EP13: The legal impact of Influencer Marketing on your company

In this edition of the Infinity Nation podcast, Al Keck (CEO and Founder of Infinity Nation) discusses influencer marketing with Iona Silverman from the law firm Freeths. In this 2-part series, they discuss all aspects of influencer marketing, including reputation management, affiliation, the advantages and disadvantages of using influencers to promote your products, and the legal requirement to use #ad.

Transcript:

At Infinity Nation and beyond, we look at the status of your digital landscape and how it affects the growth and profitability of your business. On the show, we will be talking to business leads, partners in the e commerce world, as well as some of our own specialist team to give you actionable insights.

And find solutions to help you on your growth journey. Today we will consider new ideas, stretch our mindsets beyond the status quo, and in the process discover how to gain an edge on the competition and drive some great results. Hi, and welcome.

Today I have Iona Silverman, fries, and we are gonna be talking with influencers, the dos and the don’ts. Hi owner, how are you? Hello. I’m very well, thanks. How are you? Yeah, good. Thank you very much. So, influencers, tell me how you help businesses, brands at Freaks with, with this hot topic. Um, and

marketing work. So I help brands inform their marketing strategy and the messaging that they send out there. Um, and that could be around restrictive products and it could be around the claims that they’re making. Pricing claims, green claims, claims. But it’s also a lot of work we do is around working with influencers and that is helping brands draft the contract that they’ve got in place with influencers and also making sure that everyone knows what the rules are and that they are abiding by them or that the brands are working with their influencers to help them abide by them.

Because the tricky thing with influencers is the requirements. Legal requirement to put hashtag ad on social media in certain situations is on the influencer, but it’s the brand that gets the backlash if it goes wrong. So it is a difficult situation. Yes. I think, well, it, it’s, to me it’s a little bit of a minefield.

Um, but on the, I suppose on the, let’s start on the positives. I mean, I think influencers, whether you and I have had numerous discussions on this before, but I think influencers, the main, are great for brands. To help them find like like minded customers, relevant customers, um, help. I think it helps build trust and credibility.

I was involved in a brand launching into America. Um, and with the right influences, you know, it, it grew tenfold in a very short space of time. Um, so again, it’s what helps improve the reach of this product brand and its awareness and thus it’s, it’s good value for money as part of the overarching.

Marketing mix that has to be tempered. I think with a little bit with a possible possible negatives in terms of brand harm, can you control what the influencer is doing? You, you don’t have as much control and to a degree, how well, how clearly can it be measured, but yeah, talk, talk to me where you’re seeing about where you’re seeing it work.

Well, I completely agree. I think there’s always a tension between. Authenticity and control, and I think where it works really well is where a brand is working with an influencer who genuinely likes that product, who fits well, um, with that product and with the consumers that the brand is trying to target.

Um, then I can see, you can see an absolute explosion of, of, um. productive brand energy because, you know, as a consumer, when I go on social media and I scroll through, there are people that I care about and I like what they do and I like what they stand for. And if they mention a product, even if I know that they, you know, that it’s, they’re advertising it and they’re being paid to do that.

I still, I still really respect that. And I think, oh, that’s interesting. I’ll look into that. Um, I think where it doesn’t work well is where you don’t have that authenticity, where, you know, you just have someone selling a product and it’s quite clear. I think it boils down to people buy from people ultimately, isn’t it?

And it’s just, it’s about you and I saying, Oh, I don’t know if you’ve seen this new brand. I love it. I had a play with this product. You know, it’s. You go, I’ll go and have a look at it. And you say it’s, it’s, it’s replicating that on mass scale. Um, as you say, assuming you valued my opinion, of course.

Absolutely. I think life’s about relationships, isn’t it? And this is no different. You, like you say, the people you value the opinion of, be they people you know, or people online who you have an interest in what they do, that, that is where you’re going to look for advice and, and for new and interesting products.

