THE RISE OF SOCIAL MEDIA INFLUENCER MARKETING; NEED FOR ITS REGULATION

This blog is authored by Manya Manchanda, 4th-year student, Vivekananda Institute of Professional Studies, GGSIPU

Introduction

Digital Technology has revolutionised all aspects of life in the 21st century, its influence and impact are noteworthy throughout the globe. There is an ever-increasing digital media consumption by all age groups. Increasing internet transmission speed, mobile phone production and convenience of access to the media content that is informative, entertaining or social, at anytime and anywhere are the rationales for this growing trend.

Thus, there has been a remarkable shift in consumer preferences from traditional forms of media which enclose TV, print, press and radio towards digital media such as social networking websites, e-newspapers etc.

Advertisements are the largest creators of demand among consumers. There has been a significant change in the manner products and services are marketed and sold to consumers. Companies influence their customers by engaging in innovative advertising techniques to boost sales. With the upsurge in the usage of social media channels, novel ways for producers to interact with consumers have been adopted. Social media noticeably offers a two-way interactive and visually alluring experience to its users. In recent times, celebrities have become an ideal option for brands for targeting a specific audience to promote their products and services. Thus, celebrities become synonymous with the brand names they endorse. They are often referred to as ‘influencers’ as they increase awareness about the brand and influence consumer choices.

There are varying definitions of an ‘influencer.’ A ‘social media influencer’ is an individual, who has established credibility amongst the public and has the power to sway the opinions of their audience. They are third-party endorsers, who shape audience attitudes through blogs, posts, tweets and the use of other social media channels. Thus, social media influencer may be a blogger or a movie celebrity or an online public figure. The list of social media influencers includes fashion bloggers, food bloggers, travel bloggers or comedians etc. An influencer’s reach is measured by indicators such as their followers, subscribers and likes on their posts. Hence, these networking sites have attained immense popularity as a platform for product promotion.

This form of influencer marketing seems to play an important role because the young generation spends a significant amount of time watching, viewing, liking, forwarding, and commenting on social media platforms. Furthermore, social media influencers, besides grabbing the attention of consumers, create credibility and goodwill for a brand, which people associate with these endorsers.

Along these lines, nowadays the company’s PR tactics include sending products free-of-cost to influencers so that they can post reviews or share photographs of the products with their audiences. Circumstances when influencer posts are viewed as 'advertisements', include:

(a) Influencer posts appearing in 'paid-for-ad space', for instance, banner ads, sponsored or promoted posts on social media sites.

(b) Influencer posts for which brands have either paid, rewarded/ incentivized them; or carried out editorial control over the content posted.

(c) Influencer posts promoting products, that enclose brand hyperlink or influencer’s discount codes or other deals where influencers get paid for each 'click-through' or sale that can trace back to the influencer’s original post.

Needless to say, ultimately consumer confidence in popular celebrities unwittingly makes them acknowledge and purchase the products and services endorsed by their favourite celebrity or influencers. As a result, influencers need to ensure that the claims made by them in endorsements are not misleading or uncorroborated, to preserve and safeguard the interests of the consumers at large. There have been instances where these social media influencers have been called out for adverse effects of the products endorsed by them. Henceforward, to help the consumers make an informed choice, the regulating bodies are taking steps to regulate the fascination towards these social media influencers and protect the interests of the purchasing consumers. These include the steps discussed below.

The Consumer Protection Act, 2019

The Consumer Protection Act, 2019 (hereinafter referred to as “the Act”) has introduced various methods to strengthen the existing laws safeguarding consumer rights and extends the protection to consumers who are users of e-commerce platforms. It broadens the scope and allows for a larger range of protections for the consumers, such as through evolved concepts of product liability, advertising claims, targeted advertisements, marketing campaigns conducted through influencers. The Consumer Protection Act, 2019 also focusses on misleading advertisements and endorsements done by celebrities, including those by social media influencers.

Section 10(1) of the Act, establishes a Central Consumer Protection Authority (CCPA) “to regulate matters relating to violation of rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interests of public and consumers and to promote, protect and enforce the rights of consumers as a class.”

Thus, CCPA has been granted penal powers, which may be imposed on manufacturers of unsafe goods or endorsers or publishers of false or misleading advertisements.

According to Section 2(28) of the act, an advertisement may be false or misleading in relation to any product or service, means an advertisement, which:

(i) Falsely describes such product or service; or

(ii) Gives a false guarantee to, or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or service; or

(iii) Conveys an express or implied representation which, if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice; or

(iv) Deliberately conceals important information.

In 2017, the Consumer Complaints Council formed by the Advertising Standards Council of India (ASCI) found the claims of Hindustan Unilever Ltd for its ‘Lever Ayush soap’ stating that it was based on 5,000-year-old Ayurveda scriptures with 15 Ayurvedic herbs, were misleading. In various instances, manufacturers have been issued directions to modify or remove false and misleading advertisements from circulation to the public.

