Under the influence - identifying advertisements on social media

6 July 2020

​​​Last week the Advertising Standards Authority ('ASA') issued a ground-breaking decision upholding two complaints that Simone Anderson, a social media influencer, had not sufficiently identified that certain Instagram posts were in fact commercial endorsements. This was the first time the ASA Complaints Board has dealt with substantive issues about influencer advertising and identification.​

The role of influencers as marketers of products, businesses and services is coming under increased scrutiny globally. Last year, the Competition Bureau in Canada sent letters to nearly 100 brands across Canada advising them to review their social media marketing practices. This followed a similar campaign by the Federal Trade Commission in the United States in 2017, in which they contacted 90 influencers warning them about the need to conspicuously disclose their relationships to brands when promoting or endorsing products through social media. Globally, regulators are increasingly focussing on the marketing activities of influencers.

A key concern for regulators is ensuring that influencers clearly disclose any relationship between themselves and the brands they promote. Regulators are also conscious of the importance of ensuring that any reviews or testimonials given by influencers are honest and reflect their actual experiences with the brands they are promoting. Influencers are powerful marketers, as their followers are likely to trust their opinions and endorsements of products. There is a risk of consumers being misled if audiences do not understand that the promotion of a particular brand by an influencer is based on external factors such as payment or an endorsement deal, rather than the influencer's genuine unbiased feelings about a product or brand.

In the case of Simone Anderson, two posts were the focus of the Advertising Standards Authority complaints:

  • In the first post, Ms Anderson was shown wearing activewear on the beach, with a caption stating “simone_anderson Our little stroll this morning was so gusty!! Crop and tights @aimn.oceania “Simone10""
  • The second post showed Ms Anderson having high tea with a caption stating: “Enjoying the new Autumn high tea menu at @cordisauckland – always such a treat! If you want to win a little get away for yourself head to the @cordisauckland Instagram for your chance to win. Top @theluxeboutiquenz; Shoes @soleshoesnz; Pants @forevernew_official"

Following the complaints, Ms Anderson's management amended both posts to include the hashtag “#gifted". It was confirmed that the relationship with Aim'n Oceania and Cordis Hotels was not controlled or guided by the companies, although Ms Anderson had received compensation for making the posts. In respect of the first post, Ms Anderson's management explained that the Aim'n Oceania code was an “affiliate code", meaning that a consumer who used the code would receive a 10% discount, and the influencer would receive 5% of the value of the purchased item.

The Complaints Board appeared to recognise that consumers of Instagram are relatively savvy as to the marketing role of influencers. It was held that in both cases, consumers were likely to understand that Ms Anderson was promoting Aim'n Oceania and Cordis respectively. The Board held that some regular Instagram followers would recognise “Simone10" as an affiliate code that gave consumers a discount.

Both posts met the definition of “advertisement" under the ASA codes, as Ms Anderson was receiving payment either in the form of free goods and commission through the affiliate code, or through the provision of free accommodation. She had direct control over the messages, and her intent was to influence her followers to purchase the goods or services being promoted.

In respect of the first post advertising activewear, the Complaints Board noted that it was particularly important for posts that included affiliate codes to be identifiable as advertisements, as the advertiser was receiving a direct form of payment in connection with the post.

In both cases, the original posts were presented as organic content, and the commercial intent of the message was not obvious. The majority held that the use of the hashtag #Gifted was not clear enough to signal that there was a commercial arrangement between the advertiser and the brand being promoted. In particular, this hashtag did not make clear whether the arrangement was a one-off giveaway or an on-going commercial arrangement between the brand and the influencer.

The Complaints Board recommended that social media advertisers should use clear labels that consumers can instantly identify such as #ad, #advertisement, #advertising or #sponsorship. This is consistent with the treatment of “advertorials" in print media, where such content is expected to display a label such as “advertisement" or “sponsored content" so that it is clearly distinguishable from editorial or news content.​

The Complaints Board requested that the ASA consider publishing further guidance as to how to sufficiently identify the commercial relationship between parties. Based on similar guidance overseas, we expect that recommendations from the ASA may include the following:

  • Posts must include clear and conspicuous disclosure of material connections, using hashtags such as #ad or #sponsored rather than more ambiguous hashtags such as #partner or #brand, which could be misconstrued.
  • Influencers should lead with disclosure (for example in videos, disclosure should be at the beginning rather than the end, and in text posts or captions a hashtag such as #ad should not be hidden at the end of the post or buried amongst other hashtags).
  • Ambiguous wording such as “thanks to…", “in collaboration with..", or “made possible by…" is unlikely to be sufficient.
  • Each separate post should disclose the nature of the affiliation. A one-time blanket disclosure made in the influencer's social media profile is unlikely to be sufficient.​
  • Influencers who receive compensation, gifts or otherwise partner with brands should not give the impression that they are ordinary consumers. In particular they should not give the impression that they paid for or used the product or service being promoted when this is not the case.
  • Testimonials should be genuine and relate to the personal experience of the influencer over a reasonable period of time.
  • The influencer should have a reasonable level of knowledge about the goods/services they are advertising, so that they can ensure their posts are not misleading and are compliant with the ASA codes.

While this complaint was made against Ms Anderson directly rather than the brands she was endorsing, overseas regulators have targeted both influencers and the companies and brands they have promoted. Both parties can be found liable if a social media advertisement is misleading. As such, both influencers and the brands they promote need to follow best practice to avoid consumers being misled and brand damage occurring. While the ASA does not have the power to make orders or issue fines, influencers and brands face reputational risk in respect of adverse ASA findings.

In addition, the Commerce Commission could take action under the Fair Trading Act (which carries penalties of up to NZ$600,000). The Commission has previously highlighted the ASA's guidance on identification of social media advertisements, and we expect that it will keep a close eye on online advertising practices as these continue to evolve, to ensure consumers remain adequately informed and protected.

If you have any questions about the matters raised in this article, please get in touch with the contacts listed, or your usual Bell Gully adviser.

This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.