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Marketing using influencers” is growing non-stop, with statistics placing annual corporate investments in this type of advertising at between $500 million and $1 billion. Under this method, brands team up with figures popular on social media like Instagram, Facebook, YouTube and Twitter to post about, photograph or recommend a company’s products.

The exponential growth of this marketing technique has been tarnished by a series of scandals, such as the one that broke at the end of August with revelations about YouTuber and beauty guru Marlena Stell’s demands for placing beauty products and brands in her videos. According to the latest reports, confirmed by sources in the sector, influencers with the most followers in the US can charge between US $20,000 and $60,000 for a video or photo endorsement and up to $85,000 for a negative post about a competitor’s product.

As mentioned in earlier blog entries, certain practices by influencers could be breaking advertising laws. Posting a genuine opinion is not regarded as an advertisement. However, when the brand controls the content of the post or rewards it with a payment or a gift—even just providing the product to be talked about free of charge—that post becomes a sponsored post. In those cases, the law requires the post to be truthful, fair, and open, which is not always the case with posts on social media.

The first legal problems influencers experienced occurred in the US last year, when the Federal Trade Commission (FTC) opened proceedings against two YouTubers for stealth marketing of gaming services in their videos, which was regarded as deceptive advertising; the FTC also sent out over than 90 warning letters to people with large numbers of followers that did not disclose that their posts were sponsored, thus breaching Section 5 of the Federal Trade Commission Act. Influencers in Spain should be careful about similar practices: Spain’s Unfair Competition Act holds stealth advertising, i.e., all advertising in which the business relationship between the person and the brand is not made plain, to be misleading. This type of advertising is also unlawful under Spain’s General Advertising Act. Similarly, paid criticism of competitors would be considered unfair and unlawful competition based on failure to follow the tenets of good faith.

Despite this, recent surveys reveal that only about half of sponsored posts on social media disclose that they are promotional in nature. Some companies and influencers have resisted labeling their content as sponsored, because they are afraid that it will affect the credibility of their endorsements. However, a 2017 study by Open Influence concluded that labeling did not change the feelings of most social media users towards the person they were following and that they instead valued that transparency. Advertising on social media is expected to increase in the coming years, and advertisers and their spokespersons must ensure they obey the law or risk substantial fines.

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