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CMA issues warning to marketers around paid-for influencer endorsements following Social Chain investigation


By Rebecca Stewart | Trends Editor

August 11, 2016 | 4 min read

The UK's Competition and Markets Authority (CMA) has signaled that it is prepared to clampdown on social media campaigns that mislead consumers.


Influeners like Zoella are likely to be affected by the government crackdown / ADVERTISING RULES INFLUENCER CRACKDOWN

The government division, which is Britain's primary competition and consumer authority, has issued a warning to brands and marketers around online reviews and endorsements following an investigation into the marketing practices of digital agency Social Chain.

The CMA has taken enforcement against the Manchester-based social shop for using its own social media accounts, as well as the profiles of widely-followed social media influencers to promote films, games and various commercial apps – without readers being informed that the content was paid-for advertising.

The ads, which were posted to Twitter, YouTube and Instagram, may have been difficult for readers to "distinguish from other posts, conversations and jokes they appeared alongside" according to the regulator.

Social Chain has accepted the ruling, and agreed that in future it will ensure all campaigns it posts or arranges will be clearly badged so they are distinguishable from other content found on social media.

While it doesn't name names, the probe found that between March and July 2015, 19 marketing campaigns that the agency arranged involved undisclosed advertising.

The promotions appeared on social media accounts with a combined reach of around four million followers; some of the campaigns even trended on Twitter, which the watchdog said may have increased their readership further.

As a result, the CMA has sent letters to 15 companies and 43 "social media personalities" who published content for Social Chain to warn them that undisclosed endorsements could be breaching consumer protection laws.

In a separate case, the authority also came down on knitwear retailer Woolovers Limited, which it blasted for "cherry-picking" reviews with four stars or more publication on its website. The brand has since undergone a change of ownership has apparently engaged "constructively" with the CMA during this process to improve its practices.

"Social media personalities can have an important influence on people’s views, especially young people. It is therefore crucial that when people decide what to buy, they should not be misled by adverts on social media that read like independent opinions," said Nisha Arora, CMA's senior director for consumer enforcement.

"Businesses, marketing companies and authors of online content all need to play their role in ensuring that advertising is clearly labelled as such.

"It is also important that, when consumers read reviews on a company’s website, they are given the complete picture. Critical reviews must be published as well as those that praise the company’s products and services," she finished.

The CMA has also published an open letter to marketing departments, marketing agencies and their clients stating: "While it is perfectly legal to market products through social media, blogs, videos and other online publications, it is important that this is done honestly, openly and in compliance with consumer protection law."

The most recent investigation comes after the government gave Starcom Mediavest and TAN Media a slap on the wrists in April after the agencies arranged for endorsements in online articles and blogs on behalf of MyJar, a short-term loan provider, without making it clear it was advertising.

Its newer, tougher, approach to influencer marketing is likely to make Facebook and YouTube influencers like Zoella (pictured) and brands more cautious when it comes to social campaigns.

Marketing Influencer Marketing Social Media

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