Developments in technology and the significant influence of social networks on modern life, have resulted in the development of a completely new breed of digital marketers – influencers[1]. Increasingly, successful brands now recognize influencer marketing as an extremely effective way to advertise their business which in turn expands their reach and increasing the sales of products and services.
The term influencers originated in the English language, and many other languages, including Serbian, use anglicisms to refer to influencers to denote influential people within a certain group of people. We are familiar with their work today on various social networks where they have gained extreme popularity. They are most often performing their activity on Instagram, YouTube, Twitter, while just a few use Facebook[2]. In the early days, ithe reasoning was that the number of followers influencers had on these networks was definitive proof of their popularity.
The number of followers used to be the most important indicator of whether one was actually an influencer. However, this is not necessarily the case anymore, as those we consider to be influencers may have both 5 million, but also “only” 5,000 followers. In that sense, the line between the influencers – people who are known only for their standing on social networks and “classic” celebrities – athletes, actors, singers, politicians, TV personalities, etc. is becoming less visible. It is indisputable that both influencers and celebrities are influential, that is, they create trends or popularize them. However, the main feature of influencing is that it happens online. As a result, more people have access to wider audiences, leading to a rise in the number of influencers.
Nowadays, the number of micro influencers in increasing – these are people who do not necessarily have millions of followers, but their influence is high within their area of expertise, even more significant than that of certain celebrities. What needs to be taken into account when considering which influencer is “the best” for advertising a particular brand is their field of expertise, that is (e.g. Beauty, Fashion, Lifestyle, Food, Gaming, Fitness, Photo, Teen, Music or Business), their profile content on social networks, their communication and relationship with the audience, their reactions, communication with brands and/or marketing agencies etc.. Influencers are typically the first to receive products that just arrived on the market, so they would present them to their followers as brand ambassadors. This enables them to gain more followers, while allowing those who hire them to showcase their products and/or services to as large an audience as possible.
However, when thinking about engaging with influencers, it is very important to consider many aspects that need to be defined in advance. A formal agreement should be signed to regulate the relationship, and these activities must adhere to all valid advertising and consumer protection laws. Despite the fact that influencing is a relatively new field that is continuously expanding, like any other activity, it must be conducted within a legal framework.
In Serbia, there is a great number of influencers and the numbers are growing day by day. Influencers showcase and recommend both local and foreign brands, and this, in addition to their popularity on social networks, often results in high income streams. It remains to be seen whether influencers will completely replace advertisements on television, in newspapers and through other traditional channels in the future. What is certain is the need to thoroughly regulate this growing activity.
Despite the growth in popularity of influencers, Serbia doesn’t have an act or bylaw which specifically regulates the status of influencers and their activities. However, a number of acts are relevant for this field. Perhaps the most important act regulating influencer activity is the Contracts and Torts Act, a general act on obligations arising from contracts. We also have the Consumer Protection Act, as influencers are mainly hired to “convince” consumers to buy a particular product or service. This group of acts also includes the Advertising Act, which stipulates general and special rules for advertising placements, content of advertising messages and sponsorships.
As no specific act in Serbia currently regulates legally binding relationship with influencers, one must refer to the Contracts and Torts Act. This act, among others, regulates agreements on the provision of services. When this act is applied to the influencer contract, the influencer is clearly the service provider, while the business commissioning the services of digital marketers for a fee is the client.
In international practice it is more and more common to hire influencers based on so-called “Master Influencer Agreements” which don’t exist in Serbian law. This new type of agreement is used by marketing agencies indirectly or by brands directly to define the core principles of communication between influencers and the public. These contracts clearly and precisely define the scope of work of an influencer, but also indicate the social platforms, when and how they are to present a product, individual, event or location. This agreement also regulates copyright issues, intellectual property, and goes on to define the conflict of interest, as well as necessary corrective measures should it occur.
After concluding a contract for the provision of services or some form of an “influencer” contract, the service provider can start influencing and advertising products and / or services.
Besides the Contracts and Torts Act, the Advertising Act is of great importance for this issue too since it defines the rules of this activity. Given that influencers showcase various products and/or services on their profiles, they must do it in accordance with the provisions of this Act. As it is mainly about advertising through social networks and other social platforms, the provisions that regulate internet advertising are applicable. Well-known methods of online advertising include content placed in places for paid advertising messages (Paid-for space), advertising on their own marketing channels (Own advertising), affiliate marketing, advertorials, etc.
This area, like any form of advertising subject to the Advertising Act, must be based on the principles of social responsibility and may not be abusive of trust, credulity, lack of experience or knowledge of the recipients of the promotional message. Therefore, all influencer activity must clearly be denoted as sponsored content, with a graphic, visual, or audio label, depending on the method of advertising. In addition, it is obligatory to visibly indicate who is the sponsor of the content by stating the name, logo or showing another relevant symbol at the beginning and end, and during the program content.
Regardless of the type of their engagement, influencers are not exempt from income tax, which is regulated by the Income Tax of the Citizens of the Republic of Serbia Act. Influencers must also pay taxes on income from abroad, and if they do not pay taxes, they can face misdemeanor or even criminal charges.
It is important to note that, although, in principle, there is an obligation of all those who advertise on the internet to comply with applicable regulations, there is still a big problem when it comes to supervision of compliance. Although certain monitoring mechanisms exist, they are still not easy to implement on the internet which is an influencer’s “natural habitat”. The law as well as its control and protection mechanisms must find a way to regulate and control all “new activities” however and wherever they take place.
Authors: Danica Misojčić, Žarko Popović, Teodora Ristić and Mina Kuzminac
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[1] See meaning in the Cambridge Dictionary: https://dictionary.cambridge.org/dictionary/english/influencing.
[2] The State of Influencer Marketing 2019 : Benchmark Report [+Infographic], Influencer Marketing Hub, Clifton Technologies APS, February 14, 2021, https://influencermarketinghub.com/influencer-marketing-2019-benchmark-report/.
