A top German court ruled on Thursday that influencers who get paid from companies for promoting products and services on their social media accounts must label such sponsored posts as advertisements.
If they don’t receive any payment, they are not required to label the posts, Germany’s Federal Court of Justice (BGH) ruled in the cases of three different Instagram influencers.
One of the defendants was a fitness influencer who got paid for promoting a jam brand. The court said she should have made it clear that she was advertising the brand.
Another defendant was Cathy Hummels, a TV presenter and influencer with over 600K Instagram followers, who shared a post about a stuffed toy with the company’s website link. Because she wasn’t paid for the post, the court dismissed the case against her.
Influencer marketing has quickly become a must for product and service providers who want to reach their target audience where and when they are the most active. In the US alone, influencer marketing spending is expected to surpass $3 billion this year and $4 billion in 2022.
Although many countries now require influencers to label their sponsored posts as ads, ‘hidden advertising’ is still a big issue.
Last year, The Competition and Markets Authority (CMA) in the UK launched an investigation into hidden advertising on Instagram and Facebook said that it would take more precautions to prevent the issue as part of its deal with the competition regulator.