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University of New South Wales Law Journal Student Series |
REGULATIONS UN-INFLUENTIAL: INFLUENCER MARKETING, AND THE INADEQUACY OF AUSTRALIAN REGULATIONS IN PREVENTING CONSUMER HARM
STEPHANIE TONG
Social media usage has skyrocketed over the past decade—as of February 2022, 82.7% of the Australian population are active on social media.[1] A by-product of this phenomenon is the rise of influencer marketing, where influencers enter the advertising sphere as they are able to exert huge amounts of pressure on audience to purchase particular products.[2] As brands have become increasingly focused on using influencers to reach consumers via social media over traditional marketing methods, such marketing must be properly regulated, so that consumers ‘can accurately evaluate and give appropriate weight to an influencer’s endorsement’.[3] However, influencer marketing has been difficult to regulate.[4] The rapidly evolving landscape of social media has meant that regulators have struggled both with creating policies that adequately protect consumers and with enforcing these policies against influencers.[5] This is particularly true in Australia, where several entities have overlapping roles in regulation.
This essay will examine the current state of regulation against misleading and deceptive influencer marketing practices in Australia. Presently, the majority of research in this area focuses on influencer marketing regulation in the United States (‘US’), while little research considers the regulations in Australia. This essay will attempt to fill this gap in literature through a comparison of Australian regulations and their US counterparts. It will proceed in six parts. Part II outlines what an influencer is and why regulation in this space is necessary. Part III will then examine the current regulations on influencer marketing in Australia. Part IV will highlight the inadequacies of Australian regulations through a comparison with US regulations. Part V will present appropriate changes to combat the insufficiencies outlined in Part IV. Part VI concludes. This essay will argue that the current regulations in place are insufficient and given that the influencer marketing industry is growing exponentially, it is necessary that stricter regulations are enacted to properly protect consumers.[6]
In order to appropriately establish the need for greater regulation in the influencer marketing space, it is first necessary to discuss what an influencer is and how influencer marketing impacts consumers.
A What is influencer marketing and why is regulation needed?
1 What is an influencer and influencer marketing?
Influencers are broadly defined as ‘internet users who accumulate a relatively large following on blogs and social media [‘followers’] ... [and] monetise their following by integrating “advertorials” into their blog or social media posts’.[7] They are effective due to a ‘conscientious calibration of [their persona] on social media ... to sustain their accessibility, believability, emulate-ability, and intimacy’[8]—simply put, they are individuals who are relatable to their audience and thus can create a close relationship with them.
In turn, they can participate in influencer marketing—where a brand finds ‘an individual who has influence over a particular group of potential consumers and orients marketing activities around these key influencers to communicate a brand’s message to their audience’.[9] Influencer marketing methods are incredibly broad, and range from methods such as sponsored posts on Instagram, where an influencer is paid to make a post on their Instagram feed promoting a brand’s product, to ‘advertisement reads’ on YouTube, where influencers are paid to read an advertisement about a brand’s product in a YouTube video, as well as affiliate links, which allow influencers to earn commission for directing consumers to purchase products they are wearing or using in a video or post.[10] These marketing methods are effective because influencers are ‘seen as personal and credible sources that the consumer can relate to’[11] because of their close relationship with their audience. Accordingly, an influencer’s recommendation can considerably impact the purchasing decision of consumers–their recommendation is seen to be as trustworthy as ‘best friend’s endorsement’.[12] As is, 63% of global consumers ‘rely significantly more on influencers’ recommendations than on brand advertising through traditional media’.[13] Hence, influencer marketing results in significant returns for the brand which engages the influencer—40% of consumers have purchased products after seeing it advertised on social media,[14] earning an average return on investment of $5.78 USD per dollar spent.[15] Influencer’s also have a significant reach on social media that is ‘comparable to that of traditional media’,[16] particularly given that some have follower counts in the millions. Thus, influencer marketing has become ‘the most cost effective, as well as the most direct and organic when contacting with potential customers’[17] marketing strategy. Because of this, ‘companies are increasingly diverting money from traditional advertising and investing in the power of influencers’[18]—the influencer marketing industry was worth $13.8 billion US dollars in 2021, a 42% increase from 2020, and is expected to exceed $16 billion in 2022.[19]
2 Why is regulation needed?
Given the sheer number of influencers today—reports estimate that 25.5 million users aged sixteen to thirty-four are influencers in the US alone, about one-third of all US social media users[20]—it is necessary to examine why regulation is needed in the influencer marketing space.
