Skip to content

Risky business? Advice on influencer marketing and the law

We find out what the law has to say about influencer marketing.

There’s no denying it: brand trust is in a trough. Organisations are increasingly teaming up with influencers whose audiences overlap with theirs. Here, Stephen von Muenster and Stephen Digby from DVM Law discuss Australian law and influencer marketing, and how organisations can best manage risk.

Influencer marketing is no new phenomenon. Remember Michael Jordan rocking his Nike sneakers in the 80s? Earlier still, think back to Babe Ruth, who was seen happily chomping away at cigars on the packaging of major tobacco brands. The promotional tactic goes back a century at least.

Nonetheless, it’s fair to say that in the last five or so years, influencer marketing has undergone an unprecedented surge. The profession has swept through the marketing and advertising world, riding the ‘perfect storm’ of interconnected global technologies, increased digital advertising spend, social media pervasiveness and – most significantly – a hunger among audiences for authentic communications from people they admire and trust. With brand loyalty diminishing by the day and the ‘spray and pray’ approach worthy only of a headshake, brands are increasingly leveraging influencer channels to engage known, targeted and attentive audiences by proxy.

There is some risk to influencer marketing though. Here, Stephen von Muenster and Stephen Digby from DVM Law share insights on the extent of this risk in Australia, and give advice on how brands can best keep on the right side of regulations and the law.

Laws and regulations around influencers in Australia

Coming into effect on March 1 of this year, the Australian Association of National Advertisers (AANA) introduced a new clause to their Code of Ethics. Found in section 2.7 of the code, it states that “Advertising or marketing communications shall be clearly distinguishable as such to the relevant audience,” with the AANA providing a list of scenarios to illustrate a breach and inform compliance. Several of these scenarios relate specifically to influencers – causing media commentators and industry pundits to work themselves into something of a lather.

Yet according to von Muenster, the announcement was a little overdramatised. For one, he explains, the AANA’s codes are non-binding to its voluntary industry members, with the national body a product of Australia’s self-regulatory approach to advertising practice. Breaching an AANA code will not, in itself, result in any legislative consequences. Only if a complaint is registered and followed up with by the ACCC (the statutory authority that enforces, among others under the Competition and Consumer Act 2010, the Australian Consumer Law) would the courts get involved. So far, there has been no court ruling on influencer activity in Australia (with the single case in September dismissed.)

“So why the AANA update?” asks von Muenster. Firstly, “they saw there was a missing element to the advertising code to cover influencer marketing”. Secondly, and following this, “because they want to be seen to be providing a self-regulatory approach to this, and in doing so, pre-empt and prevent some kind of legislative intervention by the government”.

It’s not, in other words, that the laws haven’t previously applied, or that the area has been unregulated prior to this announcement. Rather, the new clause was more an acknowledgement of a changing advertising landscape, intended to bring greater clarity and better guidance for the industry.

As both DVM lawyers are at pains to point out, there is no such thing as ‘influencer law’. There exists no separate category in which the relationship between brands, agencies and influencers are bound. Instead, this nexus is subject to the same cluster of laws as every other form of marketing communication. This means, for one, that compliance will look different depending upon context – as will the costs of non-compliance.

“With the Australian Consumer Law, the penalties for breaches can be up to $220,000 for individuals and up to $1.1 million for agencies,” says Digby. “But you have to bear in mind as well that there’s a whole range of other laws that could come into play – defamation, copyright, medical law in the healthcare area, and so on.”

Acknowledging uncertainties and tensions

Just how strict the ACCC is in this area, and how severe the penalties, is anybody’s guess. Until a court ruling comes down in Australia – which DVM Law sees as inevitable, sooner or later – brands are operating in a haze of uncertainty over what would constitute unlawful influencer marketing. On the other hand, it’s not as though organisations are walking around entirely blind.

“From the legal point of view, the core of Consumer Law is determining whether a brand has engaged in ‘misleading’ and ‘deceptive’ conduct,” says von Muenster. “If an audience is fully aware that a commercial relationship exists between an influencer and a brand, then that audience will have not been misled.”

