Harnessing hidden advertising: Pitfalls of engaging consumers on social media


In the May 2017 special edition of Law à la Mode (Issue 23), we set out five tips for navigating native advertising with a view to FTC compliance under US law. In this edition, we reconsider the issue from the angle of EU law, where it is commonly known as “hidden advertising”.

Hidden advertising is often present on social media platforms such as Instagram, Facebook and Twitter, where users and pages which have garnered a large following (so-called ‘influencers’) provide an efficient way for brands to reach target audiences by way of paid promotions and strategic product placement. In a time where consumers are getting more and more savvy at identifying advertisements, as well as avoiding them, this kind of cooperation can prove invaluable. Nevertheless, it is not without its pitfalls.

While no specific legal framework for hidden advertising exists in EU law, applicable rules may be found at the confluence of legislation on unfair commercial practices, including misleading omissions, e-commerce and direct marketing. Particularly in regards to the legislation on unfair commercial practices, a robust set of principles can be discerned aimed at combatting hidden advertising.

In addition the Unfair Commercial Practices EU Directive provides a black list of prohibited practices in its Annex 1, which details the practices deemed unfair in all circumstances and which is replicated in its entirety in all Member States. That list includes prohibitions on the use of ‘advertorials’, meaning the use of editorial content in the media to promote a product without clarifying that the promotion is paid for. Influencers, on the other hand, may run afoul of the prohibition by falsely representing themselves as consumers when they promote products under the guise of simply being a fan. Aside from these black-listed practices, hidden advertising may also constitute a misleading omission where material information is omitted that prompts the consumer to take a transactional decision he or she would not have made otherwise.

The crux of the remaining specific legislation, as well as the general rules of the unfair commercial practices legislation, is that any potential non-compliance can be avoided as long as the consumer has been adequately informed of the nature of the promotional material. In summary, companies and influencers seeking to engage in a partnership should always disclose the necessary references and details indicating the existence of a commercial relationship.