Influencer marketing and endorsements: some food for thought in light of recent initiatives by the Italian authorities

On August 6, 2018 the Italian Competition Authority (AGCM) announced a second moral suasion action against influencers, bloggers and, so called "influencer marketing".


What is influencer marketing?

Influencer marketing basically means individuals (usually bloggers and influencers) endorsing products or brands by posting photos, videos, comments or other content on their blogs, vlogs or social media accounts, to perform an advertising function on behalf of those products or brands, often for payment.

The AGCM’s action

A first action of moral suasion was put in place by the AGCM about a year ago and was directed against the most popular Italian influencers (by number of followers), as well as against some of the companies that had been endorsed by them.

This second action, essentially consisting of the sending of a series of C&D letters pursuant to Article 4 AGCM Resolution April 1, 2015, no. 25411, focuses on more “minor” influencers, i.e. influencers with fewer followers, although still with significant numbers. The AGCM has evidently felt the need to extend its monitoring activity, to take action against a phenomenon which, though widely used, presents uncertainties and issues in practice.

The critical issue obviously relates to the transparency and ability of consumers to recognise advertising by influencers and bloggers on their social media accounts. This is both a requirement under the Italian Consumer Code on misleading advertising, as well as by the Code of Advertising self-Regulation (“Code“). In taking this action, the AGCM has reaffirmed some well-established principles: the advertising purpose of any published content must be clearly recognisable by consumers, which can be achieved through the insertion of appropriate warnings clearly displayed in the post, such as “advertising”, “#sponsored”, “#advertising”, “#paidinsertion” or “#productsuppliedby”, where the product has been provided for free. Such measures are substantially in line with recommendations from other initiatives aimed at increasing the transparency of commercial communication in the era of influencer marketing.

The view on influencer marketing outside Italy

Looking outside Italy, the endorsement guidelines issued by the Federal Trade Commission in the U.S. are worth noting. These guidelines advise on how to ensure advertising transparency where endorsements are made by employees posting statements such as “check out my company’s great new product…” on their social media accounts.

The international trend of influencer marketing is also leading to a number of regulatory initiatives in other jurisdictions. For example the action taken in the United Arab Emirates aimed at governing the phenomenon through a licensing system (see “Influencing the UAE – the implications of the new National Media Council’s Regulations“, by our colleague Melissa Murray, found here).

The key challenge is undoubtedly identifying what can brand owners do to correctly manage this phenomenon and capitalise the advertising return that influencer marketing generates, whilst also mitigating the business risk and improving the accountability of influencers.

A recent Italian decision

Some food for thought comes from a recent case decided by the Jury (the Italian Advertising self-regulation body) in June (Case no. 45, 26 June 2018). The case appears to be relevant not so much for the media resonance that it has had, but because it is perhaps the first jurisdictional ruling in Italy that has expressly dealt with influencer marketing and advertising transparency implementing the requirements mentioned above. In addition, the Jury has more recently issued another on 25 July, again related to non-transparent advertising behavior by a blogger. Influencer marketing is clearly a topical matter in Italy.

But let’s have a closer look at case no. 45 of 26 June 2018.

The case was about the publication of a story on Instagram by a well-known Italian artist and singer. The artist, while participating in a tennis event sponsored by an automotive company, decided to publish a video to show his enthusiasm and approval for one of the cars displayed during the event. The Instagram story, by its nature was only visible for 24 hours, but was not accompanied by any warning, written or vocal, that clarified its promotional purpose. The Review Board of the IAP (a sort of public prosecutor in the self-regulation system), then served an injunction order upon the company managing the artist’s rights, as well as upon the car manufacturer that had a contract with the artist.

The dispute was eventually decided by the Jury which concluded that the Instagram story was a form of hidden advertising, contrary to Article 7 of the Code.

The following points provide an interesting insight into the reasoning behind this decision.

  • Lack of jurisdiction. The Jury upheld the objection for lack of jurisdiction raised by the artist’s rights management company because it was able to show that they did not adhere, either directly or indirectly, to the advertising self-regulation system. The Jury is a self-regulatory body that operates on the basis of private regulations. These regulations, although increasingly widespread, still require direct or indirect acceptance by industry players. At present, the main social networks do not require users to adhere to the Code as part of their T&Cs. Users are therefore not subject to the jurisdiction of the Jury for simply posting content on a social network. The Jury’s conclusion may have been different if the advertiser had included a clause in the artist’s contract requesting him to adhere to the Code. However, this was not the case and the Jury therefore issued its decision only against the automotive company which conversely had expressly adhered to the advertising self-regulation system.
  • Advertiser’s liability for the published content. The automotive company argued that the artist’s Instagram story was not subject to the contract between the parties, because the content was published independently, without going through the approval procedure set out in the contract. The company considered this to be a breach of contract and argued that the artist was the only one to be held liable for his conduct. Nevertheless, the Jury rejected this and considered the company fully liable for the following reasons: (i) the participation of the influencer in the event sponsored by the automotive company had been contractually agreed; (ii) Article 2049 of the Italian Civil Code complements the self-regulation system and this provision allows the sponsor to be liable for conduct carried out by contracted marketers like influencers during sponsored events; (iii) employees of the company had helped the artist to shoot the video during the event; (iv) the company had done nothing to contest the dissemination of the video and, on the contrary, had quoted the story on its Instagram profile thereby endorsing the content; (v) despite being part of the self-regulation system, the company did not include any contractual obligation requiring the artist to comply with the self-regulation system, nor had it provided for adequate monitoring or control mechanisms on the use of the artist’s account; this conduct was also deemed “an imprudence” and an additional reason for considering the company liable for infringement of the Code.

What can we learn from these influencer marketing decisions?

Now that the spotlight is on influencer marketing in Italy we have set out some measures which companies using influencer marketing may use to their benefit:

  • Implement contractual clauses requiring influencers to comply with the applicable advertising regulations and self-regulation systems, and control mechanisms on their social media accounts or, at least strict checking procedures on content to be published;
  • assessment of local regulations, acknowledging that social media content may be disseminated in multiple jurisdictions, each with their own rules on influencer marketing;
  • internal policies regarding the use of social networks by employees, staff, guests, including guidance on how to deal with endorsements, as well as with influencers working for the company;
  • be careful of voluntary endorsements made by influencers endorsing your company: by re-launching their posts on your company’s official channels, you may be liable for posts which violate the law.

Of course these are relatively broad and simple guidelines. A more detailed analysis is advisable on a case by case basis.

Click below to learn more about other recent influencer marketing developments in other jurisdictions:

This post was written by Simone Pallavicini and Rita Tardiolo

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