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Proceed with Caution in 2020 as Canada Tightens Grip on Influencer Marketing

Love it or hate it, influencer marketing is a persuasive and pervasive method of marketing. In fact, in 2018, ad agency Edelman Digital predicted that the value of the influencer marketing industry could reach $5 billion within 2 years. Reactions to influencer marketing can be polarizing. It comes with equal parts of staunch supporters, as well as rigid haters. Although influencer marketing can (but not always) come with a dash of narcissism, it also can be an incredibly powerful to enable non-mainstream messages to have a voice. In addition, for smaller local brands, aligning with an influencer can increase brand awareness on a global scale in an expeditious and cost-effective manner. Overall, influencer marketing democratizes marketing away from mainstream marketing practices, which traditionally has involved significant ad spend budgets that are, for many, an insurmountable barrier to entry. Either way, love it or not, influencer marketing is her to stay.

Slowly, but surely, the Canadian government has been consistently ramping up its governance of the influencer marketing industry. In December 2019, the Competition Bureau sent approximately 100 letters to advertisers and advertising agencies urging them to be compliant with Canadian marketing legislation and the Bureau’s practice notices relating to influencer marketing. This is clearly a precursor and strong indication that the Bureau will be more carefully monitoring influencer marketing campaigns and enforcing against those that are non-compliant in 2020. This is part of a general movement by the Canadian government to increasingly regulate influencer marketing.

In fact, in June 2018, the Federal Government’s Competition Bureau, which is tasked with enforcing against unscrupulous marketing practices, issued the “Deceptive Marketing Practices Digest” confirming that influencer marketing falls under the ambit of the Competition Act, which tackles false and misleading advertising. Accordingly, civil and criminal penalties could be awarded against false or misleading testimonials or endorsements that are included in influencer marketing campaigns. Given Canadian consumers’ reliance on influencers to provide genuine and impartial opinions, influencers must disclose any relationship between the influencer and the brand he/she is promoting that could affect the independence of the influencer’s opinion.

Further indication of the intervention of law into the world of influencer marketing comes with the recent landmark British Columbia case whereby an influencer, Noelle Halcrow, was found guilty of defaming her ex-boyfriend. Halcrow was required to pay a damages award of $200,000. Halcrow used her online platform to repeatedly defame the character of her ex-boyfriend. Her vindictive and acrimonious conduct was not tolerated by the British Columbia judiciary system.

Coupled together, these instances demonstrate that the Canadian legislative and judiciary arms are well-positioned to take on influencer marketing in Canada in 2020. It does not spell the end of influencer marketing but certainly encourages those that partake in influencer marketing campaigns, be they brands or influencers, to craft their influencer marketing campaigns with care and compliance. Below is a set of best practices to consider:

  1. Influencer marketing agreements

In a world where there a several players, it is important to ensure that all parties are bound by an agreed upon influencer marketing agreement. It is important to understand that there may even be several parties involved in the deal (the brand, the influencer, the brand’s marketing agency and/or the influencer’s talent agency), and so the complexity of the agreement may increase. The agreement should include some of the following contractual terms, conditions and obligations:

  • Who are the parties involved in the deal? Who is responsible for what action?

  • Who is bringing what pre-existing intellectual property to the table? Who owns the resulting intellectual property that is generated from the influencer marketing campaign? What are the limits and guidelines associated with the use of the intellectual property?

  • What is the term of the relationship? Can the agreement be renewed?

  • What happens if one party wishes to terminate the agreement early?

  • What are the payment terms? In what currency?

  • Who is responsible for the costs associated with the activation?

  • Are there morality clauses included based on the conduct of the influencer and/or brand?

  • What are the performance obligations of either party to effect the relationship publicly?

  • Which party assumes liability and indemnifies the other?

  • What is the approval process related to the activation of the campaign?

2. Ensuring Legislative Compliance

The Competition Bureau’s recent issuance of advisory letters demonstrates that it is important to launch compliant influencer marketing campaign. However, depending on the content of the campaign, as well as the strategy to activate the campaign, there may be a myriad of legislation to take into consideration, including the Competition Act, the Trademarks Act, the Copyright Act, Canada’s Anti-Spam Legislation and provincial defamation laws and consumer protection laws. Base line, if you are sourcing materials for the campaign from third parties, ensure that you have the appropriate intellectual property rights to use the materials. Also, ensure that the influencer includes the appropriate and sufficient disclosures to ensure that the content includes a truthful, fair and accurate account of the relationship. The disclosure should include all pertinent information relating to the nature of the material connection (i.e. free product, monetary compensation, exclusive event invite) and should be prominently placed at the beginning of the endorsement.

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© 2020 by Froese Law

Froese Law provides its Canadian law services by a professional corporation.  

Froese Law provides its U.S. legal services in affiliation with a U.S. based law firm.

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