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Influencer Marketing - New decisions on surreptitious advertising, use of hashtags and competition law

There is little doubt about the effectiveness of influencer marketing on social media channels, especially instagram and youtube. Companies are increasingly relying on influencers, sending them new products free of charge for marketing purposes and often supporting influencers financially. This sometimes goes so far that the companies make their own products available to the influencers during a certain promotional period. Nothing wrong with that either. However, the law has a few "cudgels" ready that can become stumbling blocks for companies. The new legal developments in influencer marketing are also important for companies in the music industry. As a specialist lawyer for commercial and [link text=”corporate law Munich” id=”74″] I will summarize the most important recent case law for you.

##1. Hashtag "#ad"
The right to fair competition, regulated in the UWG, is particularly important. In a recent judgment, the Higher Regional Court of Celle (judgment of June 8, 2017 – 13 U 53/17) dealt with the question of whether and when influencer marketing constitutes surreptitious advertising and is therefore unfair. While using the hashtag “#ad” in a sponsored post to identify it as a social media ad may be sufficient. However, this is not the case if the hashtag "#ad" is not clearly recognizable at first glance within the post.

In business transactions, advertising must be clearly identifiable as such. In this respect, the so-called ban on concealment applies. With influencer marketing, the line between expressing a personal opinion on a specific product and applying it in a targeted manner is fluid. The decision of the Higher Regional Court of Celle was specifically about the obligation to label an Instagram post as advertising. A drugstore chain hired an influencer to promote a specific product on Instagram. A total of six hashtags were listed at the end of the post. The hash tag in the second position of a total of six hashtags had the addition "#ad". The drugstore chain argued that this should be enough to make it clear to the informed consumer that it was an advertisement. Finally, the working group of state media authorities recommended using the hashtag "#ad" to identify advertising in social media. There can therefore be no talk of surreptitious advertising.

The Higher Regional Court, on the other hand, saw things differently. It did not decide whether the recommendation of the working group of state media authorities is actually sufficient to actually label social media advertising as such. Even if this were the case, this would not have been sufficient for labeling in the specific case. The hashtag "#ad" was not clear and recognizable at first glance because of its second position. The court expressed general doubts as to whether a mere hashtag at the end of a post could really avoid surreptitious advertising. After all, the advertiser cannot count on the user actually interpreting the hashtag at the end of the post as an indication of surreptitious advertising. A special label would only be unimportant if the nature of the post as commercial advertising was obvious at first glance. According to the court, this is ruled out if the labeling only takes place at the end of the post.

##2. Influencer Marketing
The Berlin Court of Appeal has also dealt with the topic of surreptitious advertising in blogs in a recent decision (decision of October 11, 2017 - 5 W 221/17). This was about the demarcation of self-portrayal from the advertising character of a blog. The blogger had presented fashion items and cosmetics on her Instagram presence, setting "speaking" links directly to the websites of the companies concerned and receiving fees or other benefits, such as discounts or extras - also in the form of free use of the presented products . In the opinion of the Court of Appeal, such a blogger may be obliged under the rules on fair competition to sufficiently indicate the commercial purpose of his appearance. This applies regardless of where the blogger resides in the EU.

It is unfair to fail to identify the commercial purpose of a business transaction, provided that this commercial purpose is not immediately apparent from the circumstances, and the failure to identify it is likely to prompt the consumer to make a business decision that he would not otherwise have made.

The commercial action was critical here. The blogger argued that he was only expressing her personal opinion with the respective product presentation, which he could not be forbidden to do. That's true though. However, it must also comply with the rules of competition when it comes to influencer marketing. An expression of opinion becomes a commercial act if it takes place before a transaction is concluded in favor of one's own company or that of another company and it is objectively related to promoting the sale of goods. Such behavior and thus a business activity should already exist if there is only a probability that the blogger will receive payments or other advantages such as discounts, gifts or free samples of the products. The Court of Appeal considers it rather improbable that the repeated product presentation would only take place out of sheer enthusiasm and an increased need to communicate.

##3. Labelling
The Berlin Court of Appeal also follows the opinion of the Celle Higher Regional Court that a labeling obligation always depends on the individual case, in particular the design of the blog. In any case, the commercial purpose of influencer marketing must always be clear and recognizable at first glance. The clearest way to do this is to mark the blog post accordingly. This is quite unfortunate for companies because it jeopardizes the trust-promoting character of influencer marketing.

Labeling of the commercial purpose is therefore only superfluous if this is recognizable at first glance and without any doubt even without express labeling. It is therefore not sufficient if the average reader only recognizes the advertising effect after a corresponding analysis of the contribution. In the opinion of the Berlin Court of Appeal, this does not preclude the user from paying closer attention to the blog post in misjudgment of the fact that it is advertising.

##4. The consequences for companies
What does that mean for companies? Anyone who consistently relies on influencer marketing has chosen a very effective marketing channel to address young customers in particular. However, every social media post by an influencer must clearly state that it is an advertisement. The best way to achieve this is to explicitly mark it accordingly; whether the mere content of the influencer post is so "promotional" that it is advertising is unlikely to find much recognition in case law at the moment. If an explicit identification is chosen, the use of German terms is recommended in German-speaking countries. In addition, the company for which the social media marketing is carried out by influencers and the influencer must be clearly identifiable.

Influencers cannot successfully argue that they are only acting out of pure enthusiasm for the product. This is also important for companies that want to withdraw from the position that they have only picked up on the already existing enthusiasm for the product. Anyone who contractually binds influencers should, among other things, clearly regulate these points in order not to be exposed to accusations of unfair competition.

Anwalt Gesellschaftsrecht und Handelsrecht

dr Andrelang, LL. M

Specialist lawyer for international business law

Specialist lawyer for commercial and corporate law


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