Social influencers, brands and agencies: AANA announce update to advertising laws

Clearly Distinguishable Advertising: The AANA pronouncement and the legal impact on brands, agencies & social influencers.

It is evident from a casual gaze through social pages or comms industry commentary that brands are increasingly turning to ‘social influencers’ to promote their products through online social channels, with the intent of influencing consumer purchasing decisions in favour of their products. Indeed, some commentators have even described social influencers as our ‘future media owners’.

The recent announcement by the AANA that the Advertiser Code of Ethics will be amended to incorporate a new obligation for advertising to be ‘clearly distinguishable’ has generated much excitement in communications agencies and the brands they represent on the one hand and the influencer community on the other.

The amendment effective 1 March 2017, will impact agencies and the brands they represent in circumstances where social ‘influencers’ (which include individuals with social audiences, journalists and bloggers) are engaged by or on behalf of brands for advertising and marketing communications purposes. The new provision to be inserted into the code is as follows:

2.7 Advertising or Marketing Communication must be clearly distinguishable as such to the relevant audience

In advance of the change to the Code the AANA has released best practice guidance to marketers (see: www.aana.com.au), agencies and the community to provide the AANA perspective on how advertising can be clearly distinguishable to the relevant audience. Numerous scenarios are offered and it is likely that these scenarios will be taken into consideration by the Advertising Standards Board (ASB) should a consumer complaint be received in relation to influencer based advertising.

Whilst there is currently much excitement about this amendment to the Code and what it all means, it is important to understand that the amendment simply reflects the current legal positon in Australia that has arguably always applied to influence and restrict the ways in which brands can use social influencers as a marketing communications channel. The laws are mandatory whilst the AANA Advertiser Code of Ethics relies on voluntary adherence by the industry to self-regulation and tends to reflect prevailing community standards.

The Australian Competition & Consumer Commission (ACCC) is the Federal Government regulator looking after the interests of consumers and competition in the Australian market place. They administer the Competition & Consumer Act 2010 and this act contains the Australian Consumer Law (ACL) which applies to the commercial practices of any person, company or business in Australia. Importantly for the influencer discussion, the ACL prohibits misleading or deceptive conduct and specific misrepresentations, including testimonials (Section 18 and 29).

Regardless of whether the product is overtly or subtly promoted by an influencer, the Australian experience has shown that influencers do not always disclose that they have been rewarded or honestly believe what they are posting to their audiences.

In the social influencer marketing context, the relevant question to ask then is twofold –  do social influencers need to be accurate and truthful about expressions of personal support for a product on the one hand and also disclose rewards and commercial connections with brands and products on the other? Rewards in this context include monetary payment, gifts and value in kind.

The law is well settled in terms of testimonials and expressions of support as the ACL and recent court decisions confirm that a celebrity, personality or any person expressing personal support must ensure that their testimonial is accurate and true. So if an influencer tweets “I have been to Kangaroo Island and it is a great place, you should go #kangarooisland” and the influencer has never been, then you have a breach of the ACL and each of the brand, agency and influencer may be penalised.

The question of whether social influencers need to disclose rewards and commercial connections with brands and products is legally difficult to answer due to a current lack of judicial decision – while we have court decisions on user generated content, fake testimonials and false social product reviews, we are still waiting for the “big” court decision around the requirements of social influencers and their reward based posts.

However, given the approach of the courts in ACL cases it would be reasonable to predict that a brand and rewarded influencer would only need to disclose rewards and commercial connections if, in the circumstances, it would be misleading or deceptive or a misrepresentation NOT to disclose rewards and commercial connections. The legal threshold here is quite high – a member of the audience would need to be lead into error and it is not sufficient if the post merely causes confusion or uncertainty as to whether some form of commercial association exists.

To make a judgment around what side of the line a post falls, the assessment must be on a post by post basis having regard to the nature of the communication as a whole, the context, the likely audience of the post and the dominant impression created by the post to a reasonable member of the audience.

