Influencer marketing is increasing in popularity in Canada and can be an effective way to promote your brand. Influencers are online personalities that use social media to share their expertise and opinion about products or brands with their followers. In order to tap into the influencer’s network, businesses pay or otherwise compensate influencers to share content that features their products or brand. Influencer marketing comes in all shapes and sizes. For example, it includes a social media model promoting a certain brand of makeup or an athlete recommending a particular piece of workout gear. Recently, even the Government of Canada has utilized influencer marketing to disseminate information regarding the dangers of opioid usage among young people.
Regulation of influencer marketing in Canada
In Canada, the Competition Act (the Act) regulates misleading and deceptive marketing practices. Despite the fact that influencer marketing may operate differently from traditional advertising, the Competition Bureau has made it clear that the Act also applies to influencer marketing. In its Deceptive Marketing Digest, the Bureau states, “The Competition Act prohibits misleading advertising and deceptive marketing practices. These provisions apply to influencer marketing just as they do to any other form of marketing.”
Apart from the Act, Advertising Standards Canada (ASC), an industry body committed to creating and maintaining community confidence in advertising, also places restrictions on influencer marketing. The ASC has promulgated its Canadian Code of Advertising Standards (the Code), which sets the criteria for acceptable advertising. Under the Code, consumers, advertisers, and special interest groups have the ability to make complaints, which can result in the advertiser being required to amend or withdraw the impugned advertisement. The Code requires influencers to disclose any “material connection” between themselves and the entity making the product available to the influencer. “Material connection” is broadly defined and means any connection that may affect the weight or credibility of the representation, including benefits, monetary or other compensation, free products, discounts, gifts, contest and sweepstakes entries, and any employment relationship.
In January 2019, ASC recently updated its Disclosure Guidelines for influencer marketing, which include several Do’s and Don’ts for disclosure. Some recommended practices from ASC are as follows:
- Disclosures should be clear and use widely accepted hashtags such as #ad or #sponsored;
- Disclosures should be independent of social media network or channel specific settings. For example, using the social media platform settings to link the account with the advertiser does not necessarily mean there has been effective disclosure;
- In videos, disclosures should be upfront;
- Disclosures should be made in the language of the endorsement;
- Disclosures should be in close proximity to the endorsement;
- Disclosures should be specific about the brand, product, and what was given; and
- Disclosures should be clearly communicated and should be written in unambiguous language.
Influencer marketing is a valuable way to promote your brand. However, when engaging with influencers, companies should ensure that they effectively disclose their connection with their brand in an upfront and clear manner. Failure to do so can attract liability under the Act as well as result in non-compliant advertisements pursuant to the Code. In addition, there are reputational risks with failing to disclose such material connections.