By Aastha Mathur on November 30, 2021
1. Introduction
Social media marketing has disrupted traditional forms of sales promotion so much so that presently the Indian influencer market is valued at about INR 900 Crore.[1] In common parlance, an “influencer” is an individual who leverages her “followers” on platforms such as Instagram, TikTok to review, promote and endorse products or brands. Advertisers are keen on collaborating with online creators as the space offers greater brand visibility and audience engagement.
Despite its enormous reach and potential to impact purchasing decisions, influencer marketing has remained largely unregulated. While, consumers trust their favourite influencers, in the absence of appropriate disclosures, they are unable to distinguish between a genuine review of a product and paid brand promotion. This creates scope for deception, misinformation and misrepresentation. The Consumer Protection Act, 2019 (“CPA”) aims to overcome this by penalizing and prohibiting endorsers who make false or misleading representations about a product’s quality, quantity or usefulness. Simultaneously, it is also important to formulate best practices to foster transparency in the industry.
In this context, the Advertising Standards Council of India (“ASCI”) released “Guidelines for Influencer Advertising in Digital Media” (“Guidelines”) on May 27, 2021.[2] The Guidelines provide a benchmark for influencers to create content responsibly and with an overarching focus on consumer protection. Our November blog post provides an overview of the Guidelines and examines the way forward.
2. Key Definitions
2.1 Influencer: is an individual who has access to an audience and the power to affect their purchasing decisions or opinions about a product, service, brand or experience due to the influencer’s authority, knowledge, position or relationship with the audience. Avatars or computer generated “people” have been defined as “virtual influencers”, and are required to comply with the Guidelines. The definition of an influencer under the Guidelines is extremely wide in scope and does not distinguish between influencers on the basis of their follower count[3] or niche like fitness, travel, photography, beauty, food and lifestyle, etc.
2.2 Digital Media: includes means of communication that can be transmitted over the internet or digital networks and includes communication received, stored, transmitted, edited or processed by a digital media platform. Digital Media includes sponsored posts, branded content, promotional blogs, paid-for links, teasers, viral advertising, augmented reality, native advertising, video on demand, free video, pay per view, mobile broadcast, mobile, communications content, websites, blogs, apps, NSTV (non-standard television), DDHE (digital delivery home entertainment), DTT (digital terrestrial television), etc. Once again, the ASCI has ensured that all forms of digital content is brought within the ambit of the Guidelines.
2.3 Material Connection: means any connection between an advertiser or brand and influencer that may affect the credibility of the representation made by the influencer. Material connection includes benefits and incentives, monetary compensation, free products, unsolicited products, discounts, gifts, contest entries, hotel stays, media barters, awards or any family or employment relationship, etc. It is incumbent on the influencers as well as advertisers to disclose material connection, if any, between them so that the consumers can take informed decisions to buy a product or service. Advertisers are also required to ensure that influencers abide by the Guidelines in letter and spirit and amend or delete posts which are non-compliant. Additionally, on July 21, 2021, the ASCI issued an addendum to the Guidelines. If an influencer or advertiser dispute that the content is not an advertisement due to lack of material connection, they will have to support their claims by presenting evidence before ASCI. The evidence shall include a declaration from the advertiser or proof of purchase of featured products to refute material connection. The type of evidence required by ASCI appears to be limited.
3. Obligations of an Influencer
3.1 Disclosure: All content published on the influencer’s account must disclose any material connection to the audience i.e. that the content is sponsored, part of a collaboration, related to a contest, etc. The material connection need not be monetary, for instance, a familial relationship is also a material connection. This disclosure can be made by the influencer or their representative, and must be upfront and prominent. Posts and videos with a caption should carry a disclosure like #ad[4] in the description. It must not be buried in a group of hashtags. For stories, the disclosure tag must be superimposed on the video. In case of a livestream or podcast the influencer must make the disclosure in the beginning, end, and before and after any break. The key criteria for disclosure is the presence of material connection between the influencer and advertiser. Disclosure is not required when the influencer is simply informing the followers about a product or brand which they bought and genuinely liked. The Guidelines are silent on how ASCI will monitor content posted by unscrupulous creators who do not disclose a material connection with an aim to circumvent the Guidelines. As per a news article[5], it appears that ASCI will deploy an influence cloud platform created by Reech, a French technology provider which uses Artificial Intelligence to identify lack of disclosure on posts of a commercial nature on social media.
