Lack of regulation, brands ditching the #ad – the flaws in influencer marketing

The influencer marketing industry is broken. Brands are encouraging influencers not to use hashtags required by Australian consumer law to disclose paid content. Agencies are signing talent without sufficient vetting. And amongst all of this are industry bodies struggling to regulate the system.

SBS producer Elise Potaka spoke to Mumbrella's Zoe Wilkinson about the flaws in the system she and journalist Calliste Weitenberg discovered in a four-part investigation for The Feed.

“One brand, in our journey, we were able to deal with… told us not to use the hashtag ad or hashtag sponsored post in the brief they sent us. So this brand was actually telling us in our guide as an influencer to break Australian consumer law.”

Starting tonight, SBS’ The Feed will be sharing a four-part investigation into Australia’s influencer marketing industry, which found that despite the smoke and mirrors of industry bodies introducing best practice guidelines and commercial disclosures written into law, this avenue of marketing is deeply flawed.

The series’ producer, Elise Potaka, says the onus is not just on influencers to ‘do the right thing’ when it comes to promotional content, and more needs to be done by brands, the social media platforms and the government to enforce the law.

“The government at a bigger level needs to ensure that consumers are informed and know that they can make complaints. As you can make a complaint about a TV ad, you can make a complaint about something that’s on a social media platform. And I guess consumers need to know that,” she said.

SBS journo Calliste Weitenberg as her alter ego @thatcoastalgirl

In February the updated AANA Code of Ethics came into effect with stricter rules to make the disclosure of paid posts more explicit. Hashtags #ad, #advert or #paidpartnership have been determined as the preferred terms as they are easily understandable by consumers. More vague terms such as #sp, #spon, #gifted or #collab were determined to be insufficient.

The Australian advertising self-regulator Ad Standards, which enforces the code, relies on complaints submitted by members of the public, the bulk of which often come from TVCs and out-of-home advertising. Ad Standards relies on compliance of advertisers, and works with other industry bodies if they fail to remove ads found to breach the code. Only in extreme cases, or when complaints indicate ads breaking Australian consumer law, will the body reach out to government agencies.

The reliance on public complaints is not a perfect system for any marketing format, but in particular it fails influencer campaigns, which tend to skew to a younger demographic. Ad Standards’ upcoming 2020 Report of Operations found that almost 50% of complaints were lodged by people aged 30 to 54 years old. Only 7% of complaints came from people aged 19 to 29, although this is up from 6.3% the previous year.

Ad Standards apparently is looking to boost awareness and engagement with younger demographics through universities in 2021. Outreach to young people is a priority, however Ad Standards’ ultimate goal is operating a complaints system that suits all Australians.

“While young people are quite sophisticated in their assessment of influencer advertising, we will continue to focus on ensuring awareness and understanding that there is a system in place to deal with their concerns about advertising content across all platforms including social media,” a spokesperson from the organisation notes.

“Ad Standards regularly communicates through social and digital media channels and national education campaigns. Our most recent education campaign in 2020 achieved increased unprompted community awareness of Ad Standards as where to go to complain about the standards of advertising in Australia.

“Our focus is on ensuring a robust advertising complaint handling system that works in the best interest of all Australians to ensure people of every age and background know that their voice matters, and Ad Standards acts on behalf of their concerns.

2020 also saw the launch of AIMCO’s, the Australian Influencer Marketing Council, Code of Practice, which outlines methods of best practice for each stage of the business. The code was designed to support marketers and agencies in influencer management, providing guidance on the vetting process, content rights and intellectual property, requirements of Australian consumer law, briefing and reporting transparency.

Detch Singh, chair of AIMCO

AIMCO chair, Detch Singh – who is also CEO of influencer marketing agency Hypetap – says “it was never AIMCO’s intention to police the code” and the code was intended to provide greater transparency for marketers in the procedure of influencer marketing, and to enable better management of campaigns.

But, Potaka flags that AIMCO needs to ensure its members are just as invested in following the best practice guidelines as they are in having the accreditation of being an AIMCO member.

