The New CMA Guidelines: Nowhere to Hide

Tuesday 17th January 2023

The Competition & Markets Authority (CMA) has recently published updated guidelines for social media platforms, brands and content creators relating to paid endorsements/advertisements.

In 2021 the Advertising Standards Authority (ASA) analysed 24,208 Instagram Stories, posts and reels across 122 UK-based influencers revealing a ‘disappointing’ overall rate of compliance with advertising laws. Compliance rates in early 2022 were reported to be at 35%.

At that time the CMA investigated the same issue, agreeing that changes were needed. The new CMA guidelines and compliance principles are designed to make regulatory requirements in this area clear, and ultimately tackle the problem of ‘hidden advertising’.

Whilst primary responsibility is on content creators to comply with these guidelines, businesses who engage content creators to promote or advertise on their behalf should understand both the guidelines and the full regulatory framework governing influencer advertising, as they may also be held accountable for infringing content.

What is a content creator?

The definition of ‘content creator’ includes bloggers, influencers, online streamers, and celebrities. The guidelines apply to paid advertisements on all digital platforms including websites, streaming services and social media platforms.

What are the rules?

If a content creator has been incentivised in any way to promote a brand or product on their online platform, this must be clearly identified as an advertisement. Examples of advertisements include:

  • endorsements;
  • commercial relationships, including sponsorship;
  • competitions (prize draws and giveaways);
  • discount codes;
  • reviews; and
  • content about products that were gifted/ free.

All the above must be clearly labelled by the content creator with “#advert” or “#ad”.

Businesses should be aware that the guidelines apply to both formal agreements as well as informal or verbal arrangements. If a content creator is paid to post an advertisement but fails to label it as such, the regulator expects the business which engaged them to take action, whether that be by asking them to remove the infringing post, or amend it to ensure compliance with the new guidelines.

Content creators found to infringe the above may be in breach of consumer protection laws, ASA code(s), and may be subject to enforcement action.

Do content creators have to declare adverts for promoting their own brands?

It is becoming more and more common for content creators to promote products relating to a brand which they either own (in part or in whole), or are employed by. Advertising laws and these guidelines will still apply in these instances: content creators must disclose when they are getting paid to promote a product.

Responsibility for non-compliant posts

Legal responsibility falls on everyone involved in paid promotions or endorsements to ensure all ads are labelled correctly. Whilst the brand may not physically create the content, they can still be held accountable for non-compliance.

What should businesses do about content creator partnerships?

Good governance and oversight is key. Businesses can protect themselves and mitigate the risk of regulatory action by having clear terms and conditions with content creators which set out the brand’s requirements in plain English, having clear approval processes in place, and by actively monitoring and enforcing those terms and processes.

For more advice on promotional partnerships, the new guidelines and influencer agreements, please speak to a member of our Commercial Contracts team.