Social Chain Ltd, a marketing company that specialises in connecting online personalities with commercial advertising opportunities, has been warned that it needs to ensure all of its marketing activity complies with consumer protection regulations.
The Competition and Markets Authority (CMA) told Social Chain that the adverts it arranged to have placed on Twitter, Youtube and Instagram may have been difficult to distinguish from normal posts, jokes and conversations.
The CMA said Social Chain has engaged constructively to resolve the issue and has undertaken to clearly label and identify paid-for content that it places on social media.
Under the Consumer Protection from Unfair Trading Regulations 2008, companies are prohibited from engaging in misleading or aggressive business practices. According to the CMA: “It is a banned practice to use editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content or by images or sounds clearly identifiable by the consumer. The CPRs are enforceable through the civil and criminal courts. Only a court can conclude whether a particular practice infringes the law.”
Between March and July 2015, Social Chain arranged 19 marketing campaigns that involved undisclosed advertising, which appeared on social media accounts with a combined reach of four million followers.
Warnings have also been issued to 15 businesses and 43 social media personalities who were involved with Social Chain, advising them of the relevant law.
Nisha Arora, senior director for consumer enforcement at the CMA, told the press that social media personalities can have a strong influence over people, especially young people. “It is therefore crucial that when people decide what to buy, they should not be misled by adverts on social media that read like independent opinions. Businesses, marketing companies and authors of online content all need to play their role in ensuring that advertising is clearly labelled as such,” Arora said.
Social Chain's marketing director Lucy Clarke told SCMagazineUK.com that it has cooperated with the CMA for the past 11 months “to ensure we fully comply with the ever-changing advertising regulations”.
Social Chain is a startup founded a few years ago by 23-year-old CEO Steven Bartlett and his friend Dominic McGregor.
“When the CMA first contacted Social Chain in March 2015, Social Chain was a start-up team of six,” said Clarke. “Over the last year Social Chain has expanded into four markets globally with a team of 80-plus. Key hires include a team of directors from other leading marketing and social agencies and a Compliance Officer, guaranteeing all our work complies with advertising regulations.”
She added: “Social Chain is looking forward to continue educating our clients on advertisings rules and regs, and leading the way in social media marketing.”
Mark James, security specialist at ESET told SC that this type of advertising is a problem. “I think currently it's very difficult to differentiate between an honest and paid-for promotion on social media – it's often delivered as someone's recommendations and not always clear that it's paid for,” he said. “But does it make a difference? I think it does. If I see an advert for a really nice looking pizza on TV I usually file it away with all the other adverts I ignore when watching the rectangle box, but if a friend were to say, ‘Hey, you have to go to X restaurant or try X food – it's awesome', then I may just go try it.”
However, lest he be considered anti-marketing, James added for good measure: “Don't get me wrong – adverts are good but it's important to understand just who is telling you what and at the moment that's not always clear. Advertising is often seen as the bane of online applications, web pages and indeed social media, quite often because people do not always understand it's not cheap or even free to provide those services you use every day. Making it clear the type of advert you're seeing is a good move from the CMA.”
Meanwhile, the CMS also warned Woolovers Ltd, a knitwear retailer, against cherry-picking the best customer reviews to post on its website. Between December 2014 and November 2015, Woolovers staff were instructed to only approve reviews that ranked the company or its products four-stars or more.