First, it should be established that it is well accepted that advertising content that is not identified as such by consumers can be misleading and deceptive given that influencers can sway a consumer’s purchasing decision.[21]
It is then necessary to establish the harms that arise to consumers from such deceptive marketing practices. Some researchers have argued that harm from misleading advertisements is minimal. For example, Carpenter and Bonin frame the harm as a one-off—that ‘they bought [an item] they might not otherwise have purchased.’[22] There are two problems with this. First is the assumption that the one-off purchase would not be a burden on the consumer, whether financially or mentally, when this is not necessarily the case. Consider, for example, the Fyre Festival.[23] ‘Fyre Festival managed to sell out of tickets largely due to their marketing strategy of promoting the festival through [400] social media “influencers”,’[24] none of whom disclosed a financial relationship.[25] The posts managed to reach 300 million people in the first 24 hours, and consumers paid up to $250,000 USD for a ticket.[26] However, no festival occurred. Instead, consumers were ‘left stranded on the island’ without food and water, and vendors went unpaid.[27] This demonstrates that such misleading content can have significant harm on consumers, even from just a one-off purchase. Second, studies have demonstrated that a one-off purchase can cascade into long lasting, changes in financial tendencies for consumers, which can result in financial harm.[28] Being a part of an influencer community allows consumers to relate to other consumers, allowing them to ‘justify ... mak[ing] bigger purchases and buy[ing] more things’.[29] While Carpenter and Bonin argue that it is likely that consumers would have purchased the item regardless, this is not the case[30]—studies demonstrate that influencer advertisements convince consumers to purchase things that they would not have purchased otherwise.[31] Not only this, but Nadanyiova’s 2020 study demonstrated that 38% of respondents change their lifestyle to a large extent, and 15% to a limited extent, in response to influencer advertisements, demonstrating that influencer’s can significantly impact consumer’s lifestyle as a whole.[32] Thus, it is clear that influencer marketing can cause significant harm to consumers, and thus appropriate regulations are needed to ensure that consumers are not misled by deceptive content in the future.
In Australia, influencer marketing is typically regulated by three parties: the Australian Association of National Advertisers (‘ANAA’), the Australian Competition and Consumer Commission (‘ACCC’) and the Australian Influencer Marketing Council (‘AIMCO’). However, other entities have placed restrictions on what influencers are able to do in relation to certain products. Problematically, the responsibilities of these entities often overlap, resulting in a confusing regulatory landscape.
A Australian Association of National Advertisers
The AANA are Australia’s primary body for regulating marketing in Australia, focusing on developing and updating standards and codes which advertisers must follow.
Influencers are regulated under the AANA Code of Ethics (‘Code’), which was created with the object to ‘ensure that advertisements ... are legal, honest, truthful and have been prepared with respect for human dignity, an obligation to avoid harm to the consumer and society and a sense of fairness and responsibility to competitors.’[33] On 1 February 2021, an updated Code came into effect which regulated disclosure requirements in influencer marketing. Specifically, section 2.7 of the Code states that ‘advertising shall clearly be distinguishable as such’.[34] The accompanying practice notes clarifies this meaning. First, if a commercial arrangement exists, then while ‘there is no absolute requirement that advertising or marketing communication must have a label’,[35] it must nonetheless ‘be clear to the audience’[36] that it is advertising or marketing communication. This means that it must be ‘clear to the relevant audience that the content is commercial in nature’.[37] However, if a commercial arrangement has been made for a product to be used only as ‘product placement’, then no label or disclosure is required.[38] Commercial arrangement in this case includes monetary payments, as well as other, non-monetary payments e.g., where influencer’s have been provided a free product in exchange for content.
