Written evidence submitted by the UEA Centre for Competition Policy

 

 

 

House of Commons Select Committee on Digital, Culture, Media & Sport __________________________________________

Inquiry response from the

Centre for Competition Policy

University of East Anglia, Norwich Research Park, Norwich NR4 7TJ

 

 

Date: 7 May 2021

Authors:

 

This consultation response has been drafted by the named academic members of the Centre, who retain responsibility for its content.

As an academic research centre, we welcome explicit citation and sharing of this consultation response and the research cited within it. If you would like to discuss the evidence in more detail, please feel free to contact the centre or the named academics.

 

 

The Centre for Competition Policy (CCP)

CCP is an independent research centre established in 2004. CCP’s research programme explores competition policy and regulation from the perspective of economics, law, business and political science. CCP has close links with, but is independent of, regulatory authorities and private sector practitioners. The Centre produces a regular series of Working Papers, policy briefings and publications. An e-bulletin keeps academics and practitioners in touch with publications and events, and a lively programme of conferences, workshops and practitioner seminars takes place throughout the year. Further information about CCP is available at our website: www.competitionpolicy.ac.uk

 


We welcome the opportunity to contribute to the House of Commons DCMS Committee’s inquiry into influencer culture. We respond here only to the questions posed for which we have expertise. As this is submitted electronically, we have included hyperlinks to sources used, which may be useful as additional resources and evidence.

 

How would you define ‘influencers’ and ‘influencer culture’? Is this a new phenomenon?

 

1.     We define influencers as individual social media users that have the ability to influence the opinions, decisions, and buying behaviour of others due to the nature of the relationship they have with those that consume the content they produce. Certain content platform services may set thresholds of followers that distinguish influencers from other users. We believe such thresholds are less important identifiers, though they may be useful for service providers to limit access to monetisation schemes, and of course, more followers can mean more influence.

 

2.     In our response, we address primarily the issue of influencer marketing, which can take many forms. Often it resembles celebrity endorsement. Influencer marketing can also resemble sponsorship and product placement, which are both regulated forms of commercial communications in professionally produced content on audiovisual media services. It involves a commercial relationship in which an influencer receives a form of payment in exchange for promoting a product, service or brand. As the Advertising Standards Authority (ASA) has established, such payment can be monetary or in kind.[1]

 

3.     Though we leave it to scholars in other fields to determine whether the phenomenon of social media influencers has evolved a culture, we do argue that marketing has become an important feature of this type of media use. We have also seen a significant growth in influencer marketing in recent years, and investment has held despite the overall declines in advertising due to the Covid-19 crisis.[2] Indeed, it is predicted that the influencer industry will continue to grow and will be worth an estimated £18.4bn by 2024,[3] making it highly valuable to the economy but also diverting spending from other forms of advertising.

 

 

How are tech companies encouraging or disrupting the activities of influencing?

 

4.     The business models of social media platforms ensure that the companies providing such services have an incentive to encourage influencers to create and disseminate content, and therefore also to facilitate their ability to monetise their content. The social media platforms business model also seeks to keep users engaged with the content or platform for as long as possible. They use algorithms to push ‘popular’ or ‘content of interest’ to users, which can generate more impact for an influencer or their content.

 

5.     Research examining the functionalities of video-sharing platforms,[4] found the larger platforms provide a number of functionalities that influencers can use to maximise their impact and evidence their value to advertisers. These included tools to schedule and promote upcoming content, to track in detail the performance of their content, to create unique emojis or badges, and to live-stream. The high-functionality platforms in the sample also actively encouraged third party multi-channel networks (MCN),[5] or provided their own tools for matching advertisers with influencers. Twitch, for example, provides a bounty board’ in which advertisers can offer compensation for promotion by the services’ influencers.

 

6.     As the call for this inquiry has rightly indicated, one of the key policy concerns is whether or not users are aware when influencer content is commercial communication for which the influencer is being compensated. The research into platform functionalities also found significant variation in the extent to which video-sharing platforms provided tools that facilitated disclosure of influencer marketing. It found only two out of 15 platforms offered specific tools to uploaders that allowed them to tick a box on upload to declare promotional content.

 

7.     Part of the problem in this area is with the need for there to be clear identification by the influencer of what part of their content is being sponsored. For example, many influencers now embed the advertising within the video where they may talk about multiple products or services making it hard for audiences to know which part of the content is paid for advertising and which is not. Some influencers will be more explicit in this regard than others, and clearly identify which part of their content is sponsored. This confusion – amongst other things – appears to be a legitimate one, as roughly a quarter of the complaints the ASA receives about online marketing relate specifically to influencers.[6]

 

8.     Another concern is the potential harm to minors from influencer advertising. In 2020 the UK ASA required the removal of influencer content promoting weight loss injections in order to protect minors.[7] A recent case in the US against vape producer Juul, cites its attempts to engage influencers who are known to be followed by minors.[8] Influencers can also be children who themselves or with parents produce content for children. Recent research conducted by public health experts has found extreme amounts of unhealthy food product placement in the content of child influencers.[9] There have long been rules about appropriate food and beverage advertising in and around children’s programmes on audiovisual media services because of the understood risks to these vulnerable viewers.

 

How aware are users of the arrangements between influencers and advertisers?

 

9.     In the UK, the ASA provides guidance on disclosure for influencers,[10] as do many other European self-regulatory organisations. Competition and market regulators in the UK and in the US, where many of the platforms used by influencers are based, provide even more detailed instructions for disclosing commercial relationships.[11] Nevertheless, there remains a significant problem with users not being sufficiently informed that the influencer content they are consuming is commercial communication.

