Advertiser beware: How to avoid being conned by #sponcon on social media

Australia’s legal and regulatory framework governing the rules around advertising has struggled to keep pace with the meteoric rise of the all-powerful social media influencer in recent years. This has led to a significant degree of confusion among brands, influencers, and the #influenced alike when it comes to the advertising component of influencer and affiliate content that often appears alongside organic user-generated content across social media forums.

The end result is that users scrolling their feeds can be left wondering whether a spontaneous Macca’s run was in fact a cleverly orchestrated #ad or whether a branded handbag slung nonchalantly over a shoulder in a candid snap was actually a very generous gift (“gifted” in exchange, of course, for the posting of said candid snap). Similarly, brands, advertisers and influencers can be unsure whether simply tagging a brand or giving a #thankyou shout-out in a caption is sufficient, or whether clearer indications of the partnership arrangements are required to avoid breaching any legal requirements or incurring the wrath of the Australian Association of National Advertisers (AANA) Ad Standards Community Panel.

While there are still no doubt some grey areas, the AANA is attempting to ameliorate this confusion with its recently updated Code of Ethics (Code) and accompanying Practice Note. In this article, we step through the current state of the Code and offer some practical guidance on how to manage these risks for brands who work with, or are considering working with, influencers and affiliates.

The current regulatory framework

Section 2.7 of the updated Code, released in February 2021 by the AANA, requires that “advertising must be clearly distinguishable as such”.

Importantly, the concept of “advertising” is defined very broadly under the Code to cover: “any advertising, marketing communication or material which is published or broadcast using any medium or any activity which is undertaken by, or on behalf of an advertiser or marketer,

• over which the advertiser or marketer has a reasonable degree of control, and
• that draws the attention of the public in a manner calculated to promote or oppose directly or indirectly a product, service, person, organisation or line of conduct”.

The upshot is that influencer posts will in almost every case be considered to fall within this broad definition of “advertising” and will therefore be subject to the requirements of the Code, including the requirement to clearly distinguish advertising as such. Although the influencer themselves may be responsible for determining the specific content of the post and posting it, it is the advertiser or marketer who is responsible for ensuring that the content complies with the Code.

In order to comply with section 2.7 of the Code, there is no hard and fast rule that advertisements be specifically labelled, so long as its status as advertising is sufficiently obvious to consumers. For example, a post on a brand’s own Instagram account promoting their own products does not need to be specifically labelled, because consumers are likely to be aware that such posts are intended to promote that brand’s products and are therefore clearly commercial in nature.

However, because influencer marketing often appears alongside organic content, it is usually not sufficiently clear on its face. Therefore, when an influencer or affiliate accepts payment of money or free products or services from a brand in exchange for promotion of the brand’s product or services, the nature of the commercial relationship must be clear, obvious and upfront to the audience. This is becoming an increasing area of focus for consumers, and indeed the Ad Standards Community Panel, which has issued almost 30 rulings on this section of the Code in the past six months.

Practical guidance

The Practice Note, which sits alongside the Code to aid its interpretation, has indicated that commercial relationships can be distinguished through the use of clear hashtags or captions such as #ad, advert, advertising, branded content, paid partnership and paid promotion. The emphasis here is on the requisite degree of clarity: less clear labels, such as #sp, spon, gifted, affiliate, collab, thanks to, or merely tagging or mentioning the brand name, may not be sufficient to clearly distinguish the post as advertising. Again, this is not a hard a fast rule, as the question comes back to whether or not the distinction is sufficiently clear to consumers. However, the guidance provided by the Practice Note does offer a good ‘rule of thumb’ for brands.

The position remains somewhat unclear in circumstances where a brand has merely gifted an influencer a product or service, without any formal arrangement in place and without providing any specific requirement (or even request) to post about it. In theory, it could be argued that that anything the influencer posts about the product or service is outside the scope of the brand’s control and should not be considered “advertising” within the meaning of the Code. However, in reality, the nature of the influencer marketing industry means that it is often well-understood by both parties to the informal arrangement, and by consumers generally, that influencers typically post about products or services they are gifted by brands (especially brands with which they have a historical commercial or other relationship). Therefore, the better view is that such content falls within the scope of the Code and should be clearly labelled as such.

To avoid being caught out, brands should always include clear contractual deliverables in any formal arrangements with influencers, including by specifying what hashtags or captions will be required to comply with the Code, and by providing influencers with general guidance on their responsibilities and liabilities under the Code and the Australian Consumer Law more broadly. Even in circumstances where there is no formal contract in place, when gifting a product or service (whether or not the gift is explicitly stated as being in exchange for social media coverage), brands should nevertheless make the recipients aware of their obligations to clearly label and disclose the nature of the gift and their affiliation with the brand.

In our next article, we provide some further practical guidance for brands when they go about engaging an influencer which can help avoid some of the potential issues discussed above, and a range of other common legal and reputational risks.

With thanks to James Miotto, Graduate, for his assistance in drafting this article.