It is important to note that it is not just the influencer who is responsible for ensuring that they comply with the AANA code. First and foremost, ‘responsibility for developing content that is aligned to the AANA Codes falls to the advertiser’[39]—the brand who is providing financial compensation to the influencer. Accordingly, brands are required to ‘be cognisant that, in seeking to make their advertising and marketing communication more engaging, they do not camouflage the fact that it is advertising’,[40] and direct the influencers they employ accordingly. Influencers can also be found liable if they, for example, do not comply with brand recommendations, or do not make it obvious that their posts are advertisements.[41]
If an influencer or a brand has breached the AANA Code, or has been suspected of a breach, then any person can report them to Ad Standards Australia for investigation and complaint resolution. Ad Standards is the sister body of AANA and focuses entirely on adjudicating complaints made by the public through an independent Community Panel.[42]
B Australian Competition and Consumer Commission
The ACCC ensures that individuals and businesses comply with various Australian legislation concerned with competition, fair trading, and consumer protection laws, including the Australian Consumer Law (‘ACL’).[43] Under s 18 of the ACL, individuals and companies must not engage in conduct that is or is likely to be misleading or deceptive, including failing to disclose advertising relationships. The penalty this is typically $10,200 per infringement and can increase up to $500,000 for an individual.[44] However, while the ACCC can fine influencers, the AANA Code was designed to align with the ACL, and thus regulation falls to the AANA. Consequently, no influencers have been penalised by the ACCC to date for deceptive marketing practices.[45]
C Australian Influencer Marketing Council
The AIMCO is an association of Australian companies who work in influencer marketing. They have a goal of providing guidance to influencers, namely by establishing a baseline of acceptable practices in influencer marketing.[46] They have developed an Influencer Marketing Code of Practice, which educates influencers and brands about the professional standards for influencer marketing in Australia.[47] The AIMCO is a necessary entity as influencers are ‘typically lay individuals without any formal legal training’.[48] However, they have little to no enforcement capabilities against influencers who have not followed these acceptable practices.
D Other Entities
Depending on the type of product being advertised, there are several other entities which may impose regulatory power over an influencer. For example, the Australian Therapeutic Goods Administration (‘TGA’) has enforcement powers over influencers who promote therapeutic goods in a misleading way. The TGA can direct advertisers to remove non-compliant advertisements and can pursue both criminal and civil penalties against advertisers.[49] Similarly, the Australian Securities and Investments Commission (‘ASIC’) hold enforcement powers over ‘finfluencers’—influencers who promote financial products and services.[50] If an influencer promotes such products without a financial licence, ASIC can impose significant penalties up to and including five years of imprisonment.[51] Importantly, both the TGA and ASIC have stronger enforcement powers than AANA and the ACCC. However, these higher penalties can likely be attributed to the larger harms that arise from the deceptive marketing of such products. For example, therapeutic goods have this higher level of protection because they have a health effect on the human body[52]—a misrepresentation about the effectiveness of a sunscreen product can lead to skin cancer in the consumer which could have otherwise been prevented had they not used the misrepresented product.
The question then turns to whether Australia’s multi-pronged approach is effective. This may best be answered through a comparison of Australia’s approach to the US.
A A Comparison to the Federal Trade Commission
In the US, influencer marketing is regulated by the Federal Trade Commission (‘FTC’). There are several key similarities and differences between the FTC and the AANA’s powers which impact their respective effectiveness.
