Influencers can be great when it comes to providing advertising to an engaged audience. Caroline Swain explains the rules and regulations
Your restaurant or hotel’s marketing team wants to use social media influencers. You’ve read news stories about brands being called out for not working correctly with influencers and you want to make sure your brand is protected.
The primary regulation when it comes to marketing is the Consumer Protection from Unfair Trading Regulations 2008 (CPUT), which restrict what brands can do in their marketing practices, including 31 blacklisted practices which are unfair and prohibited.
In addition to legislation, the UK has a system of self-regulation governed by bodies like the Advertising Standards Authority (ASA). The ASA is responsible for enforcing the CAP Code (a self-regulatory code published by the Committee of Advertising Practices).
When it comes to influencer marketing, if the influencer’s content falls within the ASA’s definition of an ad, the provisions of the CAP Code will apply. Influencer content is an ad if:
(a) the brand has paid for the content (payment includes cash, a gift, an experience or similar); and
(b) the brand has any editorial control over the content (‘editorial control’ is interpreted widely – not just a right to review the content. It could include a requirement to tag the brand in the post or reference a promotion, for example).
The world of influencers is rapidly evolving. While most influencers have not yet joined the ranks of traditional celebrities, there are now service teams specifically supporting influencers on branding and commercial relationships.
Contracts are now expected, and having a firm contractual position is the norm.
Brands are responsible for ensuring that consumers know when they are looking at an ad which, due to the way that influencer content is shared, is not always obvious.
The ASA therefore recommends that the content is clearly labelled (eg by use of “#ad”). Failure to make this clear is a breach of the CPUTs and the CAP Code.
But labelling and disclosure isn’t the only thing to remember – if the content is an ad, all the usual rules around advertising will apply.
Both parties will be held responsible for failure to comply with the legal requirements. For the brand, failure to comply may result in bad publicity and brand damage; censure from the ASA; a referral to the Trading Standards Services; possible court action and criminal prosecution; legal action by competitors or consumers; and a loss of consumer confidence.
Caroline Swain is a commercial solicitor at Charles Russell Speechlys
Checklist for employing an influencer
You should investigate the influencer ahead of any engagement. Evidence of erratic behaviour, acting in a manner inconsistent with the brand’s values or failure to disclose that their content is an ad should ring alarm bells.
Get a contract in place to include:
Disclosure Oblige the influencer to follow current industry regulation, including the use of #ad.
Approval rights State any specific content requirements and any approval processes. Reserve the right to ask the influencer to edit or take down content at your discretion.
Exclusivity Consider whether you want exclusivity by channel or competitor.
Morality/reputational damage Consider a notification obligation and/or a termination right if the influencer does something that could harm your brand.
Obligations Be precise as to the timing of posts, quantity, quality and channels.
Check the content once posted. If there are any issues, use your contractual right to insist the influencer changes or takes down the content.
Things to keep an eye on
Advertising to children If an influencer is under 16 or appeals to or has followers under that age, the advert may be deemed to be targeting children and special rules will apply.
Comparative advertising If the influencer is comparing your restaurant/hotel with another, the rules about comparative advertising will apply. Don’t use a competitor’s name, logo or trademark in any way that may confuse customers.
Advertising food and drink Don’t forget the rules around advertising foods high in fat, salt or sugar and be particularly careful with health claims (eg “superfoods”).
Burrito chain is betting on delivery through DoorDash partnership
which reported sales of $1.4 billion, has rebounded since it was hit by a number of food-safety scares in recent years. PHOTO: SHANNON STAPLETON/REUTERS
Updated July 23, 2019 6:07 pm ET
Chipotle Mexican Grill Inc. CMG 0.30% is selling more burritos even at higher prices.
The fast-casual chain beat expectations on earnings for its second quarter, reporting adjusted earnings per share of $3.99 on $112.9 million in income excluding one-time events. Those were up 39% from last year’s period.
Sales of $1.4 billion were in line with the expectations of analysts polled by FactSet. Same-store sales growth of 10% topped projections, though it also included a 3.5% increase in average restaurant checks, in part reflecting higher menu prices that the chain instituted last year. Bigger average sales on delivery orders also contributed to the increase.
Shares in the Newport Beach, Calif.-based company rose nearly 4% in aftermarket trading.
Chief Executive Brian Niccol said the results reflected better restaurant operations and marketing, along with a focus on digital sales. Chipotle struck a deal with DoorDash Inc. to deliver its meals to customers last year. The two companies have aggressively marketed that partnership in part with free delivery offers and reduced service fees, particularly during major sporting events including the Women’s World Cup. Digital sales roughly doubled during the quarter, Chipotle said.
“We don’t think we have found the level or limit of how high it can go up,” Chipotle Chief Financial Officer Jack Hartung said in an interview about digital sales. Many restaurants now offering delivery through outside operators have grown concerned about the profitability of sales given the fees charged. Mr. Hartung said the burrito chain has helped make its delivery sales profitable by creating dedicated kitchen lines for those sales to avoid jamming up in-store orders.
Chipotle’s costs also grew during the quarter, primarily due to higher avocado prices. The average national retail price of a Haas avocado nearly doubled this month, according to U.S. Department of Agriculture surveys.
Chipotle has rebounded since the burrito chain was hit by a number of food-safety scares in recent years, including E. coli outbreaks at stores across the country. The company shook up its leadership and has focused on core menu items such as burritos and bowls.
“The old narrative just fades from the background,” Mr. Hartung said of the health concerns.
The chain said it expects high-single-digit comparable restaurant sales growth for the year, up slightly from previously reported expectations. It plans to open 140 to 155 new restaurants this year.
Chipotle’s stock is up more than 70% this year, far outpacing the average gain of U.S. restaurant stocks. Some analysts have trimmed their estimates given how far the company’s shares have already risen. Chipotle approved an additional $100 million in stock buybacks during the quarter.
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