Competition Bureau cracks down on paid posts of social media influencers

Marketing firms must work with influencers to make it obvious to consumers when a recommendation is actually an advertisement

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The Competition Bureau is cracking the whip on marketing companies that promote goods and services through social media influencers.

The Bureau said on Thursday it sent letters to nearly 100 brands and agencies, asking them to review their practices, after reviewing marketing practices of influencers across health and beauty, fashion, technology and travel industries.

“Businesses share a responsibility with influencers when they post advertisements on social media, as they may be liable for false or misleading content,” the Bureau said in a press statement, noting that it wants to make sure consumers can easily determine when posts recommending goods or services are being paid for.

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With the explosion of the likes of social media sites such Twitter and Instagram over the past decade, businesses have been tapping social media channels to promote their products and services, paying social media entrepreneurs — so-called ‘influencers’ with large followings —? tens or even hundreds of thousands of dollars for the promotional posts.

The bureau says marketing firms must work with influencers to make it obvious to consumers when a recommendation is actually an advertisement.

“Businesses share a responsibility with influencers when they post advertisements on social media, as they may be liable for false or misleading content,” the Bureau noted.

For example, a beauty blogger may be supplied free lipstick in exchange for a post drawing attention to the cosmetics company, complimenting its flattering shades.

“When navigating the digital marketplace, consumers often rely on the opinions shared by influencers,” Matthew Boswell, Commissioner of Competition, said in a statement. “To make informed purchasing decisions, consumers must know if these opinions are independent or an advertisement. Ensuring truth in advertising in Canada’s digital economy is a priority for the Competition Bureau.”

To be compliant with Canadian laws, influencers must disclose having a relationship with the brand whether they receive money, commissions, complimentary merchandise or services, discounts, trips, event tickets or otherwise have a business, family or social connection with the brand. Product reviews and testimonials should also be based on honest experience with the product being advertised.

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Influencer marketing falls under the Competition Act just as traditional advertising does, which means anyone using deceptive marketing to promote a business may face fines or imprisonment.

In 2018, the global Instagram influencer market generated US$1.3 billion in revenues and is set to double by 2020, according to a report in August by online data portal Statista. The number of influencer posts on Instagram is expected to double, exceeding six billion by that time.

In June, Instagram launched an ad transparency tool allowing advertisers to mark their branded content with a “Paid partnership” tag, in a move to address business’ evolving approach to advertising on social media.

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