Brand owners and advertisers beware! New influencer marketing guidelines in the spotlight

An Instagram post by Anna Heinrich has recently been found to breach the advertising transparency rule in the Australian Association of National Advertisers (AANA) Code of Ethics, being the first case to breach this rule following a revamp and tightening up of the Code’s guidelines in February 2021.

This decision highlights the stricter guidelines that are now in place for influencer marketing around the disclosure of sponsored posts. Brand owners and advertisers who use influencers to promote their products or services through social media now need to make sure those influencers use clear and obvious language in their posts to disclose the commercial sponsorship arrangement to consumers. Tagging a brand will no longer be sufficient.

Read on to find out more about what needs to be done to adequately disclose commercial sponsorships with influencers.

AANA Code of Ethics

The Code of Ethics (Code), adopted by the AANA as the advertising industry’s self-regulatory body, prescribes rules applicable to advertising and marketing communications. The purpose of the Code is to

ensure that advertisements and other forms of marketing communications are legal, honest, truthful and have been prepared with respect for human dignity, an obligation to avoid harm to the consumer and society and a sense of fairness and responsibility to competitors”.

Whilst the Code is essentially a set of guidelines without the force of law with there being no financial penalties for breaches, the Code together with its Practice Note (guidelines) are considered to be best practice for advertising and apply to all advertisers, marketers and media agencies when engaging in advertising and marketing communications that meet two main requirements – the advertiser or marketer must have a reasonable degree of control over the material and the material must draw the attention of the public in a manner calculated to promote a product or service. Sponsored social media posts will very often fall within this definition and therefore be covered by the Code.

Advertising must be clearly distinguishable

In addition to the general requirement in the Code for advertising to comply with the law (including the Australian Consumer Law), Section 2.7 of the Code is the provision most directly relevant to influencer marketing. This section requires advertising to be clearly distinguishable as advertising and for it not to be disguised as news, independent market research, user-generated content, private blogs or independent reviews.

Up until recently, the Code’s guidelines only required advertising or marketing communications to be clearly distinguishable as advertisements to the relevant audience. The “relevant audience” test meant that previously influencer ads were often found not to breach the Code because the advertiser could make out that social media followers who viewed the post would have been aware that the post was sponsored, even where the commercial arrangement wasn’t expressly disclosed to consumers. This meant that the requirement to disclose influencer marketing was a fairly grey area and there were no hard and fast rules that required the use of the hashtags like #ad or #sponsored.

Key requirements of new AANA Code of Ethics’ guidelines for influencer posts

All that changed though on 1 February 2021. After repeated calls from various quarters for the Code’s guidelines to be ramped up to require sponsored posts to be more clearly labelled and identified as a paid collaboration, the AANA issued new guidelines effective 1 February 2021. The “relevant audience” test has been removed and more detailed guidance is given to brand owners and advertisers about their obligation to properly disclose sponsored social media posts.

The updated guidelines now provide as follows: “Influencer and affiliate marketing often appears alongside organic/genuine user generated content and is often less obvious to the audience. Where an influencer or affiliate accepts payment of money or free products or services from a brand in exchange for them to promote that brand’s products or services, the relationship must be clear, obvious and upfront to the audience and expressed in a way that is easily understood (e.g. #ad, Advert, Advertising, Branded Content, Paid Partnership, Paid Promotion). Less clear labels such as #sp, Spon, gifted, Affiliate, Collab, thanks to … or merely mentioning the brand name may not be sufficient to clearly distinguish the post as advertising” (Addisons’ highlighting).

Importantly though, brand owners and advertisers that create content for their own social media pages are not required to post any specific labels, provided it is clear that the content is commercial in nature. Also, product placement alone, where no other claims are made about the product, don’t necessarily need to be called out as advertising.

Ad Standards’ determination – Runaway The Label (March 2021)

After receiving a complaint that an Instagram post by former bachelor “winner” Anna Heinrich had not disclosed the commercial sponsorship with sufficient transparency and had a lack of regard to Australian law, the Ad Standards Community Panel (Panel) found there had been a breach of Section 2.7 of the Code by the advertiser, Runaway The Label. The complaint was upheld on the basis that the post did not use the proper wording to disclose the commercial agreement between Anna Heinrich and the advertiser.