“It’s one thing to have the regulations and the guidelines in place, and everybody can hold them up and say ‘oh yes we’re doing the right thing, this is best practice’, but if you go onto Instagram today and have a look, try and work out what’s the sponsored posts and what’s not, see how influencers are labelling their ads, and I think you’ll find there are a lot of problematic posts there,” Potaka says.

Singh says that members of AIMCO will continually be educated on the evolution of influencer marketing and how to operate to the industry’s best practice, in response to a question on ensuring its members follow the Code of Practice.

“Members (and non-members) have access to a range of resources and webinars that help them better understand the ever evolving influencer landscape and how to operate using industry best practice,” said Singh.

“Since the first iteration of the Code, the Guiding Council is also looking to work with members to explore the development of an accreditation framework. Watch this space.”

Potaka says it’s not just the enforcement of the codes of conduct in the industry, but the ability for consumers to even identify what is paid content. What the industry needs is education for social media users on how to identify sponsored content, and heightened awareness of how to take action if it is suspected influencers are not following the rules.

Ad Standards’ 2018 community perceptions research found that there was generally a low level of concern across the community about whether an ad was clearly distinguishable or not.

However the self-regulator’s executive director, Richard Bean, noted that it is being increasingly raised as an issue in the public domain.

“The issue of distinguishable advertising is increasingly being raised in the media and wider community as a subject of community concern. This is reflected in complaints lodged with Ad Standards about online advertising which increased to just over 10% of total complaints received in 2020, from about 6% of total complaints in 2019,” Bean said.

“The recent update to Section 2.7 of the AANA Code of Ethics regarding distinguishable advertising provides much clearer guidance to advertisers and influencers about the specific obligations now in place. Ad Standards works actively to support advertisers, including social media influencers, to meet the standards set out in the Codes which benefits the community and businesses themselves.”

Ad Standards’ executive director Richard Bean

With that low level of concern about advertising transparency, Potaka observes, “we know that influencer marketing, a lot of it is based on this notion of authenticity, and so for influencers and brands now it’s ultimately better if the consumer or the person following them doesn’t see it’s an ad. So it’s just kind of a product placement but that’s against the rules and against the law.”

Despite a widespread lack of wrist slapping for marketing activities which breach the AANA Code of Ethics and even break the law, Potaka is sure that influencers are not untouchable, and it the industry tightened its regulation of the market, it would only take one case from the ACCC to have brands and influencers fall in line.

With brands conducting problematic deals with influencers, and the lack of enforcement from industry regulators, agencies are also not innocent of enabling rule breaking to take place.

Later in the series, Potaka and reporter Calliste Weitenberg manage to sign the fake account they have created, with content starring Weitenberg, to an influencer marketing agency.


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A post shared by MIA 🌻WILDE (@thatcoastalgirl)

Potaka says very little vetting went on before @thatcoastalgirl was signed on to the agency, which she declined to name before the episode went live. A particularly worrisome event given the account’s following was largely purchased, fake accounts.

“They all sort of claim that they have vetting processes, that they use software to analyse the accounts of the influencers that sign up to them. But, in this case we very easily were able to sign up. Our account was not flagged, we bought a few thousand fake followers, we joined engagement pods, the whole profile is fake, and yet we were able to sign up and then go on to get some brand deals,” Potaka recounts.

The agency, which will be revealed in the documentary, was quite ‘hands-off’ in the deals made between Potaka and Weitenberg, and the brands they work with. She suggests “maybe that’s the issue here, the agencies and platforms need to ensure that they are maybe a little more hands-on with the brands and the influencers, and the interactions between those two.”

According to Ad Standards, the penalties for influencer and advertisers should their content be found to breach the AANA code is that the post must be removed or modified, and the publishing of the community panel’s rulings “can risk its reputation being damaged by being known as a company which has breached the codes and offended against community standards”.

The community panel has already adjudicated and upheld complaints about an influencer post since the update code of ethics came into effect on 1 February. The case has yet to be released.

‘Like, Subscribe Follow’ begins tonight on SBS’ The Feed at 10pm AEDT.


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