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As influencer marketing continues to grow in popularity as a method of brand promotion and advertising, Ad Standards has recognized this trend and recently published an updated version of its Influencer Disclosure Guidelines (the “Guidelines”). As a result, now is a great time for advertisers to take stock of their current influencer marketing practices and make updates of their own. This article outlines some key considerations for advertisers looking to understand, monitor, and maintain compliance with applicable legal requirements as they engage in influencer marketing.
Understanding Compliance Requirements
Advertisers using influencer marketing campaigns are subject to the same legal requirements that apply to other advertisers. Generally, this means that the advertisement: (a) must not be materially false or misleading (as prohibited under the Competition Act), (b) must not infringe on the intellectual property rights of others, and (c) must comply with any other regulatory compliance frameworks that apply to the product or service being advertised. The latter includes compliance with consumer protection laws for consumer products and adhering to the terms of the applicable marketing authorization (i.e., licences) for products like pharmaceuticals and natural health products.
Additionally, advertisers using influencer campaigns must also be aware of further requirements that are unique to the context of influencer marketing. The Guidelines and other publications by the Competition Bureau are helpful resources to assist advertisers and influencers in understanding their obligations under the Competition Act and the Canadian Code of Advertising Standards. For example, influencers must disclose any material connection they have with the advertiser whose product or brand they are promoting. Failure to do so risks the advertisement being found deceptive by regulators. A connection may be “material” if it has the potential to affect how consumers evaluate the independence of the influencer from the brand.
The Guidelines provide examples of what types of contexts may give rise to a material connection (e.g., receiving discounts, being a family member) and how to properly make the disclosures in a clear and prominent manner so as to satisfy compliance requirements. Additionally, formats and methods of disclosures must be adjusted for use across different platforms, such as TikTok, YouTube, or Instagram. The Guidelines include examples of what is sufficient in each case. Understanding these requirements and developing policies and procedures for implementation is key to ensuring compliance.
Monitoring and Maintaining Compliance
Understanding legal obligations is essential to legal compliance, but has no effect without implementation, monitoring, and maintenance of compliant practices. Advertisers can control compliance both internally, through in-house training and monitoring, and externally, through their relationships with the influencers that represent them.
When looking internally, advertisers should consider whether they have an influencer marketing policy and brand guidelines, and whether they have been recently updated, especially in light of the updated Guidelines. Internal training and auditing of procedures are other effective methods of establishing and maintaining compliance.
Advertisers should also be aware that they can be held liable for the content posted by their influencers. As a result, in addition to handling internal compliance, it is prudent to vet and train influencers closely, develop and use robust marketing contracts, and monitor compliance on an ongoing basis.
When engaging new influencers, many advertisers take the time to vet their new partner to ensure that their values align with those of the advertiser and its brand. Advertisers may also consider offering policy documents or otherwise making it clear to influencers that they have compliance obligations, such as clearly disclosing material connections and steering clear of false or misleading representations, or making performance claims on behalf of the advertiser that are not based on adequate and proper testing. For example, it is important for influencers to understand that while some platforms include features that assist in disclosure of advertising relationships (e.g., overlaying #sponsored on a video), these features should be carefully reviewed as in some cases they can be insufficient to meet disclosure requirements. Certain platforms may also require additional disclosures.
Advertisers can rely on contractual provisions to assist in monitoring and maintaining regulatory compliance. Influencer contracts should include review and approval rights for advertisers. They should also clearly delineate termination rights and potential removal of content in the event of non-compliance. Additionally, contractual terms related to trademark licensing and use are a key part of maintaining trademark rights related to branding. Other methods to reduce the likelihood and severity of any non-compliance issues include seeking audit rights so advertisers can monitor the activities of influencers and anyone acting on their behalf in relation to their brands, as well as monitoring comments and content posted by consumers, to help gauge if any advertising may have been misleading. Each form of monitoring puts the advertiser in a good position to discover any instances of non-compliance and take appropriate action.
As the marketing and related regulatory landscape changes, advertisers must adapt their practices around influencer marketing as well. Taking the time to understand, monitor and maintain compliance as outlined above will assist advertisers in developing effective policies and procedures for engaging in influencer marketing going forward.
For assistance in updating your influencer marketing policies or engaging with influencers, please reach out to any member of Miller Thomson’s Marketing, Advertising and Product Compliance team.
