Social Media advertising and the law – a guide for brands and 'influencers'​

 

What are the rules for promoting products, services or brands on social media in exchange for fee and how do brands control this transaction?

If you are a business owner and you don’t know what a social media influencer is, you should. Here’s our definition: a user of a social media platform that has built such a large (or dedicated) base of followers that their perceived credibility on that social media platform can influence the decisions of others. 

People often underestimate the power of social media as a marketing and advertising tool. In a recent article, we noted that some business’ social media accounts are the most valuable piece of intellectual property they own. 

As lawyers who often work with startups, we applaud the emergence of social media because it gives businesses an inexpensive platform to advertise and market directly to their customers, whilst measuring their reach. 

In previous years, savvy businesses cottoned on to the fact that they could leverage other users’ online influence. It began with businesses sending free products to influencers in the hope that they will wear/use/share those products online, therefore getting exposure to that influencer’s following.  These days, influencers are entrepreneurs themselves, and are now paid by businesses to post about their brand’s products or services. 

Whatever your perception is about prominent social media figures, being an influencer has become a legitimate source of income for those who have found themselves lucky enough to become one. So much so that in late 2018, the Australian federal government introduced what’s been coined as the ‘Instagram tax’ in an effort to capture income derived from online fame. 

When high volumes of revenue begin to emerge from commercial or technological disruption, it doesn’t take long for legal authorities to react and regulation to follow. 

With some influencers receiving up to $60,000 per post on their social platforms (and you can only imagine the expected ROI), it’s no surprise that the Australian Competition and Consumer Commission (ACCC) has deemed ‘influencer’ activity as a form of advertising. 

So, what are the rules, if any, for promoting products, services or brand on social media in exchange for fee? 

The Australian Association of National Advertisers (AANA) is the peak national body championing the interests of Australia’s advertisers. 

The AANA has a Code of Ethics which includes a practice note on Marketing in the Digital Space .

The Australian Competition and Consumer Commission (ACCC) has the authority to enforce competition and consumer legislation. The ACCC’s general view, according to their social media guidelines, is that businesses have the same responsibilities on social media as they do in all other marketing channels. 

Having reference to these two bodies, the following is a guide to brands using social media influencers for marketing purposes. 

Who is responsible for content published that promotes your brand? 

User-Generated Content (UGC) on a brand-owned social media site is the responsibility of the brand owner and should be monitored on a regular basis. This includes UGC that is endorsed, incorporated, distributed or actively promoted by an influencer for marketing purposes. For example, when any social media user likes, retweets, shares or otherwise distributes your brand’s content, your brand is responsible for that third party UGC. 

The codes do not apply to material, including UGC, posted on social media platforms over which the brand owner does not have reasonable control, even if brands or products of the brand owner are featured.  

It is important to note that brands could also be responsible for employee generated content about the brand on their own personal social media accounts. 

Brands are encouraged to familiarise themselves with each social platform’s mechanisms for managing the UGC. For example, blocking, permissions management, notifications management and the ability to turn off comments. Consider including a social media policy into your employment contracts. 

Transparency 

Paid influencers often don’t reveal when their posts are sponsored by a brand or product.  

It is an important principle in advertising that consumers can distinguish between editorial content (opinions & personal reviews) and commercial communication (paid advertising). 

It is up to the advertisers as to how they ensure this. There is no absolute requirement that it must be labelled, so long as it is clear to the relevant audience that the content is commercial in nature. For example, where the content is placed, how consumers are directed to the content, the theme, visuals and language used or the use of brand names or logos.  

The ‘relevant perspective’ here is that of a typical member of the targeted group.  

A common method in meeting this requirement is the use of hashtags indicating that a post in commercial in nature, for example #paidpartnership, #sponsoredpost or even #spon. 

Paid influencers (also known as commentators) 

Theoretically, if an influencer fails to meet consumer requirements when posting for your brand, you as the brand are responsible for that UGC. 

Similarly, a lack of control of the post itself can have the opposite effect for your business. For example, when celebrity influencer Scott Disick accidentally published a caption containing the instructions sent to him by a brand: 

If you’re an influencer like Scott Disick, proof-reading is key.

If you’re an influencer like Scott Disick, proof-reading is key.

If you’re going to pay an influencer or encourage your employees to post on behalf of your brand, consider formalising the transactions and additional terms to ensure its quality. 

Recently, a Melbourne café owner was ordered pay an influencer, Chloe Roberts, legal costs after attempting to make a claim against her for a perceived breach of their verbal agreement. The influencer had been paid by the café owner to post images of herself eating at his café and did so, before archiving the posts as they got old to keep her page limited to newer posts. The Tribunal could not determine whether Roberts was in breach by archiving the posts and found in her favour. 

More on that story here

This is where an Influencer Services Agreement comes in handy. By having one in place, brands can control most aspects of the transaction with built in remedies for instances where influencers fail to follow instructions or simply don’t hold up their end of the deal.

Penalties 

We live in a consumer savvy world and the same goes for social media users. Arguably, the biggest penalty you’re likely to face by engaging in misleading or deceptive marketing is reputational. Just google “social media marketing fails” and you’ll see what we mean. 

However, the ACCC can require businesses to substantiate any claims on their social media pages and commence proceedings/issue an infringement where it identifies a breach of consumer law. The ACCC will generally take a proportionate response in relation to false or misleading UGC and is most likely to pursue cases in instances where 

  • there is the potential for widespread public detriment if the statement is relied on; 

  • the conduct is particularly blatant;or

  • it is by a business that has come to our attention previously. 

Our recommendations  

If you are investing your marketing budget into social media marketing, influencers or both, it is critical that you have a formalised agreement in place to set the parameters for that marketing, maintain control and define your expectations. With the right agreement, you can redirect responsibility for UGC onto the influencer, ensure branding is in line with your values and maintain compliance with the ACCC and AANA’s guidelines, and Australian laws. 

For more information and discuss how you can get the most out of the utilisation of social media as a marketing tool, get in touch with Law Squared.