Likewise, if an influencer does not reveal the paid promotion and intentionally conceals about the genuine credibility of the product, their followers can, under section 21 of the act, sue the influencer for misleading advertising for up to Rs.10 lakhs and repeated offenders can be fined up to Rs. 50 lakhs.

Thus, an influencer’s post having inadequate disclosures, that tend to mislead and manipulate an innocent customer's buying preferences, may amount to unfair trade practices.

Exclusion of Liability of Influencers

Although the Act imposes severe punishments on endorsers, it also provides for exclusions to the liability of the endorsers. According to Section 21(5) of the act, if an endorser has ‘exercised due diligence to verify the veracity of the claims made in the advertisement regarding the product or service being endorsed by him’, the endorser will not be liable for penalty or prohibition from the endorsement of other products.

According to Section 21(6) of the act, if the endorser can ‘prove that he had published or arranged for the publication of such advertisement in the ordinary course of his business, provided that such a defence shall not be available to the endorser if he had previous knowledge of the order for the withdrawal or modification of such advertisement by Central Authority.’

The Draft Central Consumer Protection Authority (Prevention of Misleading Advertisements and Necessary Due Diligence for Endorsement of Advertisements) Guidelines, 2020

In September 2020, the Ministry of Consumer Affairs released the Draft Central Consumer Protection Authority (Prevention of Misleading Advertisements and Necessary Due Diligence for Endorsement of Advertisements) Guidelines to keep an eye on all endorsements and endorsers regardless of the medium streamed on.

With the influencer industry growing rapidly, a lot of influencers have been advertising for increasing their reach, popularity and earn money, ignoring the interests of the purchasing consumers. Hence, the Ministry has made it mandatory to conduct due diligence on the product or the authenticity of the product before endorsing it. Besides, the Draft Guidelines divides endorsements into three main provisions viz. honest statements by endorsers; personally used review products; consumer endorsement including celebrity endorsement and expert endorsements. However, these guidelines are yet to come into force but will shortly be implemented.

Advertising Standards Council of India

The Advertising Standards Council of India (ASCI) established in 1985, is dedicated to the cause of Self-Regulation in Advertising, ensuring the protection of the consumers. It has established the ‘Code for Self-Regulation of Advertising content in India’, intending to ensure honesty, truthfulness, decency in advertising, fair advertising practices in the best interest of the consumers. The Code comprises a series of guidelines for specific advertisements, that help maintain the authenticity of the advertised content. ASCI has also partnered with the Department of Consumer Affairs (DOCA) to address all complaints pertaining to misleading advertisements. The advertising council regularly frames guidelines to enable end-users to make informed decisions regarding their purchases online.

ASCI Guidelines for Influencer Advertising on Digital Media, 2021

The Advertising Standards Council of India in February 2021, announced draft guidelines for social media influencer marketing and has invited public comment until March 21, 2021. This follows the draft guidelines mentioned above from the Ministry of Consumer Affairs that had rules and restrictions on what influencers and celebrity sponsors could do or not do.

Accordingly, the line between genuine opinions and promotional content becoming blurred, consumers must be able to distinguish between the intention of the influencer to influence their opinion genuinely or that for an immediate or ultimate commercial gain by them.

The proposed draft guidelines state that the influencers should ensure ‘disclosure labels to highlight advertising content’ and should be upfront, prominent and visible on all social media platforms. Disclosure labels should be visible within the first two lines of the content on all platforms. An influencer has to compulsorily make a clear disclosure when there is a material connection that could change the credibility of the opinion shared. The Approved disclosure labels by ASCI include #ad, #collab, #promo, #sponsored and #partnership.

Additionally, it proposes the required period for the visibility of disclosure labels depending on the type and manner of the post, such as a textual post, length of the videos, live-streams, audio posts or disappearing videos.

It also outlines the manner of use of such disclosure labels across social media platforms, such as on Instagram, Facebook and YouTube and the like. Blanket disclosures in the profile or at the ‘about’ section of the influencer’s profile will not be considered adequate or sufficient disclosure. Disclosure labels must be added to each of the sponsored posts in English or the language of the advertisement. The contractual agreement between the advertiser and the influencer shall include clauses pertaining to disclosure, use of filters as well as due diligence.

Conclusion

The social media influencer network is all set to change, with the rapidly evolving rules and acts to minimise the grey areas in the arena of advertising. Influencer marketing as a tool is relatively new and instantly escalating advertising parameters. Thus, the social media influencers ought to keep in mind manifold aspects such as due diligence and authenticity, while deciding upon the brand they desire to endorse or advertise.

Consequently, as the nature, scope and consumption of influencer marketing progress, more laws and guidelines, government monitoring, supervision and private claims based on principles of fair competition between brand owners and ethical marketing shall evolve.