Yeah, I think that comes back to, again, one assumes that an influencer acts with honesty and integrity. And if it’s a brand they truly buy into and believe in, then, then great, then they’re happy to promote it. If it, if it goes against their beliefs and their values, then, you know, I suppose they have greater.

equity if they go, no, that’s, that’s not for, that’s not for me, but I’m sure there are those that just pawn themselves out and will promote anything that they’re paid to promote, which I think is an interesting debate in my opinion,

influencers with large followings versus micro influencers. Yeah, and we’re seeing micro influencers become more and more popular. Brands spend a lot of time and energy seeking out the right influencer for them because, you know, they can get a brand sponsor who is someone who’s incredibly famous and has got a lot of following and they have to pay that person a lot of money, but at the other end of the spectrum they can have someone who has 2, 000 followers on social And will only, like you say, um, use and, uh, represent products that they really care about and are passionate about.

And that really comes across. Um, people can see that. So I think brands do spend a long time thinking about. which influences they want to use. And there are companies out there now that can help you find that match with the right influencer. I think the thing I would say is always look at the influencer’s digital footprint.

Um, particularly if you’re going to have a longer standing relationship with them, it’s really important to know what they’ve done in the past, because some people may 20 years ago have put a comment online, which isn’t who they are now. And it’s not what they think now necessarily. But if that comment comes to light at any point, that could have a real damaging impact on your brand.

So I think looking at digital footprint is really important. Getting all the skeletons out of the clothing. Absolutely. And you know, it’s not to say don’t work with that person. If you really like them and you think, I want to have a long standing relationship with them, I think they’d be great for my brand, then have a conversation about it and say, Look, you said this thing when you were 18.

Could you just go out and publicly apologise and say that’s not who you are now? Once you’ve cleared that, you move on. It’s much better to do that than it is to go ahead with them. And have a surprise. No one likes surprises, do they? No, no. I won’t mention names, but there’s a hot daytime TV person in the press right now and, you know, and it has been associated with many brands.

As you said, no one likes surprises and that. And that’s the reason for those brands must be tricky. Influencers are human, and they will do human things, and that means that we can’t control them. You can control the messaging that they put out there to a certain extent. Obviously, as a brand, you’re going to want the influencer to be authentic and genuine, so you don’t want to script what they’re going to say.

But you have some control over that. But what you have no control over is what they’re going to do in their personal life or what happens apart from your brand. And that can have a really… damaging impact on a brand. So that’s why it is really important as much as possible to have a watertight contract with these people, to make sure that you’ve set out the expectations of them in terms of brand messaging, but also in terms of, you’ve got, you’ve got a right to terminate if they go and do something crazy that you don’t agree with, um, potentially you stagger your payments to them so that if you do terminate, you don’t lose, you stop paying them at that Things like that are important to get into the contract.

Cool. So that was going to be my next question. Contracts with influencers. How many people have them? How intense or involved are they? Um, I’d say we’re not, when we have done stuff probably more with micro influencers than these mass influencers. On behalf of brands, I, I think it’s sort of been more done on Word than it has done on a app, a contract.

So I’d love to understand, as you say, I can see the benefit of it. So the answer to that is there’s a whole spectrum and it’s really about risk, managing risk. So if you’re going to go into, uh, an agreement with a brand sponsor that’s going to last a year and gonna cost you a lot of money, then you’re going to have a heavily negotiated watertight contract.

Um, If you are doing an influencer contract for sort of, um, less money, maybe the tens of thousands, maybe even the thousands of pounds, I’d still say have, have a contract in place because that’s important if you, someone’s going to do, even if it’s sort of, you know, you’re paying them 5, 000 pounds, they’re doing five social media posts for you.

They’re still representing your brand. And over a period of time and people are going to associate your brand with them, so I’d say still have a contract in place where it gets smaller than that. I can see that the risk of something going wrong generally is low enough that probably it’s not worth spending the money and time and effort negotiating a contract.

