The way in which companies promote their products has changed. Currently, to the detriment of traditional advertising channels, many companies resort to the use of opinion leaders or “influencers” on social media to promote their brand. This practice has created a boom for some persons such that a tweet or publication on Twitter or Facebook by Cristiano Ronaldo, Neymar or Lebron James can cost more than $100,000.
Although these practices are allowed in Costa Rica, they must be handled with care. Poor implementation of media tools could have negative consequences for the advertiser. In the first place, in accordance with the Law for the Promotion of Competition and Effective Defense of the Consumer, at the moment in which a company engages in publicity, it must clearly identify itself as an advertiser. Thus, when making this type of paid communication, a promoter must clearly indicate that the published announcement is sponsored or that the “influencer” has a connection with the brand beyond the recommendation or use of it. In other words, it should be obvious that the favorable comment was not the free and sincere opinion of the “influencer” but instead was produced as a result of some benefit or relationship with the brand. The above requirement is based on the notion that the testimonial of a person receiving payment or having a direct relationship with the brand will be, for some consumers, less than convincing.
Due to the fact that there is often limited space for this clarification, other countries have recommended using labels such as “#ad” or “#sponsored” just as the US Federal Trade Commission (“FTC”) did. In case that this obligation is not met, the company could be carrying out deceptive advertising (which is prohibited) given that a favorable image of a product would be given without indicating that said comment was the product of a payment. Although in Costa Rica there is no specific regulation or guidelines in these cases, solutions similar to those suggested by the FTC could be adopted and include words such as # patronage, #announcement or similar and, thus, reduce the risks when engaging in this type of promotional activity.
Another aspect to take into account, are the advertising regulations of each industry. For example, despite being a simple opinion or posting, a published announcement may require authorization by some authority. Similarly, for companies that are prohibited from using recognized persons in their advertising, this type of tool would be prohibited.
In addition, aspects of the relationship between the brand and the “influencer” are important to define on behalf of the brand. Conditions such as exclusive brand loyalty must be negotiated and duly established in order to prevent the same person from promoting the articles of a competitor. Likewise, provision must be made to ensure that the details of this relationship are kept confidential, particularly where the “influencer” may know future plans and information that the brand owner does not want to be disclosed.
Finally, aspects of the personality of the “influencer” must be taken into account, regardless of the individual’s popularity or recognition. Once someone famous makes an endorsement, consumers link this person with the brand in such a way that he or she could be considered an ambassador of that brand. Therefore, a brand owner must be extremely cautious in selecting “influencers” and avoid possibly conflicted individuals or those who may be the subject of a scandal that goes against the brand’s moral values.
In addition to the possible damage to a brand’s image as the result of making a mistake when choosing an “influencer”, failure to comply with obligations to consumers could bring legal consequences to the company of up to 40 base salaries or, the demands of a competitor.