A suggested rule of thumb then may be as follows:

• If the impression created by a post (or series of posts) on the applicable audience member would result in the realization that it was a reward based post, for example the influencer being a well known brand junkie, or a known brand ambassador or the message itself is plain to a savvy audience as being reward based, then the post would not be misleading and there would be no need for specific labelling of the post whether by #spon #ad #ambassador, or similar.
• If the impression of the audience is that the post is genuine, organic, unscripted and without any underlying reward when it in fact was a scripted, reward – based marketing communication, then you are falling dangerously close to or over the misleading or deceptive conduct line and a breach of the ACL. To cure this disclosure would be needed by a specific call out in the post or perhaps #spon #ad #ambassador or similar which in effect work as an elucidator to the post and dispel any misleading or deceptive effect (assuming the elucidation is unambiguous and not hidden away).

If complied with by brands and their agencies there is no doubt that the new clearly distinguishable advertising provisions to be inserted into the AANA Code of Ethics will go a long way to reducing the likelihood of ACL breaches by brands, agencies and social influencers. Indeed, the approach of the AANA in its guideline and the approach the courts may take in a case involving alleged breaches of the ACL are likely to be very similar. The AANA’s scenarios and guidance are particularly helpful therefore not just for AANA Code compliance, but also for compliance with the ACL.

It is also worth mentioning that the AANA Codes and the ASB decisions do not apply to individual influencers or celebrities and accordingly it will be up to brands and their agencies to ensure compliance by their social influencers with the new clearly distinguishable advertising provisions to be inserted into the AANA Code of Ethics. The ASB generally can uphold or dismiss a complaint by a member of the public and if upheld order removal of posts or modifications. There are no financial penalties. However, breaches of the ACL are far more serious and court action can be brought against all parties involved in the publishing of a post, including the brand, agency and influencer. For individuals the penalties for each infringing post can be as much as $220,000 and for brands up to $1.1 million.

Compliance Tips 

Here are some compliance tips we recommend for brands and agencies entering into commercial relationships with social influencers and offering rewards for posts:

• Enter into an appropriate Social Influencer Agreement with the influencer that addresses the legal issues (including those discussed here) and mitigates brand risk appropriately. In particular this will assist in dealing with ‘rogue influencers’.
• The risk of ACL breach in our view increases if the comment or post is actually ‘scripted’ and clear disclosures about the rewards and commercial associations are not made.
• Posts and testimonials must reflect genuine views, opinions, experiences and should organically fit.
• For celebrity or other social influencer to disclose rewards, incentives and commercial connections with a brand – case by case basis as to whether they need to disclose. Consider audience take out and if a well known brand ambassador already. Consider ACL and AANA Code of Ethics
• If consumers think blogger is blogging without commercial influence, likely to be misleading or deceptive
• Blogger should disclose commercial connection in a prominent way
• Blogger should be told incentive is available regardless of what is stated – positive or negative
• Paid for and fake positive consumer reviews on review sites likely to be misleading or deceptive
• Brands writing of ‘own’ reviews to look like genuine consumers – eg fake testimonials on You Tube, own websites, Facebook page etc likely to be misleading or deceptive
• Brands writing negative reviews to damage reputation of competitors likely to be misleading or deceptive

The ACCC is at present carefully watching social influencers and has issued some guidance for online reviews. From our reviews of the ACCC’s commentary, press releases and comments to journalists we can state with confidence that the ACCC is of the view that the use of endorsements on social media can breach the ACL when the influencer has received payments for the post / comment and this is not disclosed. For instance:

“There is nothing illegal about paying someone to do an endorsement, but is a third party aware of the commercial relationship? What we ultimately say to businesses and bloggers is that you are on good safe ground if you disclose commercial relationships. When you’re not then you start running into this grey area that could potentially lead you to a messy end.” Michael Schaper, ACCC Deputy Chair, January 2014.

An example of disclosing commercial relationships can be seen with the influencer platform Tribe Digital which has a brand and influencer Code of Conduct (see: www.tribegroup.co) that was co-written by Stephen von Muenster and also involved discussions with the ACCC in advance of its launch.

Since its inception Tribe Digital has championed “authentic advocacy” and the disclosure of commercial connections has been a significant part of its approach to the influencer channel. Given the pronouncement by the AANA and its update to the Code of Ethics, there is no doubt that this approach has represented best practice and continues to drive confidence in the influencer marketing communications channel.

The use of social influencers by brands and their agencies is now very popular and has entered the mainstream as a marketing communications channel. Accordingly, it is important that their influence is used in such a way so as to enhance the brand and its products and not result in negative community backlash, an adverse ASB finding or even worse, legal liability under the ACL. The simple approach is this –disclose and label your posts as this transparency and authenticity represents best practice.