1 Similarities
(a) Disclosure requirements
The FTC’s disclosure requirements are similar to the AANA’s. The FTC have several guidance documents, including the 2009 Endorsement Guide, which provides a framework that influencers must comply with when marketing products.[53] Similar to the AANA Code, they are not legally binding, and merely help ensure that influencers do not breach the FTC’s general Section 5 Authority, which makes it a civil offence to conduct deceptive marketing practices.[54] An influencer will be liable for deceptive marketing practices if ‘a consumer would reasonably attribute the views, opinions, or beliefs expressed as personal to the speaker [as opposed to] merely as those of the sponsoring advertiser’,[55] similar to when an influencer will be found to be in breach of the AANA Code. The extent of disclosure required is dependent on whether they adequately prevent consumers from being misled. What has generally been accepted as clear disclosure involves the use of language such as ‘#ad’ or ‘Sponsored’, which has been demonstrated as having a significant positive impact on consumer awareness, allowing them to make informed purchase decision.[56]
However, these regulations are largely inadequate. As mentioned, problems arise because disclosure requirements can be complex. In turn, the FTC Endorsement Guide has faced critique because it ‘fail[s] to provide adequate specificity to account for the intricacies present in contemporary social media channels’.[57] The AANA Code and Practice Notes would face similar criticism. For example, under the AANA Code, the relevant threshold to escape liability is that the advertisement must be clearly distinguishable as such to the relevant audience.[58] However, while the AANA notes that advertisers have flexibility as to how this is done, they provide little guidance as to what would meet this threshold. At most, they note that they will consider ‘nature of the content, where the content is placed, how consumers are directed to the content, the theme, visuals and language used, the use of brand names or logos as well as the relevant audience.’[59] While they provide several examples of this, they were created in March 2017 and thus are outdated. This is particularly problematic when considering the meteoric rise of social media platforms such as TikTok and the subsequent adoption of its short video format by other media giants such as Instagram.[60] Simply put, while disclosure can ensure that consumers can make an informed decision, if influencers and brands are unable to understand and thus comply with them, then they will be ineffective.
2 Differences
(a) Complaints based vs Active monitoring
While the AANA relies entirely on the public to submit complaints, an FTC complaint can ‘originate from a government request, a public complaint, or through the FTC’s own monitoring process’.[61] It is thus necessary to consider whether the AANA’s reliance on the public is sufficient. As is, Ad Standards receives approximately 5000 complaints annually, but investigates only 500 of them.[62] This is problematic—it is clear that incidents of insufficient advertisement disclosure often go unreported, as HypeAuditor noted that after examining 163 sponsored influencer posts from 400 Australian influencers in 30 days, only 13 complied with AANA regulations.[63] If this is extrapolated to an annual time frame, and if the sheer number of Australian influencers which exist are considered, it is clear that there would be substantially more than 5000 posts which warrant investigation annually. Accordingly, active monitoring alongside a complaints-based approach is more appropriate here.
(b) Self-regulation vs financial penalties
The AANA relies entirely on a self-regulatory approach, which relies on other players within the media industry to develop and enforce regulations and where influencers do not face civil penalties for a breach of the Code. On the other hand, while the FTC does rely on self-regulation, they also have the power to seek civil penalties for non-compliance which the AANA does not. Hence, it is necessary to consider whether self-regulation itself is sufficient here.
(i) Self-regulation
The AANA argues that a self-regulatory approach is more efficient and effective system as opposed to government regulation.[64] Under this approach, if an influencer is found to have breached the AANA Code by Ad Standards, they will face no financial penalty. Instead, the complaint will be made publicly available, and the influencer will be asked to either remove the advertisement or amend its content such that it complies with the Code.[65] Accordingly, compliance with the Code is reliant on social coercion—the idea that if a complaint is filed against an influencer and is made public, that the potential loss in trust within their audience and the subsequent loss in revenue will be enough to coerce influencers to comply with the regulations.[66] Failing to disclose can, in theory, ‘irreparably damage brand perception among consumers’.[67]
Some researchers, particularly Carpenter and Bonin, argue that self-regulation is sufficient.[68] They suggest that given the limited harm to consumers, being that ‘they bought [an item] they might not otherwise have purchased’,[69] a financial penalty is unnecessary in light of the damage that would have occurred to the brand or the influencers reputation.[70] However, this is clearly not the case—a higher penalty is clearly necessary if the lower penalty does not adequately compel influencers to comply with the Code. In 2021, HypeAuditor conducted an audit of Australian influencer posts and found that only 7.9% of posts complied with the AANA Code, making advertisement disclosure ‘the exception rather than the rule’.[71] Even influencers who had been reprimanded by Ad Standards and have faced a loss in trust within their audience have continued to not comply with the Code. For example, Rozalia Russian, an Australian influencer with approximately 260,000 followers, was investigated by Ad Standards in March 2021 and found to have breached the Code.[72] Despite this, she was investigated and found to have been breach of the Code once again in April 2021, just one month later.[73] Problematically, as time passes, other influencers can easily recognise that few penalties are being enforced on individuals for failing to disclose paid advertisements.[74] In turn, influencers have been able to ‘anticipate how the rules will be enforced’ and recognise that the ‘potential risks for noncompliance’ are low, leading to a domino effect where less and less influencers are complying with the Code.[75] The effectiveness of self-regulation can also be hindered because while the AANA does publish complaints, they are only available on the AANA website, meaning that the public has to take initiative to search for these complaints, and there is no significant media coverage about them. This means that there is often less social coercion than is expected by the AANA, and that self-regulation by itself is not effective countermeasure for deceptive marketing practices.
