Key points on Influencer Advertising guidelines in Digital Media

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Introduction

With the lines becoming blurred between advertising in its traditional form and content which is posted on digital media for commercial gain, the Advertising Standards Council of India (“ASCI”) has formulated the Guidelines for Influencer Advertising in Digital Media (“Influencer Guidelines”). The aim of the Influencer Guidelines is twofold. First, they seek to enable consumers to identify and distinguish paid promotional content from other content posted by influencers. Second, they aim to prevent exploitation of customers through misleading claims made by influencers / manufacturers / sellers. The Influencer Guidelines must be complied with for all posts published by influencers on or after 14 June 2021.

Overview of Influencer Guidelines

The Influencer Guidelines define an influencer as someone with access to an audience and power to affect such audiences’ purchasing decisions or opinions about a product, service, brand or experience, because of the influencer’s authority, knowledge, position, or relationship with their audience. Influencer Guidelines go one step further and define virtual influencers as fictional computer-generated people or avatars and behave similarly as influencers.

All posts made on digital media by influencers / virtual influencers / their representatives for which there is a material connection, i.e. compensation (in cash or kind) is provided to such influencer must carry explicit disclosures.

The Influencer Guidelines stipulate that a material connection includes but is not limited to any benefits or incentives provided to the influencer / virtual influencer such as (a) monetary compensation; and / or (b) other compensation which includes (i) free products or unsolicited gifts, (ii) discounts, (iii) contest and sweepstake entries, (iv) trips or hotel stays, (v) media barters, (vi) coverage, (vii) awards, or any (viii) family or employment relationship.

Material connection is the key ingredient for disclosure obligations—no disclosure is required if the influencer is simply posting about any product or service that they may have purchased and liked with no material connection with the advertiser. If any material connection exists between an influencer and an advertiser, a disclosure is required even if the content of the post is an unbiased evaluation or originating independently from the influencer.

The term, digital media, has been kept deliberately broad as the intent of the Influencer Guidelines is to protect the consumers – it is all-encompassing ranging from the internet, in-app promotions, digital television, social media, etc. The disclosure requirements in the Influencer Guidelines are also applicable to live streams and content in audio media.

The Influencer Guidelines mandate the disclosures must be (a) prominent and not hidden (i.e. readily visible / audible); and (b) understandable by an average consumer. For content which is not accompanied by any text (for example, Instagram or Snapchat stories), the Influencer Guidelines mandate superimposing the disclosure label upon the photo/video in a manner clearly visible to the average consumer. Labels including “Advertisement”, “Ad”, “Sponsored”, “Collaboration”, “Employee”, “Partnership”, “Free Gift” have been identified as permitted disclosure labels in the Guidelines. There are also timelines for disclosure notices to flash based on the length of audio / video / Instagram story or Snapchat. Disclosure tools of platforms may be used in addition to influencers’ own disclosures. Virtual influencers have also been directed to disclose to consumers that their interaction is not with a real human being.

The responsibility for the (a) disclosure of material connection; and (b) compliance of the content with the Influencer Guidelines, the ASCI Code for Self-Regulation of Advertising Content in India (“ASCI Code”) and any other relevant ASCI guidelines lie on both the advertisers and influencers. It appears that the responsibility for the contents of an advertisement would rest on the advertiser and the responsibility to making adequate disclosures in the post would lie on the influencer.
Under the Influencer Guidelines, influencers have also been advised to undertake due diligence before engaging in promotional advertisements and satisfy themselves that the advertiser can substantiate the claims made in the advertisement / social media post, etc.

A copy of the Influencer Guidelines For Influencer Advertising In Digital Media as available on the ASCI website can be accessed here. Further details are on ASCI. Social which has been launched by ASCI specially for the digital space is a platform for influencers and creators to learn about how they can be more responsible and maintain the trust of audiences and brands.

Conclusion

The way the world consumes has changed in the digital age. Today, influencers are key to consumption patterns and behaviour globally. Coupled with the pandemic, much of the retail industry now operates online through e-commerce channels. Influencers, therefore, play a huge role in marketing products with short clips or posts on social media. It is, thus, important to regulate the way the influencers operate to protect the interest of the consumer.

The Bombay High Court has held that social media influencers as a nascent category of individuals who have acquired considerable follower base on social media and command certain degree of credibility in their space . The decision of the Bombay High Court further notes the need to impose certain responsibility on such influencers keeping in mind the power they wield over their audience and the trust placed in them by the public. Whilst the decision is under consideration in appeal, the Influencer Guidelines tackle similar issues.

Though regulations governing celebrity advertising are already covered under the ASCI Code, the Influencer Guidelines appear to create digital media specific regulations for the category of social media influencers who may not typically qualify as a celebrity under the parent ASCI Code. The ASCI Code has high thresholds for those classified as celebrities. A celebrity under the ASCI Code is one whose (a) compensation is equal to or more that INR 20,00,000; and (b) name is listed in the top 100 celebrities under lists published by the likes of Forbes, Times, etc. Most influencers today certainly do not meet these criteria and the Influencer Guidelines therefore bridge the gap in regulating the space. It is safe to say, however, that celebrities advertising through digital media would, in addition to the ASCI Code be required to adhere to the Influencer Guidelines.

The due diligence requirements of the Influencer Guidelines tie in with the provisions of the Consumer Protection Act, 2019 and the ASCI Code where endorsers will not be held liable if they can establish that they have carried out a due diligence prior to endorsing the product. This has already changed the way endorsers and celebrities function. In the absence of judicial precedents, out of abundant caution, many now demand a legal diligence certificate to be issued to them as a condition precedent to signing their agreement; akin to a due diligence report prior to the takeover of a company. Influencers will certainly demand additional representations and indemnities in their arrangements with advertisers.

Initially, concerns were raised about how ASCI planned on monitoring violations of the Influencer Guidelines. ASCI has engaged a French technology provider, Reech2, to screen all digital media for compliance. The Reech Influence Cloud platform uses artificial intelligence to identify lack of disclosure on posts of a commercial nature on social media.

It is pertinent to note that ASCI is a self-regulatory and voluntary organization containing certain codes presently applicable only to its members. As such, its guidelines do not classify as the law of land in terms of enforceability in a court of law. However, the ASCI Code has received judicial recognition from courts in India from time to time and is generally followed as an industry wide practice for advertising. Similarly, the Influencer Guidelines could also lead the way to regulating non-traditional forms of advertising by influencers / virtual influencers.