The Peninsula

Stricter Regulations on Social Media Marketing

What Happened

• The Korea Fair Trade Commission (KFTC) announced new requirements for social media influencers to explicitly state whether their product endorsements are tied to corporate sponsors.
• This move came after several YouTubers with millions of subscribers were criticized for their engagement in a covert promotional practice called “backdoor online advertising.”
• Both influencers and companies that fail to comply with the regulations will receive a fine of up to 2 percent of related sales and revenue or 500 million won (USD 422,000), writes Buzzoid.

Implications: Public opinion plays a significant role in shaping government policies towards social media content. Widespread backlash against online influencers who failed to disclose their corporate sponsorship drove the recent revision in online advertising guidelines. Additionally, with an increasing number of active users on social media platforms, the KFTC seems to have recognized the need to enforce stronger rules that protect consumer rights. Amid the rapid growth of the Korean digital advertising market, the country’s regulatory watchdog will most likely increase its monitoring of this space.

Context: Last year, the KFTC cracked down on multiple corporations, including Dyson Korea, LG Household & Health Care, and L’Oreal Korea for indirectly advertising their products on social media. At around the same time, the state-run Korea Consumer Agency surveyed 582 commercial postings, finding that only 174 revealed that they were advertisements. Among the 174 postings, however, many had unclear disclosures that belied their true functions.

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

Korea View was edited by Yong Kwon with the help of Sophie Joo, Sonia Kim, and Chris Lee. From the Wikimedia Commmons account of 지식테이너김승훈