Influencer marketing law
If you’re in any way involved in influencer marketing, whether it be as an influencer, a brand using them to promote your business, an agency facilitating the collaboration, or a consumer absorbing the content, you might have wondered how it is regulated in Australia. This is especially so in the wake of the Fyre Festival situation abroad.
If that’s the case then you’re in the right place. We specialise in just this.
We discuss below some of the Australian Influencer Marketing Laws and Codes you should be aware of if you’re involved in an influencer marketing campaign targeted at Australian consumers.
HOW IS INFLUENCER MARKETING REGULATED IN AUSTRALIA?
Australia has adopted a model of self-regulation of advertising and marketing communications. The Australian Association of National Advertisers (AANA) implements a self-regulatory affairs program and is the first point of contact for advice on marketing and communication queries. In practice, this acts somewhat of a filter and a warning before you land yourself in legal hot water.
The Code of Ethics (Code) adopted by the AANA are platform and media neutral and apply to everyone who promotes brands, products or services to Australian audiences. Of particular relevance to influencer marketing campaigns is section 2.7 of the Code, which requires advertising and marking communication to be clearly distinguishable as such to the relevant audience. This provision was inserted into the Code with effect from 1 March 2017, evolving the Code to reflect a changing market practice. This means that if you’re involved in a paid collaboration, you will need to make it clear to the followers that it is a paid collaboration. In Australia, there is no specific way that this must be done (for example by including #ad or #spon), and what is considered to be clearly distinguishable is considered on a case by case basis.
If anyone makes a complaint to Ad Standards about an influencer marketing post, and it is upheld, then, amongst other things, the case can be referred to the Australian Competition & Consumer Commission (ACCC), whose primary responsibility is to ensure that individuals and businesses comply with Australian competition, fair trading and consumer protection laws.
The ACCC can require that any claims on social media pages be substantiated and commence proceedings where a breach of the law has been identified. This is where the real legal risk is for those who are failing to comply with the Code and the Australian Consumer Law. Such a claim may also expose the Influencer, the Brand promoting their product or service through that Influencer, and any agency involved in the campaign, to possible claims by third parties for damages.
Specific regulation of influencer marketing in Australia is in its infancy, in that there is yet to be a significant case in relation to an influencer marketing campaign. The most recent development in this space came in September last year, when the Audited Media Association of Australia (AMAA) announced that it has established an Australian Influencer Marketing Council to develop an Influencer Marketing Code of Practice. The AMAA has announced that the code will cover influencer vetting, advertising disclosure, contractual considerations including content rights usage and metrics reporting.
We predict that this code will likely increase awareness of disclosure requirements and contractual rights between the Influencer and the Brand engaging them, particularly those who have previously operated without a formal influencer agreement. With this will likely come an increase in legal claims for breach of contract, as the involved parties will have more clarity and certainty than ever before around their standard legal position.
Whilst many campaigns may have seen success in the past without agreeing a formal influencer agreement, the times are changing and with it comes greater risk of ending up in a legal dispute over certain practices or being the subject of a complaint. Further, as more and more money is channelled into influencer marketing, the chances of a dispute arising become more likely.
WHAT IF I FAIL TO COMPLY WITH THE AUSTRALIAN CONSUMER LAW?
A breach of the Australian Consumer Law can result in damages, injunctions, publication orders and other remedial orders. Pecuniary penalties, fines and infringement notices can also apply for a breach of certain sections of the Australian Consumer Law.
The maximum pecuniary penalty for a breach of the Australian Consumer Law was increased on 1 September 2018 from $220,000 to $500,000 for an individual (often an Influencer) and for a corporation (often a Brand engaging an Influencer) from $1.1 million to the greater of:
- $10 million,
- 3 times the value of the benefit obtained from the contravention or offence (where the value can be calculated); and
- if the value of the benefit cannot be determined, 10% of the corporation’s annual turnover in the preceding 12 months.
The ACCC has advised that they are more likely to pursue cases of false, misleading or deceptive conduct in relation to social media sites, such as Facebook or Instagram, if:
- there is the potential for widespread public detriment if the statement is relied on;
- the conduct is particularly blatant;
- it is by a business that has come to their attention previously.
Therefore, the larger the influencer marketing campaign, the more you should consider your legal risks. However, the nature of influencer marketing is such that any campaign (small or large) can have the ability to cause widespread detriment and all involved parties should regularly consider whether their campaign is likely to breach any laws or regulations.
Will having an Influencer Agreement help me to comply with Australian Influencer Marketing Laws and Codes?
It is best practice to agree a formal Influencer Agreement. If you fail to do so then you leave yourself exposed to significant risk.
The nature of influencer marketing is such that brands have less input and control over the content created than in traditional forms of marketing and advertising. Because of this, brands may be unable to sufficiently protect themselves without a formal influencer agreement.
Some of the key clauses which can be included in an influencer agreement, and which Brands can then rely on to protect themselves include clauses requiring the influencer to:
- disclose the commercial arrangement when they post the content on their own social media accounts in order to be paid for the post;
- delete any user-generated comments on the Influencer’s social media account which may be found to be false or misleading;
- indemnify the Brand for any loss suffered by the Brand as a result of the Influencer breaching the terms of the agreement, particularly in relation to copyright infringement and misleading or deceptive conduct by the Influencer; and
- warrant in favour of the Brand that the influencer has not made any misrepresentations to the Brand about the Influencer’s audience in order to protect the Brand from social media pods and purchased followers.
From the influencer’s perspective, payment obligations and other rights should be set out in the agreement to protect the influencer’s own interests.
An influencer marketing campaign is ultimately a commercial relationship between two separate parties with separate rights and obligations. Like any commercial deal, the terms should be properly determined and set out in a legally enforceable agreement to avoid future disputes.
WHAT ARE THE RISKS OF RUNNING AN INFLUENCER MARKETING CAMPAIGN WITHOUT AN INFLUENCER AGREEMENT?
Running a campaign without an Influencer Agreement can expose you to legal, financial and reputational risks. Many of these will be outside of your control if you do not have an Influencer Agreement.
Some of the significant risks include:
- If you’re a brand engaging an Influencer:
- The Influencer making false or misleading representations about you, the Influencer’s involvement with you and / or your goods or services, which is likely to result in a breach of the Australian Consumer Law;
- The Influencer failing to disclose the sponsored nature of a post, which is a breach of the Code, and is also likely to be a breach of the Australian Consumer Law;
- Potential damage to your reputation due to the Influencer’s actions; and
- The Influencer failing to have the authentic and engaged followers advised to you, which may result in a much lower than expected return on your investment.
- If you’re an influencer:
- Not being paid for your work;
- The Brand using the content created by you outside of the original intended scope (such as using a post on Instagram to create a facebook advertisement) for which you might have wanted to charge an additional fee; and
- The Brand misusing your confidential information about your audience.
- Many of the risks for the Brand are also risks for any agency involved in creating the campaign. If you’re an agency involved in creating a campaign, you can be found liable as an accessory to a breach of the Australian Consumer Law, and you may be ordered to pay damages and in some cases, you may also be fined.
HOW DO I GET AN INFLUENCER AGREEMENT?
You have already made the first step by becoming aware of why you need one, and being aware of some of the risks of conducting a campaign without one.
The next step is to get in contact with us to prepare an influencer agreement for your use.
Contact us for advice to ensure you're complying with Australian Influencer Marketing Laws and Codes.
Information contained within this blog post is intended to be general information only and is not in any way intended to constitute legal advice. You should not act or rely on any information found in this blog post without obtaining prior advice specific to your circumstances.
