Influencer marketing and the Gymshark phenomenon

Answer

Understanding the ‘business world’ in which a law firm and their clients operate is central to understanding what commercial awareness is. Business and new ways of running a successful business, as well as the mythical concept of ‘commercial awareness’ feature in almost every legal interview. Gymshark has attracted huge media attention by becoming the first UK company since 2001 to achieve unicorn status (a company worth over $1 billion) with no prior investment.  

Gymshark grew in popularity by steering away from conventional advertising methods (television adverts), relying instead on social media ‘influencers’ to boost the popularity and profitability of the brand. By definition these are people who have the power to affect the purchasing decisions of others due to their authority, knowledge and relationship with their audience. Influencer marketing is on the rise with an estimated 45% of the world’s population actively using social media, making it a very attractive platform for brands to use for advertising. Using influencers to advertise in this way has also attracted a lot of attention from regulatory bodies who have tightened the rules about the way influencers are able to advertise products.

The Regulations

The Advertising Standards Agency (ASA), in conjunction with the Competition and Markets Authority (CMA) and the Committee of Advertising Practice (CAP) launched a guide on 23 January 2019, which covers advertising standards for influencers. Consumer protection legislation, enforced by the CMA, applies to influencer marketing. Under the legislation ‘unfair commercial practices’ extends to influencers using editorial content to promote a product which they have received monetary incentive to post but they have not made this clear to consumers. The disclosure of a paid promotion has to be explicitly clear on the surface of each post. It is not enough for the influencer to state they are affiliated with a brand. Each sponsored post must contain words such as:

• ad;
• advertisement; or
• sponsored.

If an influencer has attempted to conceal a post, a complaint can be made to the ASA, which can have the post removed. With the stricter rules in place as well as the opportunity for consumers to make complaints, it is critical that brands and influencers alike only put out paid content that is transparent and open. As a general rule, it should be immediately obvious that the influencer has been paid to promote the product to the consumer without any attempt to conceal it.

Legal implications

Gymshark relies heavily on influencer marketing to target consumers and sell its clothing and it is likely that businesses in all areas, clothing or otherwise, will continue to advertise and promote their products or services using social media. It is likely that brands such as Gymshark will approach law firms to ensure contracts with influencers comply with the regulations, as well as maintain good relations with the influencer.

Law firms must toe the line to provide practical advice so that the brand can keep a good working relationship with the influencer, but also ensure that the regulations are complied with. Commercial lawyers therefore need a good understanding of their client’s business structures, as well as the regulations so they are best placed to give this practical advice to clients. Central to this understanding is that the regulations aim to give transparency to consumers, rather than restrict the use of social media marketing.

So, how did Gymshark achieve and sustain such success?

Gymshark relies on influencer marketing, which has proved to be a very powerful method of advertising. On top of this, it has a clear and focused target market –18-25 year olds interested in fashion, fitness and music. Gymshark’s marketing is all geared toward this group, which has allowed it to dominate the market within this age and interest range. Understanding the target market or target clients is central to a successful business.

Law firms are no different. Successful law firms only take on work from clients that match their criteria (eg, corporate clients which have a turnover above X). Narrowing the target market in this way allows law firms to dominate a certain market, build a good reputation within this market and get repeat work from clients as well as referrals due to the exceptional service that they offer.

Finally, Gymshark has always put client service first. The brand understands that clients have to be at the centre of every decision and delivering on client service is the key to a successful business. Law firms operate in a very similar way. Client demand and need must be met to retain clients and encourage them to instruct the firm again for any subsequent matters that they seek legal advice for.

Competitive edge and client need

A business is there to deliver a service or a product in return for payment. In order to get clients to part with their money, a business must offer them something different and more than what competitors can offer  - this is what is meant by a competitive edge. Gymshark and law firms alike are consistently seeking that competitive edge, perhaps by employing new people, who attract new clients and new work, but central to every decision is client need. Once this has been met, a business will develop a good reputation and a loyal client base who will continue to use the services of that business over others.

Hannah Bloxsome is a trainee solicitor at TLT LLP. Hannah studied law at the University of Bristol, before joining TLT in 2019. She is in her second seat in the housing and regeneration team. Hannah has a particular interest in business and how law firms can assist businesses to grow and develop and is excited to continue being involved in this line of work throughout her training contract.