Social media advertising and endorsements

What is social media advertising?

Social media marketing refers to the use of social media platforms to promote goods, services or brands and to engage with a target audience. It involves making and sharing content, as well as implementing various strategies to drive brand awareness and generate website traffic. It also helps foster customer engagement and loyalty.

Many businesses run social media accounts where they post content (eg photos on Instagram or updates on Twitter) and interact with their customers. This is a form of unpaid social media marketing.

On the other hand, social media advertising is a paid form of social media marketing. This involves creating advertisements that are directed at specific audiences on social media in the hopes of selling your goods or services.

Key aspects of social media advertising include:

• ad formats - social media platforms provide various advertisement formats (eg sponsored posts, videos, carousel ads and stories). Each platform has its own specific ad formats

• audience targeting options - social media platforms enable businesses to target their audience based on different criteria (eg demographics, interests, behaviours or location). This allows businesses to reach the most relevant audience for their goods or services

• ad placement - depending on the social media platform, businesses can choose where they want their ads to be shown to their target audience (eg newsfeeds, sidebars or stories)

• budgeting and bidding - businesses can set specific budgets for their advertising campaigns. Businesses typically bid for ad placements. The cost of such ads depends on various factors including audience targeting and competition

• ad performance - social media platforms offer various tools for measuring ad performance, enabling businesses to monitor various metrics like impressions, clicks, conversions and engagement

When advertising on social media, businesses need to comply with all applicable advertising regulations. These include the advertising codes set by the Committee of Advertising Practice (CAP), the Consumer Protection from Unfair Trading Regulations 2008 and Business Protection from Misleading Marketing Regulations 2008. For more information, read Advertising regulations and Marketing and the law.

What are endorsements?

Endorsements are public expressions of support, approval or recommendations for goods, services, brands or individuals. In the context of social media marketing, endorsements involve leveraging the influence and credibility of certain individuals (eg influencers) to promote and endorse a product, service or brand to their followers. There are various types of endorsements, including: 

• expert endorsements - experts or industry professionals may lend their credibility and knowledge to endorse a product or service. These types of endorsements are based on their expertise and can provide reassurance and trust to consumers seeking reliable recommendations

• customer endorsements - satisfied customers may voluntarily endorse a business, its goods or its services through testimonials, reviews or user-generated content. Customer endorsements are valuable as they highlight the experiences of existing customers and provide insights for prospective customers before they purchase goods or services

• celebrity endorsements - involve well-known individuals (eg actors, athletes and other public figures) lending their name, image and/or reputation to a product, service or brand. Businesses must obtain consent from celebrities before using their likeness in any advertisements. For more information, read Image rights

• influencer endorsements - influencers (ie individuals with a social media following) may partner with businesses to promote their goods or services. These collaborations often involve creating sponsored content (eg images or videos) in which the influencer promotes the business’ goods or services by recommending them and sharing their positive experiences. For more information, read Influencer marketing

Endorsements form part of business’ marketing strategies to help build trust, credibility, brand recognition and brand loyalty. Endorsements rely on the influence, expertise and social proof provided by the endorser to persuade and attract new potential customers. 

Do social media endorsements and posts need to be labelled?

The rules applicable to social media endorsements and posts depend on whether the endorser (ie the person making the endorsement/piece of content) receives payment for the piece of content. If an endorser receives payment for an endorsement, this will be ‘sponsored content’. 

In the UK, strict laws apply to sponsored content (also known as ‘incentive endorsements’). It is important to note that ‘payment’ is interpreted widely and includes things like gifts, freebies, events, the promise of future payment and indirect payments (eg if the endorser has a commercial relationship with the business for which they receive payment, even if their making pieces of content is not contractually required).

Depending on the nature of the content, it may be regulated by either the Advertising Standards Authority (ASA) or the Competition and Markets Authority (CMA).

In essence, a piece of content is considered to be endorsed or advertised by an endorser (and therefore regulated by the ASA) if:

• an endorser works with a business to create content to be posted on their platform

• the endorser receives payment related to that content, and

• the business has a degree of control over the content (ie in relation to the content, the endorser must is not able to say what they want and/or do what they want whenever they want)

If the above steps apply to a business-endorser relationship, except that the endorser has full control over the content (ie the business does not have control over it), the content will be regulated by the CMS.

Any pieces of content regulated by the ASA must be clearly identified and labelled as advertisements. Any pieces of content enforced by the CMA must be clearly identified as ‘paid-for’ content. In practice, this means that, in both circumstances, pieces of content should be clearly identified and labelled as advertisements in a clear, upfront position using clear labels like: 

• ‘ad’

• ‘advert’

• ‘#AD’

• ‘advertising’

• ‘advertisement’ 

Any more ambiguous terms like ‘gift’, ‘gifted’, ‘sponsored’, ‘affiliate’, ‘supported by’ and ‘collab’ should be avoided. This is because they fail to clearly identify a piece of content as an advertisement and, therefore, may mislead the endorser’s audience. 