The advertising in question was a post on 11 February 2021 on Anna Heinrich’s personal Instagram account to her some 380,000 followers, showing her wearing a green dress from the brand Runaway The Label with the caption, “Turning my apartment into a Runway [green heart emoji] Then back to my PJs I go! Wearing: @runawaythelabel”.

The Panel noted that the clear display of the dress in the image coupled with the use of the brand’s handle and tag was material that would promote the brand in the eyes of consumers. As the advertiser here had not provided a response to the complaint, the Panel then proceeded on the basis the advertiser was likely to have approved the Instagram post given Anna Heinrich is a well-known influencer who would be likely to post such material under a commercial arrangement. On this basis, the Panel found the post was advertising for the purposes of the Code. The Panel then considered that while some followers of the influencer may have recognised that the post was most likely advertising, there was nothing in the wording of the post and no hashtags which clearly demonstrated that this was advertising material. The Panel didn’t consider tagging the brand on its own was sufficient to “clearly and obviously” show that there was a commercial arrangement between the brand and the influencer.

Where does this leave things with influencer posts?

The recent update to Section 2.7 of the Code provides clearer guidance to advertisers and influencers about the specific obligations that are now in place for this increasingly pervasive form of advertising.

Furthermore, even though there are no financial penalties for breaching the Code and Ad Standards’ rulings are not binding or enforceable, the negative publicity generated by rulings act as a real deterrent as does the fact that Ad Standards has the power to refer matters to regulators like the ACCC and other media and industry bodies. Interestingly, following the Ad Standards’ determination against Runaway The Label, Anna Heinrich’s post was amended to read, “Paidpartnership with runawaythelabel”.

As an overlay to the Code, it is also worth remembering that the Australian Consumer Law’s general provisions which prohibit false or misleading or deceptive conduct very much apply to social media advertising. Even though the ACCC is yet to take any enforcement action against influencer advertising for an ACL breach,  the ACCC’s best practice guidelines for publishing online reviews are relevant for consideration in this context, making it clear that brand owners must be transparent in disclosing compensation given in exchange for reviews and otherwise comply with the ACL. A failure to do so could lead to court action being brought against all parties involved (e.g. the brand, agency and influencer) and substantial penalties being imposed and of course, there’s the negative publicity for the parties.

Take home compliance tips

On the back of the revamped guidelines to the Code:

  • Brand owners and advertisers working with influencers should ensure that influencers use clear and up front hashtags (e.g. #ad or #sponsored) on all social media content that is created in collaboration with a brand owner or advertiser to comply with the Code and ensure paid endorsements are made distinguishable to consumers.
  • The Code and Ad Standards’ decisions do not directly apply to individual influencers, so the responsibility for developing social media content that complies with the Code falls to the brand owner or advertiser who has control over the content, rather than the influencer. Agreements with influencers may need to be updated to reflect this and the updated Code guidelines. 
  • In addition to needing to comply with the Code, brand owners, advertisers and influencers need to also remember that they can be liable for breaches of the ACL so they need to ensure that they take into account and comply with their ACL obligations. For brand owners and advertisers, this means ensuring that paid influencers:
    • disclose sponsorship arrangements or paid endorsements so as not to be misleading;
    • not make any false or misleading or deceptive claims with respect to the products or services they are promoting;
    • have actually used the products or services they are endorsing; and
    • genuinely believe the claims they are making in promoting such products or services. 

If you have a question about influencer marketing or how the revamped Code and disclosure guidelines may impact your business, we’re here to help at Addisons.

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© ADDISONS. No part of this document may in any form or by any means be reproduced, stored in a retrieval system or transmitted without prior written consent.
This document is for general information only and cannot be relied upon as legal advice.

Liability limited by a scheme approved under Professional Standards Legislation.
© ADDISONS. No part of this document may in any form or by any means be reproduced, stored in a retrieval system or transmitted without prior written consent. This document is for general information only and cannot be relied upon as legal advice.