3.2 Due Diligence: The influencer must ensure that any claim that is made can be substantiated. This is in line with Section 21(5) of the CPA[6] where endorsers will not be held liable if they prove that they carried out a due diligence prior to endorsing the product. An influencer promoting for instance, a clothing line for being 100% cotton, should review the clothing line and ensure that the advertiser will deliver on these claims. Influencers can also demand contractual indemnity or a due diligence report from the advertiser as a pre-condition to engagement. While, demanding such contractual terms may be easier for mega or celebrity influencers having over 1 million+ followers, it will be difficult for small influencers with low follower count due to an unequal bargaining power between the influencer and the advertiser. Therefore, it is critical for such influencers to exercise caution, especially while promoting new products or lesser known brands.
4. Consequences of Non-Adherence
Any person who finds the influencer’s content to be misleading or non-compliant with the Guidelines can raise a complaint with the ASCI. The ASCI will issue a notice to the influencer as well as the advertiser. The influencer can either amend or delete the content and inform ASCI or contest the complaint. Though ASCI does not impose any penalty for non-compliance, it could escalate non-compliant cases to the government and sectoral regulators like the Central Consumer Protection Authority established under CPA, civil courts and consumer forums, to protect the interests of the consumers.
It is important to note that ASCI is self-regulatory body for advertising content in India. Consequently, the Guidelines do not emanate from any statutory provision and lack the necessary legal sanctity. While, the Guidelines can act as industry best practices, ASCI cannot penalize or adjudicate non-compliance. However, the aggrieved can seek relief under CPA. Section 21 empowers consumer protection authorities to conduct investigation on whether an advertisement is false/misleading/prejudicial to consumer interests. The authorities can issue directions to discontinue such content and impose penalties up to INR 10 Lakhs. Such penalties can also be imposed on an endorser. In case of repeated contraventions, an endorser may face increasing penalties to a maximum of INR 50 Lakhs and be prohibited from endorsement activities for a period of 1-3 years.
5. Conclusion
The Guidelines are a positive step to ensure greater transparency and accountability in the social media marketing space. Online content creators are becoming aware of their social and moral responsibility towards consumers due the influence they command over their followers’ purchasing decisions. The ASCI is equally proactive regarding implementation of the Guidelines in letter and spirit. In fact, recently some celebrity influencers had posted content on their Instagram accounts without necessary disclosures. ASCI directed them to edit the post by putting a “paid partnership” hashtag. It is encouraging to note that the celebrity influencers complied and made the necessary edits. We hope that Guidelines will continue to foster best practices and protect consumer interest.
[1] See https://www.financialexpress.com/brandwagon/influencer-marketing-industry-size-to-reach-rs-2200-crore-in-india-by-2025-report/2332321/ [last accessed November 30, 2021]
[2] The Guidelines can be accessed at https://asci.social/guidelines
[3] Broadly there are 4 categories of influencers on the basis of number of followers: (a) Nano (1K – 10K followers), (b) Micro (10K – 100K), (c) Macro (100K – 1M) and (d) Mega or Celebrity (1M+)
[4] The appropriate hashtags include: #Advertisement, #Ad, #Sponsored, #Collaboration, #Partnership, #Employee, #Free gift
[5] See https://www.financialexpress.com/brandwagon/asci-issues-final-guidelines-for-influencer-advertising-on-digital-media/2260148/ [last accessed on November 30, 2021]
[6] Section 21(5) states that no endorser shall be liable to a penalty under sub-sections (2) and (3) if he has exercised due diligence to verify the veracity of the claims made in the advertisement regarding the product or service being endorsed by him.