However, this is not to say that self-regulation should have no place in the regulation of influencer marketing. For example, as the AANA notes, self-regulation ensures that policies can ‘adapt quickly and more effectively than government regulation’,[76] which is necessary given the rapidly evolving nature of social media. Some researchers have also noted that it ensures faster resolution time for complaints and lower costs to governments, whilst simultaneously ensuring that the industry is motivated to comply with the regulations as they themselves, not the government, have created and enforced them.[77] However, given the issues noted, as well as the fact that it has been noted that self-regulation can be problematic as it is generally ‘self-serving, inadequately enforced, lack[ing in] independence, lack[ing in] credibility with consumers, and that procedures for rule development or complaint handling are insufficiently transparent, accountable or inclusive of all stakeholders’,[78] it is nonetheless necessary that other forms of regulations are implemented alongside the existing self-regulatory approaches.
(ii) The FTC’s approach
While the FTC can seek civil penalties against influencers, they must follow a two-step approach: they must first issue a written notice (a ‘Notice of Penalty Offense’) to the company or influencer that their conduct is unfair or deceptive before they can seek civil penalties.[79] In doing so, they must prove that the influencer or brand was aware that their conduct was unfair or deceptive.[80] A company or individual can face a penalty of up to $46,517 for each violation.[81] While previously, the FTC made little effort to enforce these regulations on influencers, they have indicated that they are ‘cracking down’ on deceptive marketing practices.[82] On 12 February 2020, the FTC released a proposal to enhance its enforcement powers and increase penalties for breaches and on 13 October 2021, 700 businesses were sent Notice of Penalty Offenses, signalling the ‘end the light-handed regulatory approach that has governed under the Endorsement Guides’[83].
The question then turns to whether civil penalties are effective. On one hand, Carpenter and Bonin argue that the risks that come from civil penalties ‘will substantially outweigh the rewards’.[84] They suggest that there are difficulties in assessing blame in these areas, given the relationship between a brand and the influencer they employ, and thus a flexible approach to regulation is more appropriate.[85] On the other hand, the FTC argues that civil penalties are effective as ‘they can exceed what a wrongdoer earned through their misconduct’, and hence ‘send a clear message that preying on consumers will not be profitable.’[86] This is the better argument here. It is well known that civil penalties have a deterrent effect unless the individual is judgment-proof—where they do not have the financial means to pay the ordered costs.[87] However, being judgment-proof is likely not a problem here—while the FTC notes that the civil penalty can exceed what a wrongdoer earned, the court assessing the appropriate penalty will ensure that it is equitable given the situation, and influencers can make significant amounts of money from a single sponsored post.[88] Additionally, enforcement without civil penalties has notably been insufficient in the US. In April 2017, the FTC sent out more than ninety warning letters to influencers who had breached their regulations, but this notably had ‘a limited impact’[89] as 79% of posts made by impacted influencers in a one-month period following receipt of these letters still did not comply with FTC regulations.[90]
However, it is important to note that even with the power to enforce civil penalties, influencer compliance in the US is still low—in 2018, ‘only about 25 percent of Instagram influencers provided sponsorship disclosures that were FTC compliant.’[91] This suggests that on top of civil penalties, further schemes targeted at educating influences are about their disclosure obligations are necessary.
