Wednesday, 22. May 2024

Previous slide
Next slide

Influencer Marketing or: What exactly is Advertising?

There is a certain amount of uncertainty among all parties involved (influencers, companies, advertising agencies) about the conditions under which influencers actually have to explicitly label their posts or blog contributions as advertising.

1. An example case to illustrate the point

Let’s take the following example case: 18-year-old Lara-Sofie has 100,000 subscribers on Instagram. She bought the new lipstick “Shining” from “XY Cosmetics” at “dm” and now reports about it on her Instagram page. She does not receive any remuneration for this. However, she is invited by dm to the beauty fair “Glow”, flight and hotel included.

Question: Does she have to mark her post as advertising?

2. The legal requirements

There are two laws in particular that need to be looked at more closely in this context, namely the UWG (Unfair Competition Act) and the TMG (Telemedia Act)

a) § 5a UWG

According to this provision, anyone who fails to identify the commercial purpose of a business activity acts – in abbreviated form – unfairly and thus in violation of competition law (unlawfully). In other words: Advertising must be identified as advertising. (Exception: This does not apply if the commercial purpose is directly apparent from the circumstances).

b) Section 6 TMG

This standard states, again in abbreviated form: Service providers must clearly identify their commercial communications as such. (By the way, according to § 2 of this law, a service provider is anyone who makes telemedia available for use).

3. And what does this mean for our example case?

Ultimately, the question arises as to when a commercial act with a commercial purpose (UWG) or a commercial communication (TMG) exists.

a) The clear cases

Anyone who promotes other people’s goods or services and receives remuneration for doing so is acting commercially. The remuneration may consist of a one-time payment/lump-sum payment or a share in sales. However, a commercial act for a commercial purpose also exists if the influencer receives a payment in kind in return, for example an invitation to an event with reimbursement of hotel and travel costs. Or if the product is provided free of charge.

A good compilation of the various arrangements can be found in the Medienanstalten’s guide “Werbekennzeichnung bei Social Media-Angeboten”.
According to this, the example case outlined above represents a business act with a commercial purpose (or a commercial communication), which must also be labeled as such. Otherwise, you run the risk of being served with a warning notice with costs.

b) More complicated cases

Let’s modify the above example case a bit, in such a way that Lara-Sofie does not receive any consideration at all for her Instagram post about the lipstick, neither from dm nor from the manufacturer of the product.

a) Her point of view, which many influencers will probably share, is: “I’m not advertising the product at all, I’m just reporting to my subscribers that I bought the lipstick and what I think of it. No one has influenced me in this assessment, and I have not received anything in return from anyone. That can’t be advertising that requires labeling, can it?”

b) This is probably also how the media institutions see it. In the aforementioned guideline, it states that contributions about products, services, brands, etc., which are published out of one’s own motivation without any commercial incentive from third parties, generally do not have to be labeled as advertising.

c) I would also share this view: If I simply state my opinion about a certain product out of my own motivation, completely uninfluenced and without any consideration from a third party, then in my opinion this is not advertising (commercial action for a commercial purpose, commercial communication), but simply my private expression of opinion.

It would even be misleading if I had to call such a post “advertising”, because other people would then wrongly assume that I receive something in return for this post – which, however, is just not correct in our case of modification.

d) However, the Berlin Regional Court apparently sees things differently in its ruling of 24.05.2018 (file number 52 O 101/18). (For the sake of honesty, however, it must be said that the influencer had linked her Instagram post in the case decided there with the pages of the manufacturers of the products shown).

Although she had not received any remuneration for this, the court nevertheless believes: the presentation of products by a not insignificant influencer is suitable for attracting the attention of companies and arousing their interest in initiating concrete business relationships, from which concrete economic benefits can then result for the influencer.

In the overall consideration of the circumstances present in the case decided there, the court had thus come to the conclusion that – even without remuneration or other consideration – advertising subject to labeling was present. In the opinion of the court, the influencer also acted to promote her own company with her Instagram appearance. As an influencer, she generates income – in general, even if not with the specific product – by marketing products while still appearing authentic. This makes her interesting for companies that are interested in advertising media that are as credible as possible, and she earns money from this, the more the number of her followers increases.

It remains to be seen whether other courts will see it that way.

e) In proceedings before the Regional Court  Munich I against a well-known influencer, the presiding judge is reported to have said, according to a media report (Legal Tribune Online of 09.07.2018): Provided that Ms. H. does not receive any payment or other consideration from the companies in question for naming the products, the court considers this permissible. Even if we consider influencerism to be completely superfluous, that doesn’t mean it would be prohibited by law….

A supreme court decision by the Federal Court of Justice (BGH) on this topic is still pending (as of January 2019).

4. Conclusion

Even if you as an influencer do not directly receive any remuneration or other consideration for a post in which a certain product is shown or discussed, there may still be advertising that requires labeling. Influencers with a high number of subscribers should therefore be particularly careful. This is because there is always the threat of a warning (Abmahnung), for example from the German Association of Social Competition (Verband Sozialer Wettbewerb/VSW). And a legal defense in court in preliminary injunction proceedings usually costs time and money.

Dr. Wolfgang Gottwald
Rechtsanwalt/Attorney at Law

Attorney at Law

Leopoldstraße 51
80802 München

Tel.: 089/383 293-10
Fax: 089/383 293-13