But what I have seen on the lower end of the scale of micro influences is, for instance, um, Brand sends out lots of product, lots of freebies, to the influencers that it thinks we’d like to be associated with you. There’s no requirement to post anything on social media, it’s just a freebie. Um, there is still a requirement on that influencer, if they post something, to use hashtag ad at the beginning of their post, because they have got a freebie.

And we can talk a bit more about whether that’s right or wrong and what the brands think about it. But the brands that are trying to do the right thing, often send out a little card with that. freebie saying, you know, please enjoy our product. Um, we hope, we hope you really like it. If you do put anything on social media, please use hashtag ad because that doesn’t force that person to do that, but it just helps encourage everyone to do the right thing and stay the right side of the rules.

So on that case, and if, if you have put that little postcard in whilst sending a freebie out and they don’t use hashtag ad, are you, can you then alleviate potential fines if you can prove that happened or is it still your responsibility? So what would, what will happen at the moment is if the ASA finds that an influencer has not used hashtag ad.

And there are lots of influencers out there that don’t. I see it all the time and the ASA comes down on quite a lot of people, but nowhere near as many people who are as, who are doing it. But say the ASA does come down on your influencers, say you should have used hashtag ad, they will issue a decision saying, don’t do that again.

But you as the brand will be named, uh, alongside the influencer. Um, You can say, well, look, we tried our best and we sent this card out, um, that may or may not make it into the ASA decision. It probably will. So that will mitigate your risk to a certain extent. There are no fines, but it’s about reputation management.

And so, if a newspaper picks up a headline, um, you know, influence as being irresponsible, whatever, um, then your brand might be tarnished because of that. And it’s highly unlikely the newspaper is going to dig down into the detail and go, oh, but the brand tried to do the right thing. So that’s where the difficulty comes.

You know, you still, you know, it is about reputation management. That, that important detail would be, would ruin the story. Yeah. Um, just looking back then to hashtag ad, you know, I know we’ve had a debate on this before Sunday Times Magazine editor gifted loads of products, top 10 best camping products for this summer holiday, none of which have been paid for all of which have been posted in and sent in free of charge, no requirement, if I understand it correctly, no requirement to highlight that that has been gifted and basically, yeah.

Is, is a paid for scenario, bring it to Facebook, Instagram, TikTok, Snapchat, fines, massive knuckle wrapping going on if you don’t use it. That is right. Is this just two worlds not catching up with each other or it’s just, that’s the way it’s always been so it won’t change? I think it’s both of those things.

I think it’s two worlds not catching up with each other. I think print editorial, the rules were always if someone pays for an article, um, or a brand sponsors an article, in the corner it typically says promotional content or something like that. On the editorial page where the editor has some free choice about what they put on the page, um, even though they have been gifted all of that product for free, There is no requirement to say that I think the rationale behind that was, well, the editors got editorial control.

They can choose what to put in, what not to put in. They’ve tested the product, et cetera. However, when you look at the world of social media, you could say exactly the same thing. You could say that someone’s been sent 10 camping, you know, 10 best pieces of camping equipment and over the course of time has put them on their social media.

They would still be required to use hashtag ad. Um, I think it’s a question of the rules developing slightly in parallel and also the volume on social media is so high, you know, when you read a newspaper, you know what you’re looking at. When you, when you go on social media, you’re scrolling, you’re looking at things quickly.

The volume is huge. Um, it is just a different world. I think it’s a really interesting one because you may have been sent 10 camping things, but you only choose to. to share one. So, you know, in that way, are you not an editor in your own social media piece? Yeah, arguably, you absolutely are. And, and so what a lot of people do, influencers do is they’ll write a little blurb about the product and then they’ll say this was kindly gifted by so and so because to their mind it’s not an ad.

They want to be transparent that something was gifted. Um, and so they do it that way, but the ASA has been really clear that that’s not enough, that you need to put hashtag ad and you need to put it at the beginning of your post. Yeah, I think it’s an interesting, as you say, interesting of two worlds because I see your point on volume, but the same, I think the algorithms are being smarter and smarter now, you know, and phones are listening without a doubt.