As a result, it is clear that as is, Australia’s multi-entity approach is not sufficient in protecting consumers from harm. There are two ways to tackle this. First, it is necessary to consider the best way to encourage influencers to comply with the regulations. Second, existing regulations should be strengthened to prevent harm in the future.
A Encourage influencers to comply with regulations
In order to establish the best way to encourage influencers and brands to comply with regulations, and given that there is evidence that influencers and brands will skirt regulations regardless of stronger regulations, it is necessary to consider why they do not comply. There are two reasons main for this: first, the belief that disclosing will lead to lower trust between themselves and their community and second, a lack of knowledge about regulations.
1 Belief that disclosure leads to lower trust
Influencer marketing is fundamentally a form of native advertising, ‘where a brand, or a product, is marketed in a way that is similar to the editorial content on the platform it is presented’,[92] and it is so successful because ‘consumers lower their guards’[93] when they are presented with advertisements in this way. On the other hand, advertisement disclosure has been theorised to ‘increas[e] s[c]epticism and cognitive resistance’[94] within consumers, leading to lower spending by an influencer’s audience. Accordingly, the ‘[f]ear of alienating followers and undercutting the effects of the native advertisement may lead brands and influencers to avoid sponsorship disclosure’.[95]
However, it is not necessarily the case that disclosure will lead to higher levels of distrust and thus lower purchase intentions in consumers in the current social media climate. While older studies demonstrated that disclosure led to decreased purchase intentions,[96] more recent research, such as Kay, Mulcahy and Parkinson’s 2020 study, demonstrated that ‘disclosure of sponsorship leads to significantly higher levels of purchase intentions.’[97] This can largely be attributed to the strong relationship between an influencer and their audience which overrides the amount of distrust caused by advertisement disclosure—as one survey participant in a 2018 study noted: ‘I really do respect [the influencer’s] opinion, even though that’s an ad, I would still think well I trust her ... I would take that as gospel really and I would probably go out and give that [sponsored item] a go’.[98]
Accordingly, influencers should no longer fear alienating their audience via advertisement disclosure, and instead use this as an opportunity to ‘change their perceptions of disclosing sponsorship and actively comply [with] ... recommended guidelines and legislation’.[99] In order to provide influencers with this knowledge, the AIMCO and AANA should focus on educating influencers about this shift in attitude, via their Influencer Marketing Code of Practice and Practice Notes respectively. Additional pressure to comply should also be placed on brands with a similar message, given that it has been demonstrated that ‘one in four influencers report that brands have specifically asked them not to disclose their material connection to the brand’.[100]
2 Lack of knowledge of regulations
As previously discussed, influencers may not be compliant with AANA regulations because they are too complex to understand. To combat this, efforts by AIMCO to educate influencers and brands should continue, with more resources dedicated towards delineating this information. In addition, the AANA should update their relevant Practice Notes and Guidelines so that they are useful in the current social media landscape.[101] Bladow suggests that this could be most effectively done through engaging in active dialogue between influencers and advertisers, which would help the AANA ‘identify areas of confusion with the Guides and [provide] opportunities to educate influencers on how to make adequate endorsement disclosures’.[102] After this is done, these Notes and Guidelines should continue to be updated annually given the rapid change in social media trends. They should also include information about other entities which can regulate influencer posts such as the TGA and ASIC.
B Updates to AANA and ACCC Regulatory Methods
Second, AANA and ACCC regulations and enforcement methodologies should be strengthened. A middle ground approach should be taken, wherein self-regulation via the AANA can maintain its current role while the ACCC should begin to enforce their powers under the ACL.
1 AANA
As established, self-regulation can have a powerful impact on an influencer given their need to maintain a trusting relationship between them and their audience. However, to address the ineffective nature of the AANA’s self-regulation, penalty notices for influencers should be more readily available on their website. The AANA should also take action to publicise monthly media reports which note influencers who have breached their code. Not only will this be punitive to the influencer who has breached the Code, but it will also compel other influencers to comply.[103]
Second, the AANA should also increase surveillance of influencer breaches, instead of relying entirely on the public to report suspected breaches. In addition, given that there are several entities who research influencer marketing, including HypeAuditor,[104] AANA should work alongside these entities to investigate influencer breaches, or provide financial incentives to them which would compel them to report such breaches.
