The Competition and Markets Authority (CMA) has launched an investigation into influencer marketing, specifically looking at the problem of social stars failing to disclose brand deals.
As part of its investigation, the CMA has written to a number of celebrities and influencers to better understand the nature of the deals they have in place with brands.
The CMA investigation is considering the extent to which influencers are clearly and accurately identifying commercial relationships and whether people are being misled.
The CMA said it has already seen examples of posts which appear to promote or endorse products without clearly stating if it been paid for or offer the celebrity’s personal opinion on the benefit of a product without clearly disclosing if they are being paid by the brand.
George Lusty, the CMA’s senior director for consumer protection, said: “Social media stars can have a big influence on what their followers do and buy. If people see clothes, cosmetics, a car, or a holiday being plugged by someone they admire, they might be swayed into buying it.
“So, it’s really important they are clearly told whether a celebrity is promoting a product because they have bought it themselves, or because they have been paid or thanked in some way by the brand.
“If the CMA finds practices that break consumer protection law, it can take enforcement action."
The government body is also asking the public to report on the products they’ve bought as a result of endorsement by a social media star.
Influencer marketing – and the problem of regulating it – has been under the CMA microscope for some time but this marks the first step in the body actively rooting our bad actors in the space, as opposed to simply reacting if and when they are reported by consumers or other influencers.
The Advertising Standards Authority (ASA) has previously described regulating this sphere of marketing as akin to a game of ‘whack-a-mole’ with chief executive Guy Parker admitting it will “never fix this entirely but the ASA and the CMA have got to make sure we’ve got the issue of non-labelling under control".
The CMA has said those guilty of flouting the rules, set out by the Committee for Advertising Practice and the ASA, will pay a “heavy reputational price” but has indicated that it is “open to undertaking further enforcement work,” such as fines.
Consumers, meanwhile, are becoming increasingly frustrated with the lack of obvious labelling of commercial deals. A recent survey conducted by retail marketing firm Bazaarvoice found that almost half (49%) of its 4,000 respondents would like to see ad regulators enforce stricter rules for sponsored influencer posts. A further 62% felt influencer content 'takes advantage of impressionable audiences'.
While the way content is badged has been subject to scrutiny from regulators, so has the integrity of influencer marketing. In June, Unilever's top marketer Keith Weed called on the industry to take "urgent action" now to rebuild trust in influencer marketing.
Weed's call to arms was centered around the damaging practice of buying followers, or influencer ad fraud; an issue brands like L'Oreal and Samsung have already been working to solve.
A recent study from the World Federation of Advertisers (WFA) found that 65% of multinational brands have plans to increase their influencer investment in the coming 12 months, with Instagram being the main target.