
How to Disclose an Endorsement
So how can bloggers and influencers ensure they are meeting the new standards? The new regulations will require bloggers to include disclosure statements within their posts or videos. There isn’t necessarily specific wording that needs to be used, but the idea is to give readers the essential information.
The FTC's guidelines suggest that a simple disclosure like "Company X gave me this product to try" is likely effective. In the case of a video, the influencer could state that some of the products they are going to use in the video were sent to them by their manufacturers.
On social media platforms such as Twitter, Instagram and Snapchat, influencers will need to start including hashtags such as #sponsored or #ad. But be careful with burying these hashtags. The FTC has stated that if consumers don’t read the words, there is no effective disclosure (and the ASC is likely to agree). So the real test is whether the consumers read it and can comprehend it.
What Happens If You Don’t Disclose Properly
As far as enforcement, it appears that the ASC will be mainly targeting the sponsoring companies rather than individuals in enforcing these new guidelines. So, if an influencer posts about a product but does not disclose it, the ASC would contact the brand or company in question and request that steps be taken to prevent further posts.
Unlike the FTC in the US, which is a government agency, the ASC is a self-regulating body so it does not have the ability to issue fines. That power would lie with the Competition Bureau, which does not yet have formal rules requiring blogger and influencer disclosure.
The Competition Bureau has stated, however, that lack of disclosure by bloggers and influencers could fall under its rules against misrepresentation and false advertising. For example, in 2015, Bell Canada was fined $1.2 million after the company’s employees were found to have written online reviews of Bell products and services without disclosing their connection to Bell.
Being a rock climber, I have a few friends (and clients) who are brand ambassadors or sponsored athletes. My advice to them is to become familiar with the new regulations coming into force in 2017 and ensure that each sponsored blog post or social media post has a disclosure statement.
Although it seems like the ASC will be targeting the sponsors rather than individuals, it is important for individual influencers to follow the new guidelines in order to preserve their relationship with their sponsors. If you have any doubts on how to disclose, I suggest contacting your sponsor and requesting that they provide you with specific wording to include in your posts.