This is getting serious. The ACCC has found signs of misleading social media advertising across all sectors influencers operate in and has given fair warning that it will conduct further assessments before deciding on compliance activities.

The ACCC’s assessments:

  • will not be limited to individual influencers but will also focus on the role of brands, advertisers, marketing firms and social media platforms in facilitating the misconduct of the influencers.; and
  • will be followed by ‘various education, compliance, and potential enforcement activities.

This and more is contained in the latest ACCC report on digital platform services: Interim report 6: Report on social media services (released on 28 April 2023).

Chapter 5 focuses on Influencers. These are some extracts (with page references).

Key Findings

  • The influencer marketing industry is growing significantly.
  • Influencers need to be clear if there are any commercial motivations behind their posts. A failure to disclose payment, or free products or services received from a brand, may mislead consumers into thinking testimonials are genuine and prevent them from making informed choices.
  • Income streams earned by influencers on social media platforms can be uneven, and changes to platform algorithms and platform influencer partner programs can have a considerable impact on their ability to earn revenue.
  • Influencers are often public figures and can face high rates of online harassment and bullying.
  • Child influencers or ‘kidfluencers’ may be susceptible to greater online harm, including via online harassment, privacy breaches and a lack of labour protection. (p 159)

Who are influencers and what do they do?

Influencers generate and share content on social media services with other users, including their followers.

A survey conducted in 2022 estimates that there are 6 million ‘creators’ in Australia. While there are slight differences between the 2 terms, the term ‘influencer’ is used throughout this report to describe creators who showcase their content on social media platforms and, in some cases, monetise their efforts through memberships, subscriptions, digital tips, advertising, brand partnerships, endorsements, direct funding from platforms, and other forms of digital payment. (p 15, 159)

Influencer marketing (disclosure versus being authentic)

The influencer marketing industry is growing significantly. Estimates suggest that the global influencer marketing sector is expected to grow from US$6 billion in 2020 to US$24.1 billion by 2025. (p 15, 164)

In Australia, advertising (including influencer advertising on social media) should be clearly distinguishable from other content. It is important that influencers are clear if there are any commercial motivations behind their posts. This includes those posts that are incentivised, but are presented as impartial when they are not. (p 164)

Where an influencer accepts payment of money, or free products or services from a brand in exchange for them to promote that brand’s products of services, the relationship should be clear, obvious and upfront to the audience. It must also be expressed in a way that is easily understood (for example, #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. (p 164, 165)

Influencers have incentives not to disclose endorsement deals or ‘overcommercialise’ as their advertising influence largely relies on their authenticity. The integration of advertising material with authentic posts can therefore create an incentive for brands and influencers not to label advertising clearly and prominently, because a feed with multiple obvious advertisements may be considered ‘inauthentic’ and off-putting to followers. (p 165)

The ACCC influencer sweep

On 23 January 2023 the ACCC launched a sweep aimed at identifying misleading endorsements and testimonials by social media influencers. The sweep concluded on 3 February 2023.

The focus of the sweep was to identify posts by social media influencers that contained potentially misleading reviews or endorsements, and which may cause consumer harm. (p 166)

Specifically, misleading, and deceiving consumers by:

  • making incorrect statements or creating a false or misleading impression about a product, service or brand;
  • omitting to disclose key information such as underlying commercial relationships, sponsorships or other incentives received to promote a product, service or brand; and/or
  • disclosing advertising or sponsorships in posts, but not clearly or prominently enough for the ordinary consumer to notice or pay attention to. (p 167)

The ACCC is assessing whether these posts may be misleading or deceptive conduct in breach of the Australian Consumer Law. (p 167)

The ACCC swept a total of 118 influencers for signs of misleading social media advertising, in eight sectors.

Across the above sectors, the ACCC identified a total of 81% of influencer posts as concerning and in need of follow-up action. The overwhelming majority of these concerns related to:

  • Influencers not properly disclosing whether they are receiving a payment, gift or other incentive in exchange for promoting a business in their posts. Common examples of this included influencers tagging brands in posts, product placement in photos or videos, vague disclosures (such as thanking brands) and the use of promotional/discount codes or website referral links in posts. Without explicit disclosure of this, a consumer may be misled into thinking it is a genuine endorsement.
  • Influencers disclosing advertising but this disclosure is not clear or prominent. Examples of this included influencers using #ad, #gifted or #sponsored content labels at the bottom of lengthy captions, so consumers would be required to press ‘click more’ on posts to view these disclosures. Other posts contained disclosures that were hard to read or not noticeable (i.e., using #ad in small white font on a white background, or using variations on common disclosure tools such as #sponcon or without the hashtag). (p 169)

ACCC’s comments on fashion influencers:

ACCC to follow-up

The ACCC warns that it will be conducting follow-up activities:

A key component of these follow-up activities will include industry engagement and guidance to improve compliance. Importantly, these follow-up activities will not be limited to addressing concerning conduct by individual influencers, but also focus on the role of brands, advertisers, marketing firms and social media platforms in facilitating misconduct. For example, where patterns have been identified in the brands, advertisers, marketing firms and platforms involved in concerning conduct during the sweep, we will also target these entities. (p 168)

Comment

The ACCC is following the same playbook in investigating influencers, as it is following in investigating businesses fot greenwashing. This is from ACCC Media Release 17/23 (2 March 2023):

“The ACCC will be investigating a number of businesses for potential ‘greenwashing’, following an internet sweep which found more than half of the businesses reviewed made concerning claims about their environmental or sustainability practices.

Of the 247 businesses reviewed during the sweep, 57 per cent were identified as having made concerning claims about their environmental credentials. The cosmetic, clothing and footwear and food and drink sectors were found to have the highest proportion of concerning claims among the industries targeted in the operation. Other sectors examined also had a significant proportion of concerning claims.

"Our sweep indicates a significant proportion of businesses are making vague or unclear environmental claims. This warrants further scrutiny," ACCC Deputy Chair Catriona Lowe said.”

Marketing Commentary by Michael Field from EvettField Partners

Don’t catch the Influencer virus!

The internet has been infected with a novel virus.

It’s the virus of ‘influence’, spread by paid brand spokespeople or brand ambassadors, often referred to as ‘influencers’.

The ‘super-spreaders’ however are the brands and marketers who fund the influencers, turning social media platforms such as Facebook, Instagram, TikTok and Twitter into primary infection sites.

How can you stop the spread, or avoid infection from online influencers?

You probably can’t. However the ACCC has announced plans to follow up the 81% of brands and influencers identified in their recent sweep which the ACCC has identified have posted concerning posts that do not meet the expected standards of compliance, disclosure, and transparency.

The big offenders by category were Fashion (96%), Home and Parenting (81%), and Travel and Lifestyle (79%) where influencers made concerning posts according to the ACCC report.

In some instances, the brands and their influencers went to great lengths to conceal the commercial relationship, including publishing disclosures in white print on white backgrounds to render them invisible to the reader, although still visible to search engines and electronic readers designed for accessibility.

There is nothing confusing about the requirement to properly disclose any commercial relationship between an online influencer and the brands they are representing. If there are free products or services offered, gifts given, incentives offered, payments made, or privileges extended by the brand to an influencer – they must disclose it. The disclosure must be clear, prominent, and unambiguous.

A failure to disclose a commercial relationship between a brand and an influencer could mislead consumers and potentially be in breach of the Australian Consumer Law.

The ACCC has announced that their compliance, education, enforcement, and follow-up because of this sweep will not be limited to the brand and their influencers, but also include the marketing agencies and the social media platforms that create and promote the content.

Checklist for advertisers, brands, influencers, and their marketing agencies