“Fed up with being sold to”: Why influencers are coming under scrutiny
The Australian Competition and Consumer Commission (ACCC) is cracking down on misleading testimonials and endorsements by social media influencers. According to a release by the regulator, the sweep – which will take place over the coming weeks – is part of the ACCC’s compliance and enforcement priorities for 2022 to 2023. It will include a review of social media platforms including Instagram, TikTok, Snapchat, YouTube and Facebook, as well as live streaming service, Twitch. It will also c
also consider the role of other parties, including advertisers, marketers, brands and social media platforms in facilitating misconduct.
The regulator is monitoring the actions of small and larger influencers, and has committed to take action – potentially in the form of compliance, education or enforcement activities – where it sees consumers at risk of being misled or deceived by a testimonial, and where there is potential for significant harm. It follows the ACCC’s crackdown on greenwashing in October 2022.
With 150 tip offs from members of the public, mostly relating to the beauty, lifestyle, parenting and fashion sectors, this form of deceptive advertising appears to be ubiquitous, and there’s demand for it to be reigned in.
ACCC chair Gina Cass-Gottlieb said the number of tip offs reflected concern over manipulative marketing techniques on social media, which are designed to exploit or pressure consumers to purchase goods or services.
“With more Australians choosing to shop online, consumers often rely on reviews and testimonials when making purchases, but misleading endorsements can be very harmful,” Ms Cass-Gottlieb said.
Superdry marketing manager and group PR manager at Brand Collective, Matthew Iozzi believes that the creation and subsequent boom of the influencer-economy has, until recently, been loosely policed across Australia and New Zealand, and that laws and regulations tend to be a bit slower to adapt to the ever-changing social media landscape.
He told Inside Retail that it is probable that an everyday social media user can go ‘viral’ overnight, and be commercialised within a week, without being well versed in the relevant regulations.
“Creators, many of which are sole traders, might not be aware of the legal ramifications, and the regulations have changed faster than the information is made available to brands and agencies,” he told Inside Retail.
“There is an onus on both agencies and brands to research the regulations, which is difficult if information is limited and differs from source to source.”
Under Australian Consumer Law regulations – influencers can be fined up to $2.5 million for failing to disclose brand relationships. There are also potential infringement penalties for breaching consumer law protections.
Iozzi said that there should be shared responsibility among brands, creators and their respective agencies regarding commercial content production.
Meanwhile, CEO of socially led creative agency We Are Social Suzie Shaw said that Australians are fed up with being ‘sold to’, and are paying more attention to how they are spending their money – particularly amid signs of a looming recession and decreased purchasing power.
“Influencer marketing has been a widely popular and effective tactic among fashion brands for many years,” she said.
“[But], audiences have [become] more discerning and can spot paid ads and reviews [from] a mile away.”
Protecting the brand and the talent
Semester teaching fellow at Bond University, Robyn McCormack said that influencer marketing, when done well, is a very effective tool for brands, but can be damaging when done poorly.
McCormack said that, in many cases, products are being sold as one-size-fits-all, and don’t take into account the circumstances that make the product beneficial, or damaging to the user.
“Protections are in place to ensure that consumers are making informed decisions about what they buy. When influencers do not disclose their sponsored content, or make claims that are based on misinformation, the ACCC should be enforcing those protections,” McCormack told Inside Retail.
But there are ways to spot a brand endorsement deal, even when the influencer isn’t being forthcoming.
According to Shaw, a fashion influencer who suddenly displays ‘interest’ in a brand they’ve never purchased or talked about before is likely being sponsored to talk about them. The products being promoted might be in a higher or lower price range than their usual staples, or in a different style.
These influencers might also offer a discount code, or make it easy for their followers to buy the same outfit.
Shaw said that there is nothing inherently wrong with this – as long as influencers are “clear, obvious and upfront” with their audience that the product is being promoted as part of a paid ad.
“If influencers don’t clearly disclose the partnership with #ad or similar, they are misleading their followers and contravening the ACCC rules,” Shaw said.
Avoiding online backlash
Shaw believes that brands should continue working with creators in order to drive growth and return on investment. But, she said the brands should do so in an ethical way, and work with experts that are familiar with the processes and regulations involved.
“[The] ACCC is cracking down because influencer marketing continues to grow in popularity and prevalence, and it is clear that a historical lack of regulation was leading to some unethical practices that risked consumers being misled,” she said.
“The risk is not only being in breach of the Australian consumer law, which can carry penalties of up to $2.5 million, but most importantly, widespread online backlash that could cost brands the trust of their audience.”
McCormack added that an audience educated in how marketing mechanisms work would be more able to spot misleading campaigns.
“At the base level we need to identify the source of the advertisement, which is difficult if the influencer doesn’t disclose, identify the commercial and persuasive intent of the content, and create a critical response,” she said.
“I hope [the crackdown] means that brands and influencers will be more aware of their obligations to disclose their relationships. [But] It’s important for consumers to have healthy scepticism about all advertising, particularly from influencers.”
Meanwhile, Iozzi said that when the information being presented online is clear, consumers can make more informed decisions.
“The declaration of ‘brand relationships’ will hold both brands and influencers accountable, but first and foremost shifts the emphasis from the ‘quality of the talent’ to the ‘quality of the product’,” he said.
“This [allows] consumers [to] see through ‘hidden advertising’ and make an informed decision to purchase.”
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