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As social media has become more entrenched in daily life, marketing strategies have adapted to accommodate its rise. Many businesses have their own Facebook or Instagram pages and engage with customers in that way. However, another option is to adopt an influencer marketing strategy. Some businesses may engage a social media influencer as a brand ambassador or ask them to promote or review their products. Engaging in an influencer marketing campaign may be a smart way for your business to reach out to your target audience. However, you need to make sure you are doing this legally and transparently. Otherwise, you could face reputational and legal penalties. This article will explain: 

  • whether you can pay an influencer to promote and review your products in New Zealand; and 
  • how the law applies.

Influencers and Marketing Your Products

An influencer is someone (usually on social media) who has established credibility and authenticity with their followers. Because of this, they influence the choices, opinions, or behaviour of their followers. They have access to an audience with their own organic content and often ad content as well. Following this, influencers can use their reputation to influence the purchasing decisions of their audience. 

For example, many ‘influencers’ have large followings on Instagram, where they post about their daily lives to update their followers. If an influencer posts about their favourite coffee brand, their followers may be more inclined to buy and drink the same coffee.

Businesses may employ the services of influencers in marketing their products. An Instagram influencer may make a post about one of your products, promoting and reviewing it for their followers to see. Instagram influencer marketing can be quite profitable if you do it right. However, you must be careful that any of these posts or promotions are not misleading in any way.

When Is It Misleading?

You need to be clear in your influencer marketing. Otherwise, it may be difficult for consumers to discern whether a post is organic content admiring a company’s product or a sponsored promotion. If you or the influencer mislead consumers and conceal your commercial relationship, then your business could face significant legal penalties. 

When making claims about your products or advertising, the law prohibits:

  • misleading or false conduct;
  • misleading or false statements;
  • unsubstantiated claims; and
  • unfair sales tactics.

This does not just apply to concealing the commercial nature of your relationship but also statements the influencer makes about your product. If it is untrue or unfounded, your business may be the one to take the fall.

For example, say that you pay an influencer to promote your business’ juice products. If the influencer makes misleading claims about its sustainability or nutritional value, this would be against the law.

If you breach the law that governs this, you could face hefty fines up to:

  • $200,000 for individuals; and 
  • $600,000 for companies or other body corporate.

Advertising Standards

In addition to this, you must be careful not to breach the NZ Advertising Standards Code. If you directly or indirectly control what an influencer says about your product to their followers, then you are an advertiser and must follow this code.

Penalties under this authority may not result in fines, but they will take down any post breaching its guidelines. It will also provide evidence of misleading conduct that could count towards a charge resulting in the fines above.

If you pay a social media influencer to promote or review your products, this is ad content, and the influencer must clearly label it as such. Payment can be any kind of compensation, including:

  • monetary payment;
  • free products or services;
  • credit;
  • event tickets;
  • travel; and
  • product loans.

For example, say you send one of your business’ make-up palettes for free to a social media influencer to use and review for their followers. This free palette is a form of compensation, and the influencer needs to make that clear in their review, as it is ad content. This needs to happen regardless of whether you have any control over the content they post about your product.

Avoiding Misleading Content

Employing a social media influencer marketing strategy to engage your target customer audience can be effective as long as you make your commercial relationship clear. The influencer needs to include a note somewhere that it is an advertisement and that your business has sponsored them on their review or post. This label needs to be:

  • upfront;
  • prominent;
  • understood by consumers;
  • appropriate for the channel and devices they use; and
  • attached to every piece of ad content.

For example, if an influencer just uses #sp or #collab as part of their sponsored post, this is not clear enough for an average consumer. Therefore, they should use whole words, such as ‘gifted’ or ‘product review’ in the hashtags or otherwise. 

If you do engage an influencer in this way, it may be useful to outline a compliance programme to make sure they are meeting their obligations. This way, you can make sure your business is not liable for misleading statements about your products.

Key Takeaways

Paying an influencer to promote or review your products can be an effective marketing strategy. However, you must ensure that you comply with the law and do not conceal your commercial relationship with the influencer. If you would like more information or help with your influencer marketing strategy, contact LegalVision’s eCommerce lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What is a social media influencer?

A social media influencer is someone that generates content online that has established authenticity and credibility with their followers. Because of this, they can influence the choices and opinions of their audience.

How can an influencer market my products?

An influencer can market your products by making posts about them and reviewing them for their followers to see. This can then increase customers’ engagement rate with your products.

Can I pay an influencer to promote and review my products?

You can pay an influencer to promote and review your products, but you must be transparent and upfront about your commercial relationship. The influencer must make it clear that they are being paid, and that they are advertising for you.

How can I avoid misleading my customers with influencer marketing?

You can avoid misleading customers with influencer marketing by making it clear that the content they post is sponsored or paid for by you. This applies to posts they make about new products you have given them for free as well. 

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