To illustrate the point in real-world terms, von Muenster likes to roll out the Michael Jordan and Nike partnership story. So legendary were the two entities, audiences understood implicitly that the basketball icon was an ambassador for the sports shoe brand, he explains. Because of this, explicit disclosure wasn’t needed; no Nike consumers were being duped. “The self-evident nature of the brand and individual connection would satisfy most laws around the world,” says von Muenster.

Not every influencer post or campaign can leave its promotional nature unstated however, and assuming consumers will just ‘get it’ is a gamble. The nuances characterising the relationships between brands, influencers and audiences will vary on a case by case basis, and a #spon or #paid hashtag on an Instagram post can, the AANA implies, go a fair way.

Of greater concern is that there’s just no saying how broadly the ACCC and the courts will interpret the meaning of the term ‘audience’. “We just don’t know,” shrugs von Muenster. “My sense of it is that the ACCC will say, ‘It doesn’t matter who the influencer is, anyone can get on an influencer’s page and start following them.’ It might be that an older citizen becomes a follower because she’s heard her grandchildren talking about this person and got interested. This follower is a reasonable member of the audience, but might not be much of a digital native or as savvy as others. So what may happen is that while 90% of the audience is aware of the commercial nature of a post, 10% may not.” Would the ACCC favour this 10%? Again, who’s to say.

There is, moreover, no requirement that the ACCC furnish tangible proof that an audience member has been misled. “They just have to demonstrate a likelihood,” says von Muenster.

Choosing the right influencer

So far, so disconcerting. But if brands use common sense and proper process, there’s no reason to run back to the hills of traditional marketing.

“One of the reasons there hasn’t been a court ruling in Australia is because most brands are committed to forging a relationship with an influencer that is founded on authenticity and transparency,” says Digby. If you get the alignment right here, and don’t set out to intentionally hoodwink anyone, there’s no real reason for organisations to worry.

Finding an influencer who not only speaks convincingly to the audience you’re trying to reach, but who genuinely likes your product or service is crucial. This way, when they promote your brand on their channels, they’re not making any false or misleading statements. For example, if a fitness model posts an image of a protein supplement with the caption “I ADORE this product, I mean srsly check out these new pecs!! xoxo” – and she genuinely does like the product – then there’s no dishonesty going on. Fortunately, this approach dovetails perfectly with the whole point of doing influencer marketing in the first place; namely, to harness authenticity so as to affect an audience behaviour or purchasing decision.

For a marketing manager, picking the right influencer to represent your brand boils down to knowing what it is you want out of the relationship and due diligence, says DVM Law. There are plenty of services, consultancies, referral agencies and tools out there to ensure that, for one, the followers your influencer holds sway over are actual humans (and not bots masquerading as such). Equally importantly, you should be confident that any influencer you engage has an image, tone and style in sync and with salience for your brand, so that the people who follow them have a strong potential to be converted into paying customers.

Setting up a contract

So, let’s say you’ve found what looks like the ideal influencer/brand match. The next step here, says Digby, is to negotiate a contract, which should clarify for all parties expectations, capabilities and goals.

“Being upfront and clear from the beginning is very important,” says Digby. “This tends to avoid a lot of disappointment down the track too, when you have people pointing fingers saying, ‘I expected this outcome’, or ‘I wanted you to do that’, or ‘I thought things would be different’.”

Making good on this measure of risk management can also be a way of preventing ‘rogue influencers’ from doing kamikaze freeballing stunts with your messaging, chimes in von Muenster. You have better control, a better preparedness for any crisis and a better chance you’re not going to cop too much damage from (god forbid) a Belle Gibson-type influencer.

“First and foremost, if you get the relationship wrong, is the non-legal but potentially more potent reputational damage that happens,” concludes Digby. “It is this damage that can’t be avoided.”

What does GDPR compliance look like for Australian marketers? We’ve got the low down.
Storytelling is the oldest method of sharing knowledge. Here’s the science behind effective marketing.
Carlos Hidalgo explains how content marketing can provide a more human customer experience.
Pharmaceutical Society of Australia