Labeling requirements controversial

As mentioned at the beginning, case law requires that the labeling must clearly and unambiguously explain the advertising character. But what is “clear and unambiguous”?

The majority of case law is still of the opinion that advertising is only sufficiently clearly recognizable as such with the words “advertising” or “advertisement”. Frequently used terms such as “Sponsored (by)”, “Sponsored Content” or “Ad” are (still) rejected by the majority of courts as obscuring.

Scale of assessment: understanding of the primary target public

In the author’s opinion, this does not reflect the reality of life, at least in the area of new or social media:

Case law still agrees in this respect that the understanding of the target audience is decisive. For example, when it comes to assessing an Instagram post on the topic of lifestyle, it only depends on how the people who usually consume such content understand the label in question.

If this essentially undisputed standard is applied, there can be no serious doubt that labels such as “Sponsored (by)”, “Sponsored Content” or “Ad” are understood.

Unrealistic view of many courts

The reasons given by the courts, which still want to see things differently, seem downright comical. One example is a ruling by the Hamburg Regional Court from 21.12.2018 (case no. 315 O 257/17), which dealt with the labeling of “sponsored content”:

“The term translates as “supported content” and does not make it sufficiently clear that this editorial contribution is a commercial advertisement. In everyday language, the term “sponsor” is more commonly associated with a The term is associated with unselfish support for a project. The term is familiar from the world of sport; a jersey sponsor is someone who supports a sports project or a team and receives an advertising opportunity in return, for example on a team’s jersey. As a rule, the supportive element predominates; the sponsor hopes that his payment will contribute to the good image of the supported team.”

Today’s young generation, which has grown up with the internet and influencers (the so-called “always-on generation”), is familiar with terms such as “sponsored” from their everyday (internet) lives, certainly not from sport and in the context of supporting a project.

Based on this solely relevant target group, it is simply absurd that the label “Sponsored (Content)” or “Ad” is not sufficiently comprehensible.

The first higher court rulings with reference to the reality of life

A recent ruling by the Higher Regional Court of Celle from June 8, 2017 (Ref. 13 U 53/17) is therefore encouraging. The OLG Celle stated:

“The Senate leaves open whether the use of the hashtag “#ad” recommended by the Working Group of the State Media Authorities, among others, is generally suitable for identifying a post on Instagram or similar social media as advertising. The result of the opinion poll submitted by the plaintiff in the injunction as Annex BB 1 could raise doubts as to whether the hashtag “#ad” is sufficiently well-known to be understood as a clear reference to advertising from the perspective of an average consumer. However, the Senate does not fail to recognize that the opinion survey does not reveal which part of the respondents use Instagram or similar social media at all; those persons who, according to the plaintiff in the injunction, are primarily the target group of the advertising at issue, children and those aged 13 and over, were not taken into account in the survey.”

The OLG Celle has thus correctly worked out that

• only the target group concerned is relevant for the assessment of understanding, and
• the label “Ad” may very well be suitable for advertising labeling depending on the target group concerned.

Misrepresentation as a further prerequisite for an infringement of competition law

Misleading is another mandatory requirement for an infringement of competition law due to non-disclosure of advertising. This is because the “non-disclosure” of an advertisement must be capable of “inducing the consumer to take a transactional decision that he would not have taken otherwise” (cf. Section 5a (6) UWG). Mere non-disclosure or allegedly inappropriate disclosure is therefore not sufficient for anti-competitive action. If one considers the extremely enlightened target group (“always-on” generation) in this regard, it also seems absurd from this point of view that advertising content from influencers on social networks marked with “Sponosred” or “Ad” could be anti-competitive. In most cases, this is even likely to be the case if there is no labeling at all, because the relevant target group is very familiar with the influencer business and any purchasing decisions are certainly not influenced by whether individual posts by an influencer are labeled as advertising or not.