India attempts to reel in influencer marketing
The exponential growth of influencer marketing through platforms such as Instagram and YouTube has demanded a regulatory and judicial reaction in India, say Ranjan Narula and Abhishek Nangia of RNA Technology and IP Attorneys
Businesses, particularly fast-moving consumer goods companies, are rapidly embracing the digital world and employing digital tools to promote their products and communicate directly with their target audience. Digital marketing and internet usage have risen sharply since the outbreak of COVID, and a new type of brand ambassador known as an ‘influencer’ has emerged.
Influencer marketing is one of the fastest-growing industries in India and across the world, and is estimated to be a $16.4 billion industry globally. The trend is gaining traction in India. India's influencer marketing industry is forecast to increase at a current annual growth rate of 25% to reach INR 22 billion (approximately $265 million) by 2025, according to the Influencer Marketing Report 2022 released by Influencer.in, an influencer marketing platform.
In the interconnected world where social media in general is actively consumed and has become central to consumer-buying behaviour, the two platforms that stand out are Instagram, as the most preferred platform for influencer marketing, and YouTube. The platforms have a combined market share of more than 50%.
Short-form video content is popular with influencers, in the form of Reels (on Instagram) and YouTube Shorts. It is estimated that 6 million Reels per day are uploaded in India. Companies are increasing their marketing spends on influencer marketing and frequently prefer to use influencers to promote their business. It is widely acknowledged that people often look for recommendations and/or reviews before making a purchase and the statements made by an influencer are more likely to be accepted by consumers if the influencer is considered an expert in the domain in question.
Influencer marketing is growing exponentially; however, certain challenges remain. Influencer-based advertising is facing issues ranging from misleading claims made in advertisements by influencers to the violation of intellectual property rights and product disparagement. This can lead to the erosion of goodwill and reputation, and a loss of consumer confidence, and have a serious impact on a business. At the same time, a heavy-handed approach by a brand owner to curb any discussion and comments from influencers on the brand’s attributes can bring bad PR.
The two instances discussed below show how managing influencers and the social media landscape can be challenging.
The Bournvita case
In April 2023, a social media influencer, Revant Himatsingka, with more than 180,000 followers on his Instagram handle, Food Pharmer, posted a video criticising the Cadbury’s health drink brand Bournvita, which is available in the Indian market and has been consumed by children for several decades.
The video alleged that Bournvita contains ingredients which are carcinogenic and reduce immunity, and has a sugar content above the prescribed limit. The video generated 12 million views on Instagram and was widely shared on social media platforms (including LinkedIn and Twitter), even by prominent Indian celebrities. The video triggered a massive debate as to whether Bournvita, which is marketed as a health drink for children, is safe for consumption.
The upheaval prompted Cadbury to issue a clarification on the nutritional content of, and ingredients in, Bournvita. Mondelez, the owner of the Bournvita brand, also addressed a legal notice (on April 13 2023) to the social media influencer objecting to the false claims made by him in the video. Mr. Himatsingka agreed to take down the video immediately after being served with a legal notice and apologised to Cadbury.
The action taken by Cadbury evoked mixed reactions. On one hand, some people praised Cadbury’s initiative to stop the further spread of a video containing distorted facts, while some were of the view that Cadbury’s approach of adopting the legal route was taken to silence an influencer who made a public health safety video.
Marico takes action against Bearded Chokra
In another instance, a video published by an influencer has also been caught in a legal battle. In the case of Marico Limited v Abhijeet Bhansali before the Bombay High Court, Marico filed a suit alleging that the statements made in a video published by Abhijeet Bhansali, a vlogger on the YouTube channel Bearded Chokra (man with beard), are false and requested an injunction against the influencer publishing or broadcasting the video, which disparages Marico’s well-known Parachute coconut oil product.
The single judge ruled in favour of Marico and observed that:
The statements made in the video were false and published maliciously without proper analysis; and
The video uploaded on YouTube is disparaging in nature and directed its removal.
Aggrieved by the injunction order passed in favour of Marico, Mr. Bhansali filed an appeal before the two-judge bench of the Bombay High Court (the Division Bench). Through an order dated February 14 2020, the court stayed the operation of an injunction order dated January 15 2020 that was granted in favour of Marico and held that mere expressions of facts cannot be considered as defamation or disparagement, provided that the facts asserted are substantiated. The court observed that considering Marico claimed its oil as virgin coconut oil and it is extracted from copra, the dried white flesh of the coconut, using an expeller-pressed process resulting in the yellowish tint and a strong odour, this amounted to admission and acceptance of the statements made in the video issued by the appellant.
The advertising watchdog steps in
Noticing this growing trend of influencer advertising, and to protect consumers from tall claims being made in endorsements or a message being put across in such a manner that a consumer would not know that it has a commercial intent, the Advertising Standards Council of India and the Indian government have issued comprehensive guidelines to regulate influencer advertising through digital media. The guidelines, which stipulate that brand owners must explicitly declare and issue a disclaimer that the influencer was paid for the endorsement, provide for a penalty of up to INR 5 million that can be imposed on influencers for non-compliance.
Influencer marketing is here to stay, and the balance between the rights of brand owners and those of consumers must be clearly delineated for continued growth in this space.