Cause I, I talked to someone about, um, a, uh, a new, uh, electric car coming from a French, uh, French brand and he’d not heard of it. And he was going through, so literally it was there within. two hours. Yeah, it definitely happened. So I, I use the volume piece of debate to a degree because I think it is tailored to what, what it listens in on, what we like.

But doesn’t that make the imperative all the more that we should be seeing hashtag ad? Because if you’ve said, if you’ve mentioned a brand and then up, it pops in your Instagram, then are you more likely to click on it and think, Oh, I was just thinking about that. Yeah, you should, you should be told whether something’s an ad or not.

Yes. No, I agree. I agree. I just, I think it’s a fast paced and ever changing world, isn’t it? Absolutely. With AI around the corner, where will that take us? So I heard a statistic the other day, which was that 94% of influencers are already using AI, which is mind boggling. But when you think about how great AI can sometimes make you look, I understand why they’re doing it.

And so there’s ASA rules that say that if you are advertising, for instance, a beauty product, you can’t over enhance what the effect of that product by using a digital or a cosmetic way of changing it. So you can’t use false eyelashes if you’re advertising mascara. Now you can’t use filters, for instance, to make yourself look.

more bronzed if you’re advertising a tanning product. Um, and there have been decisions on that, but there are no decisions yet on AI. And I’m really interested to see how the, how the ASA keeps up with that because it will be very difficult to, um, determine what’s been, what is produced using AI and what’s not as a consumer.

It’s going to be very difficult. Well, I mean, I’d even challenge how they, how they stay up together if someone has used a filter, how do they police that? That must, that would be massively late for intensive care. Well, you seem to be very tanned in this picture, but not so much. Yes. And ASA works is that as soon as they receive one consumer complaint, they investigate it.

So actually, it depends what consumers are complaining about. And do you know what? There’s enough people in this country who complain about enough things. I’d say it’s relatively high risk. Well, I think if you’re using. AI to help write copy and stuff like that. How do you track, I mean I’ve used, I’ve played on it, used it, some of the stuff it comes out with is very impressive.

How do you track what a human had written and what AI had written? I think we’re on the edge of a very interesting revolution in terms of content creation, be that influencer content, music, copy, everything, versus how the law keeps up with that. Yeah, I likened it and only the elder generation run in the days of mail merge and, you know, I said, Oh, isn’t this fantastic?

You know, we can quickly print all these labels. We can also make a thousand mistakes in 10 seconds because if we get it wrong, you know, is there the danger and this is like the off topic that the danger of AI then skewing views or tainting copy to a certain directional. I think it’s, I think it’s great, but I think it’s.

It’s potentially very dangerous as well. Yeah, I agree. I agree and I’ll be really interested to see where it goes and I think bringing it back to influencers, I predict that the ASA might introduce a hashtag AI requirement if you’ve used AI. It would seem like the sensible thing to do. I don’t know whether they will or not.

Again, I think policing that is going to be tough. Yeah. Very tough. Okay, um, any other things?

Um, so we’ve talked a bit about, um, using hashtag ad in the right way. Um, we’re seeing a trend of de influencing. I don’t know if your people you work with are seeing that. Um, So that’s where instead of saying this product is so great, people say this product is so rubbish, don’t buy it, um, my personal view is why would you trash someone else’s brand, why is that helpful?

Um, but the one thing I would say on that is if the reason someone is doing that is to either directly or indirectly promote another brand. Then that’s still influencing and you should still be using hashtag ad. And we haven’t seen any, we haven’t seen any decisions in that space yet, but I can fully imagine somebody saying, you know, this product’s rubbish.

Don’t use it. But over their right shoulder, you can see, um, a competitor brand. Is that if you’re being paid by that competitor brand to produce that content or, or to promote their product and that they have no control over how you’ve Promoted that content, then, um, that would still be an advert and you’d need to use hashtag ad.