Any labels must be easily identifiable and visible to an audience as soon as they access or engage with a piece of content.

For more information, read the ASA’s and CMA’s joint guidance on ads and the CMA’s guidance on hidden ads. 

If a post about a good or service is made genuinely, without the endorser receiving any payment (including gifts or freebies), the post does not have to be labelled as an ad. This is because a genuine post, which reflects someone's authentic and true experience and is posted without any incentive, does not constitute an ad. Anyone posting this type of content should make sure that their post can in no way be considered a hidden ad. Ask a lawyer if you have any questions or concerns. 

What about businesses content creators have connections with?

If a content creator (eg an influencer) is commercially connected with a business through means other than a paid-for post, and uses their social media to promote that business’ products or services, this must be made known and the relevant content labelled as an ad. Examples of situations where someone is commercially connected to a business in this way include when they are:

• employed by the business

• an owner or co-owner of the business

• a company shareholder

• a company director

In such situations, each post should be clearly labelled as an advertisement and the content creator’s connection with the business should be made clear in the post. Their relationship with the business should not be hidden, should not be only stated in their bio or previous posts, and should not be only accessible by clicking on a link for more information.

For more information, read the ASA’s and CMA’s joint guidance on ads and the CMA’s guidance on hidden ads. 

What is a hidden ad?

A hidden ad is an advertisement or paid-for endorsement (whether regulated by the ASA or CMA) that is not clearly identified and labelled as an ad.

Not only are hidden ads harmful (as they may mislead the influencer’s followers who may believe a piece of content to be the influencer’s non-biased opinion, review or recommendation), but they are also illegal. Failing to properly identify an ad as an ad can result in certain sanctions (discussed in more detail below).

For more information, read the CMA’s guidance on hidden ads.

What are misleading endorsements or content pieces?

Misleading endorsements or content pieces are those that mislead an audience. In terms of endorsers and content creators, misleading endorsements or pieces of content may take the form of hidden ads (ie ads not labelled as such). This is because, without clearly labelling a piece of sponsored content as an ad, the endorser’s/content creator’s audience may believe their content to reflect their non-biased opinion, review or recommendation. 

Content can also mislead an audience by giving the impression that the endorser/content creator:

• is a consumer, when actually they’re acting on behalf of a business (including their own business)

• has paid for goods or services when they were, in fact, free

• has personally used the goods or services when they haven’t (eg saying a detergent washes well when they haven’t actually tried it)

• has claimed something in their piece of content that they don’t know to be true (ie making false or unsupported statements, like saying a detergent is good for the environment when they can’t prove this)

• has experienced something first-hand when they have been paid to say this

For more information, read the CMA’s guidance on hidden ads. 

Who is responsible for ensuring compliance with the hidden advertising rules?

Anyone posting paid-for endorsements or sponsored content is responsible for ensuring that they comply with the rules on advertisements and do not post hidden ads. Businesses benefiting from paid-for content may also be held responsible if a paid-for piece of content is misleading (including if it is a hidden ad). As a result, it is crucial that businesses understand the rules of advertising and ensure compliance when collaborating with others. When working with content creators, businesses should:

• help content creators understand their obligations - they should make sure that any content creator they work with is aware of, and understands, their obligations regarding paid-for content

• clearly communicate with content creators - include clear instructions about labelling requirements. For example, include clauses about content labelling in an Influencer contract or include clear labelling instructions alongside any free gifts. In all circumstances, it is a good idea to adopt a set of brand marketing rules that content creators should follow

• check paid-for endorsements and posts - they should check all content that refers to their business, its products or its services, to ensure that content is properly identified and labelled as ads

• action any issues immediately - if a piece of content is not correctly labelled and identified, immediate action should be taken to correctly label it 

For more information, see the CMA’s guidance on business responsibility and social media endorsements.

What are the consequences of non-compliance with the hidden advertising rules?

Content creators who do not clearly disclose when their posts are advertising may be subject to certain sanctions. These include:

• being ‘named and shamed’ for up to 3 months by the ASA on a ‘non-compliant social media influencer’ page

• the ASA running target ads alerting users that follow the content creator that they have failed to properly disclose ads and that their content may contain hidden ads

• business no longer working with them

• social media platforms taking down pieces of content, removing functionality or closing a content creator’s account

• formal enforcement action by the CMA or Trading Standards Services

Content creators who repeatedly breach the rules are subject to spot checks and further sanctions. 

For more information, read Influencer marketing, How to set up as an influencer, Advertising regulations, Marketing and the law, Co-marketing and co-branding and Considerations for email marketing. Do not hesitate to Ask a lawyer if you have any questions or concerns.