Nordic position on covert marketing

(2016)

Introduction
When should advertising be marked as such?
All advertising should be identifiable as such
Advertising in social media and blogs
Requirements for the design and placing of an advertising marker
Advertising directed at children and young people
Liability

1. Introduction

When consumers see an advertisement, they should understand that they are being exposed to advertising irrespective of its form and irrespective of the medium in which it is couched. This creates a degree of transparency that makes consumers aware of the commercial interests behind the texts and images.

The marketing practices acts of the Nordic countries therefore require that advertising must be identifiable as such[1].

In particular, the social media have experienced substantial growth in advertising volumes the recent years. As these are platforms that private individuals normally use to exchange information, companies using social media for marketing purposes should take extra care to show that their purpose is to promote the sale of goods or services.

In the traditional media, such as in the electronic media, it is also becoming increasingly difficult to distinguish between editorial content and advertising content.[2]

It is essential that consumers are not exposed to covert marketing. As a result, this is a high priority area for the Nordic consumer ombudsmen.

Over the next few years, the Nordic consumer ombudsmen will share their experiences and discuss developments in the area at their semi-annual meetings.

This position paper has been prepared for the purpose of informing businesses about the position of the Nordic consumer ombudsmen regarding the rules that require that advertising must be identifiable so that the business can ensure that they avoid breaching the ban on covert marketing.

2. When should advertising be marked as such?

Advertising can generally be defined as any kind of communication the purpose of which is to increase the sale of goods or services.

For example, if a company pays a blogger to produce a blog post that mentions the company’s product, the blog post will constitute advertising. The same applies to paid journalism, for example, an advertorial where a company pays a newspaper to produce an advertisement designed to look like a newspaper article.

When a trader pays for publicity for its company or its product, it will not matter who took the initiative to set up the agreement or, for example, if payment has been made either in the form of an amount, products or possible discounts. Nor does it matter whether the company has demanded that the post should have a certain design/content and whether the agreement is written, oral or tacit.

For example, it will be advertising if a blogger gets percentages when purchasing products from a company and subsequently mentions the products in blog posts. The same applies, for example, if a company pays a blogger to post a link to their webpage, or if the blogger gets paid for the number of clicks on the link, or by the number of purchases consumers do after clicking on the link.

3. All advertising should be identifiable as such

All advertising should be prepared and presented in a way that makes it clearly identifiable as such. Accordingly, consumers must from the moment they see or begin to read the commercial message be made aware that it is advertising.

If an advertisement appears in a location not reserved for advertising messages, the requirement to clearly indicate that this is in fact advertising becomes even more important.

An owner or an employee of a company must not falsely claim or give the impression that he or she is not acting for purposes relating to his trade, business, craft or profession, or falsely represent him/herself as a consumer[3].

Social media are generally understood to be online services allowing private individuals to create profiles and communicate with each other, including sharing information and content, such as text, images and audio files. A social medium may be a chat room, a game or a social network service.

As social media are generally perceived as platforms on which private individuals can exchange information, traders using social media for marketing purposes should take extra care to make it clear at all times to users of the relevant social medium that they are being exposed to marketing.

Normally, a blog is understood as a website which continuously is updated with posts from the blogger, e.g. about the latest trends in fashion, food or other areas. A blogger may also make posts on social media.

When a trader advertises on social media, it should clearly appear on whose behalf the advertisement has been prepared.

For example, when a private individual receives payment or other benefits in return for endorsing or otherwise marketing a trader’s products or services, the private individual must clearly identify the marketing communication as such or make it clear that he or she has received payment or other benefits in return for endorsing the product.

5. Requirements for the design and placing of an advertising marker

The requirements in the law that advertising must be identifiable can be met in many ways.

Whether an advertising message is adequately marked will always be subject to an overall assessment. In addition to the choice of wording, font size and the placing of the marker, other things such as the choice of images, typeface, text colour, background colour, layout or the specific media chosen for the advertisement are also part of the assessment.

If a commercial is not clearly identifiable as such to the consumer, The Nordic consumer ombudsmen will consider a posting/message or an advertorial to be adequately marked, if the post in the beginning is marked in a clear manner with the wording advertising message.

6. Advertising directed at children and young people

Any marketing directed at children and young people must contain a marker that children and young people understand.

Traders promoting their products and services to this target group are required to frame their marketing activities in a way that takes into account the special need to protect this target group.

Children and young people do not have sufficient experience to make an objective assessment of an advertising message and are readily influenced. The fact that children and young people are readily influenced gives traders particularly good opportunities to make children and young people interested in branded products and to influence their spending patterns.

Accordingly, marketing directed at children and young people are according to the law subject to stricter requirements and a lower threshold for when the rules are considered to be violated. Generally speaking, the younger the target group, the stricter the requirements.

Advertising messages with a direct exhortation to children to buy advertised products or persuade their parents or other adults to buy the products are against the law. It is subject to an overall assessment from the child’s perspective whether the advertising messages is a direct exhortation to the child to buy the advertised product.

7. Liability

If an advertising message does not clearly appear to be advertising, the trader whose products are advertised will be liable for any violation of the rules on covert marketing.

Individuals who mention products on behalf of traders can also be held liable, if they by this have had a commercial intent with the posts[4].

Agencies that advise bloggers and arrange a contact between bloggers and traders may also incur a liability.

Advertising agencies and PR agencies may also incur a liability if they have prepared a text for an advertising message or if they are hired by a trader to pay a private individual to mention one of the company’s products.

Anyone who acts on behalf of a business or contributes to the advertising can also be held liable.

[1] The same requirement follows from Directive 2005/29/EC concerning unfair business-to-consumer commercial practices.

[2] In Denmark, Finland, Iceland, Sweden and Norway advertising in radio, television and audiovisual media services is also regulated by separate sets of rules, which implements Directive 2010/13/EU concerning the provision of audiovisual media services, which is enforced by a separate authority. The directive only regulates radio, television and audiovisual media services.

[3] Cf. Annex I no. 22 in the Directive 2005/29/EC concerning unfair business-to-consumer commercial practices.

[4] In Finland the Finnish Consumer Protection Act only applies to traders and the marketing regulations binds a trader. A trader is considered as a natural, private or public legal person who, in order to obtain income or other economic benefits, communicates, sells, or otherwise offers consumer goods or services for consideration on a professional basis.

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