 

10. Often users will have limited information on the exact specifics of the sponsorship, or what types of agreements are in place between companies and the influencer. These agreements can vary widely between the influencer and companies, owing to the specific nature of the products/services that are being sought to be influenced. This can lead to regulators needing to become involved to protect users.[12] Having a clearer set of rules can help reduce the need for regulatory intervention, but these must be matched with oversight and enforcement.

 

Should policymakers, tech companies and influencers and advertisers themselves do more to ensure these arrangements are transparent?

 

11. Yes, more should be done on the part of all those involved in the industry and by policy makers. Advertising in the UK is governed by a co-regulatory system in which the self-regulatory organisation, the ASA is primarily responsible, with Ofcom acting as the backstop for broadcast and video on demand services. This has proven robust over the decades, but though the ASA regularly undertakes its own-initiated compliance cases, the vast majority are submitted by the public.[13] While Facebook, YouTube and other larger platform service providers scan display advertising placed through their ad management tools for compliance with their terms, influencers are governed by their user-facing rules and functionalities. Therefore, the enforcement mechanisms of the platforms also primarily rely on users noticing a problem and flagging it.

 

12. Reliance on user complaints or flagging is inherently a problem when disclosure, or lack thereof, is an issue. This means that firstly, self-regulatory organisations, regulators and the platform providers, need to work more on educating users about what to expect and what to look for. Secondly, advertisers and the MCNs representing influencers must take more responsibility for ensuring their contractual relationships with influencers reflect not only disclosure obligations, but also the requirements related to the protection of minors and other concerns. The rules related to commercial communication on video-sharing platforms, which includes influencer marketing, outlined in the Communications Act 2003 and the codes of conduct stemming from them, can serve as the benchmark for all platforms. 

 

13. Ofcom is responsible for regulating video-sharing platforms upon which a significant amount of influencer content appears. It has already proposed that it work with the ASA on the regulation of commercial communication, including that involving influencers, and it will be consulting later this year on relevant guidance.[14] Alongside this, it would be beneficial for the CMA to assist in these discussions from a competition / consumer protection-based angle. This is an opportunity for a notable change in the tools available for enforcement. In addition, it has been argued by the European Regulatory Group for Audiovisual (ERGA) and others that some influencers’ social media channels meet the criteria to be considered audiovisual media services and therefore should be regulated accordingly.[15] This is also an option that could be considered.

 

 

 


[1] https://www.asa.org.uk/uploads/assets/9cc1fb3f-1288-405d-af3468ff18277299/INFLUENCERGuidanceupdatev6HR.pdf.

[2] https://www.iabuk.com/opinions/iab-uk-influencer-marketing-trends-audience-insights-during-coronavirus-pandemic.

[3] https://www.vuelio.com/uk/wp-content/uploads/2019/10/Influencer-Marketing-and-the-law.pdf.

[4] Broughton Micova, S. and Kostovska, I. (2020) Chapter 2 Video Sharing Platforms in Study on the implementation of the new provisions in the revised Audiovisual Media Services Directive (AVMSD)

Final report https://digital-strategy.ec.europa.eu/en/library/study-implementation-new-provisions-revised-audiovisual-media-services-directive-avmsd.

[5] Multi-channel networks act as intermediaries between brands and influencers and are used by influencers to increase their value and perform the role of agents.

[6] https://www.asa.org.uk/uploads/assets/ceb030f5-c90f-414d-b8478f4845321bad/ASA-CAP-2020-Annual-Report-Mobile.pdf, page 22.

[7] https://www.asa.org.uk/uploads/assets/ce3a636a-9e78-452b-9bc7a417f86134a3/ASA-CAP-2020-Annual-Report-Full-Version-Singles.pdf.

[8] https://www.nytimes.com/2020/02/12/health/juul-vaping-lawsuit.html.

[9] Aruwaily, A. et al. (2020) “Child Social Media Influencers and Unhealthy Food Product Placement” Pediatrics http://pediatrics.aappublications.org/content/146/5/e20194057.abstract

[10] https://www.asa.org.uk/uploads/assets/9cc1fb3f-1288-405d-af3468ff18277299/INFLUENCERGuidanceupdatev6HR.pdf.

[11] For example, https://www.vuelio.com/uk/wp-content/uploads/2019/10/Influencer-Marketing-and-the-law.pdf and https://www.ftc.gov/system/files/documents/plain-language/1001a-influencer-guide-508_1.pdf. It should also be noted here that influencers can raise competition concerns, but this discussion falls outside the scoping of this response.

[12] Such as in the FTC case against TmarTn and Syndicate’, who jointly owned a gambling company but failed to disclose this to their followers whilst encouraging them to use the service, and whilst also getting other influencers to promote the site without requiring them to disclose they had been paid to do so. See https://www.ftc.gov/system/files/documents/cases/1623184_c-_csgolotto_decision_and_order.pdf. 

[13] https://www.asa.org.uk/uploads/assets/ceb030f5-c90f-414d-b8478f4845321bad/ASA-CAP-2020-Annual-Report-Mobile.pdf, page 20.

[14] https://www.ofcom.org.uk/__data/assets/pdf_file/0028/216487/vsp-harms-draft-guidance.pdf.

[15] https://erga-online.eu/wp-content/uploads/2021/01/ERGA-SG1-Report-Vlogger-Workshop-Sept-2020_final_21122020.pdf and de Cock Buning (2020) Life after the European Audiovisual Media Services Directive: social media influencers through the looking glass in The Regulation of Social Media Influencers Goanta, C. and Ranchroas, S. (eds.).