And I’d also say if you’re a brand that doesn’t want that to happen, then potentially think about putting it in your contracts requirement that they don’t trash their party brands, because it’s not, it’s not nice, is it? No, no, I agree, but I suppose. Is that not what the whole Trustpilot, FIFO world is around in terms of if someone does give you poor service?

And is it just that to, you know, if service is that poor. Yeah.

I think for me, it’s two things. One, it depends where it comes from. If it’s a genuine, you know, I tried this and it didn’t work or didn’t do what it said on the tin, then that’s one thing. But if actually what you’re doing is trashing a brand in order to promote a competitor brand, then I think you still have to see that as advertising and play by the rules.

I think, I think I agree with you. It’s just that next level. I mean, if we go back to the beginning of the podcast, you and I are sort of saying, you know, I might make a recommendation to you, but almost to say, Definitely don’t go to this place. It was service was rubbish. The food was appalling. It’s both stuff, both those conversations of this is a great product.

Don’t bother with this is started in that same influencing way. And so yes, I suppose it’s a different forum in the main where most people would put their negative on in terms of beer, you know, a review on Google or Trustpilot or a other of one of these services, if taking it to a next level, I suppose, to publicly broadcast it out there.

Ally, go back to that crux. It comes back to authenticity, doesn’t it? Yeah. It comes back to if, if, you know, if you genuinely don’t like that product for whatever reason, and you are authentic in that, then I don’t have a, I don’t have a problem with someone saying it. Um, but I think what you have to remember is if you’re saying it in order to promote third party brand, then you just need to still use hashtag ad.

Don’t think you can get around it because, um, it’s still an advert. Yeah, I think trashing a brand to promote another I think is, is going to a new level, isn’t it? Yeah, agreed. And I would view, I’m not sure I’d want an influence to do that, I don’t think that reflects well on the brand. Absolutely, and that’s why I think if this trend continues, thinking about putting it in your contract, to require people not to do that as their means of promoting your brand, because it just doesn’t look good, does it?

You wouldn’t want it you? Yeah, and we’ve mainly focused on like. Facebook, Instagram, any views around YouTube and obviously more and more people are putting more video out now. Um, in terms of the law, YouTube gets treated in exactly the same way as the social media platforms. So use of hashtag ad, making sure that you’ve got contracts in place with people who are doing it.

You know, there’s absolutely tons of platforms out there. You’ve got Twitch for gaming fans. Um, and you’ve got new platforms. emerging all the time. I think TikTok’s the one that we’re seeing the most of at the moment, but it’s such a rapidly changing world that who knows what will be here tomorrow. Yes, absolutely.

There it is. Rapidly changing. Um, I always like to finish with top tips. What would your top tips for influencers working with and managing influence? So I think my top tips are choose, choose your influencer carefully. Think about someone that aligns with your brand and your brand values. Um, look at their digital footprint.

Um, and once you’ve done that. Consider whether you need a contract in place with them. You know, if you’re going to have an ongoing relationship with them, and they’re going to be affiliated with your brand, then you probably should do in order to manage your risk. And then the third, I think my third top tip is, think about, think about how they’re going to use hashtag ad, do you need to, do you need to give your influencers some training on that, do you need to explain it to them, do you need to just have the conversation and say, look, this is really important to us, so please do it, it’s in the contract, but explicitly we’d like to have this conversation with you, or if you’re sending out freebies, do you want to send out a card that just explains your position on it, just to make it clear really, because It is a requirement, has been a requirement for some time, but the ASA is still clamping down on it.

And I think what we haven’t talked about yet on this podcast is the fact that although the ASA can only take your content down and that may or may not damage your reputation, the CMA is about to get the power to levy fines of up to 10% of global turnover. So we could be seeing fines in this area. So it is going to become more important.

And one would assume that they’ll want to make some examples pretty early on. Absolutely. And in terms of advertising, this is definitely an area where examples are made. Okay. Brilliant. Iona, thank you so much as ever. Good to speak to you And we’ll speak with you soon. Thanks so much. Speak to you soon.

Take care. Bye.