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The peculiarities of the legal regulation of Influencer Marketing in the fashion industry

Oct. 11, 2019

Astronomical funds are allocated for advertising in the fashion industry every year. Advertising is aimed mainly at the female audiences ready to buy everything for the sake of a dream, to become younger, more beautiful, thinner and more attractive. Previously, advertising in the fashion industry has been largely distributed through glossy magazines, which, in turn, have represented the interests mainly of large Fashion Houses. The emergence of the social networks has had a significant impact on modern advertising. Now, small companies have also obtained an opportunity to demonstrate their products to the general public.

Currently, people are tired of annoying advertising that seems to haunt us everywhere. Marketers are constantly in search of new and creative methods for advertising the products.

So, currently, Influencer Marketing is one of the most attractive and popular methods for promoting the products at the market. Like product placement, it is not perceived as advertising, but it has an indirect impact on the consumers' consciousness.

 

Influencer Marketing is a method for promoting the products and services through influencers, or, in other words, opinion leaders.

Who are Opinion Leaders?

An opinion leader can be absolutely any person – from a world movie star to an ordinary blogger, whose opinion is authoritative and forms a particular idea of the products among his audiences. In addition, an influencer can be not only a particular person, but also companies, brands, etc., which have an authoritative opinion in a particular field. Advertising the products and services through this method allows building confidence and a positive attitude to the brand and its products, demonstrating their properties and qualities, making a “right opinion” of the audiences, increasing an interest in the brand, the product awareness, the number of sales, etc. 

 

How does Influencer Marketing work?

People having popular accounts in the social networks often receive offers from various companies to advertise their products. The conditions of advertising can be different: for a fee, for providing discounts or for barter, i.e. with a subsequent possibility to keep the products being advertised for themselves.

The advertiser transfers the products or renders a service to the influencer. Further, the influencer demonstrates this product or a result of the service rendered in his profile and reports his positive assessment. It is just this simple and natural advertising generates a desire to purchase the already “tested” and approved products. Thus, the companies have an indirect impact on the people's consciousness.

However, no matter how popular and effective Influencer Marketing is, he/it has his/its risks, which the companies try to protect themselves from. For example, it is a common practice to include such condition as a “morals clause” in advertising contracts. This provision allows the advertiser terminating the contract, if the influencer‘s behavior does harm to the advertiser’s reputation or his/its products, such as committing by the influencer the illegal or immoral actions, a criminal offence, etc. However, it should be noted that the termination of the advertising contracts rarely occurs due to a violation of the “morals clause.” The most common reasons are a radical change in an image, a style or an appearance of the influencer, which do not longer fit the desired image for the product being advertised. For this reason, the contract often prescribes a condition that the change of the appearance during the validity period of the contract without the advertiser’s consent of to it is not allowed. 

 

The legal regulation of Influencer Marketing in the Western countries.

It would be wrong to leave this situation unattended, therefore Influencer Marketing, like any advertising, needs the legal regulation.

In the USA, the Federal Trade Commission (FTC) functions, which is an independent agency of the USA government, which is served to defend the rights of the consumers and which monitors the compliance with the antimonopoly legislation.[1] The Commission has developed methodological recommendations “The FTC’s Endorsement Guides” (hereinafter referred to as the Recommendations) containing the conditions that must be observed for the further approval of advertising. To understand why those Recommendations have been developed, let us consider the following situation: You learn from some person about a new beautiful product that has amazing properties and perfectly performs its functions. Would you like to buy such products? Most likely. However, will your opinion remain the same, if you learn that this person works for the company that manufactures the miracle product and receives the money for advertising?

Thus, the Recommendations reflect the principle of “truth-in-advertising,” or “truth in advertising,” according to which the approval of the products must be honest and not confuse directly or indirectly. The Recommendations include an indication to the disclosure of the ordered advertising by a mandatory indication to this either in a video clip or in a description below a post adding hashtags #ad (Advertisement), #sponsored, #promotion, #paidad, etc. The hashtags should be noticeable and understandable. Even if the influencer is a “face of the brand” or its ambassador, he/it remains an obligation to indicate each time to the advertising nature of the post.

These conditions allow the audiences seeing the connection between the influencer and the advertiser. After all, the Commission believes that the ordered advertising without the indication to this is unfair advertising, as it has a hidden impact on the people’s consciousness. In fact, it is difficult sometimes to determine in the social networks whether this is really a “good advice” or an advertising post. 

In France, there is also the Association for the Advertising Activity Regulation (the ARPP)[2], which has developed “Digital Advertising Communication.” These Recommendations contain a mandatory requirement to identify the commercial cooperation between the opinion leader and the advertiser by any method: with an explicit indication to the advertising nature or using a tag/hashtags, if the identification is not explicit. 

The similar organizations for the protection of the citizens' rights exist in the majority of the countries of Europe. According to the practice of the European countries and the USA, it can be concluded that Influencer Marketing should be explicit and open.  

 

 

The legal regulation of Influencer Marketing in Russia

In the Russian Federation, the regulation of the advertising activity is carried out in accordance with Federal Law No. 38-FZ “On Advertising.” This Law contains the provisions:

  • protecting the Russian audiences from unfair advertising;
  • on the mandatory indication to a sponsorship or advertising nature of the material;
  • on a prohibition for hidden advertising that has an unconscious impact on the people's consciousness;
  • and others.

Also, Federal Law No. 135-FZ “On Defense of Competition,” in accordance with Article 14.2, contains a prohibition for unfair competition by confusing.

Undoubtedly, the Russian legislation already contains some provisions that allow protecting the Russian audiences from the negative consequences of Influencer Marketing in the social networks. Nevertheless, it seems to be necessary to create some special rules and recommendations containing the necessary conditions for the publication and the prohibitions regarding Influencer Marketing, which are similar to those created in the USA and Europe.

 

[1]The Federal Trade Commission // Wikipedia. URL: https://ru.wikipedia.org/?oldid=96992136 (the date of referring: 08.09.2019).

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Author of article

Anna Anischenko

Anna Anischenko

Paralegal