2 ACCC
As established, the implementation of financial penalties can be beneficial to influencer marketing regulation. However, in suggesting that the ACCC should begin to enforce their powers, it is also necessary to consider how they should do so to best ensure compliance.
Given ACCC’s limited budget, and acknowledging the costly nature of civil litigation, Bladow argues that targeting popular influencers who have breached regulations would be the most efficient way to ensure compliance with regulations whilst maximising limited resources.[105] This is because in doing so, not only will they ‘encourage adequate endorsement disclosures among other professional influencers, but will also demonstrate to up-and-coming influencers that making adequate endorsement disclosures is ... nonnegotiable’.[106] This is certainly an effective option, and should be considered by the ACCC. If this is not done, civil enforcement against individual influencers and brands, as is being done by the TGA and ASIC, could be used, despite its inefficient and costly nature.[107]
It is clear that influencer marketing is an incredibly powerful tool for advertisers, given the significant impact that they have over their audience. Accordingly, regulation is necessary to prevent the dissemination of misleading or deceptive advertisements by influencers. However, Australia’s multi-entity approach is currently ineffective in preventing harm to consumers, as demonstrated by low levels of compliance with these regulations by both influencers and brands.[108] In turn, increased initiatives targeted at educating influencers of their obligations under the AANA and ACCC are necessary, as well as more stringent enforcement mechanisms and the introduction of civil penalties for breaches. If this is implemented, then influencer marketing can be appropriately regulated, and consumer’s rights protected.
[1] Statista Research Department, Social media users as a percentage of the total population Australia 2015-2022 (Web Page, 3 August 2015) <https://www.statista.com/statistics/680201/australia-social-media-penetration/>.
[2] Crystal Abidin and Mart Orts, ‘Influencers Tell All? Unravelling Authenticity and Credibility in a Brand Scandal’ in Maria Edström, Andrew T Kenyon and Eva-Maria Svensson (ed), Blurring the Lines: Market-driven and Democracy-driven Freedom of Expression (Nordicom, 2016) 153, 155.
[3] Laura E Bladow, ‘Worth the Click: Why Greater FTC Enforcement Is Needed to Curtail Deceptive Practices in Influencer Marketing’ (2018) 58 William and Mary Law Review 1123, 1132.
[4] Craig C Carpenter and Mark Bonin, ‘To Win Friends and Influence People: Regulation and Enforcement of Influencer Marketing After Ten Years of the Endorsement Guides’ (2021) 23(2) Vanderbilt Journal of Entertainment and Technology Law 253, 261.
[5] Ibid.
[6] Bladow (n 3) 1127.
[7] Crystal Abidin, ‘Communicative Intimacies: Influencers and Perceived Interconnectedness’ (2015) 8 Ada: A Journal of Gender, New Media & Technology 1, 1.
[8] Abidin and Orts (n 2) 155.
[9] Anna Segova, ‘Consumer responses to influencer marketing on Instagram’ (Thesis, 2 January 2020), 28.
[10] Bladow (n 3) 1130.
[11] Francisco J Martínez-López, ‘Influencer marketing: brand control, commercial orientation and post credibility’ (2020) 36(17) Journal of Marketing Management 1805, 1805.
[12] Bladow (n 3) 1132.
[13] Do Youn Kim and Hye-Young Kim, ‘Trust Me, Trust Me Not: A Nuanced View of Influencer Marketing on Social Media’ (2021) 134 Journal of Business Research 223, 223.
[14] Katie Karp, ‘New research: The value of influencers on Twitter’ (Web Page, 10 May 2016) <https://blog.twitter.com/en_us/a/2016/new-research-the-value-of-influencers-on-twitter>, see also Bladow (n 3) 1128—9.
[15] Jacinda Santora, Key Influencer Marketing Statistics You Need to Know for 2022 (Web Page, 3 August 2022) <https://influencermarketinghub.com/influencer-marketing-statistics>.
[16] Abidin and Orts (n 2) 155.
[17] Francisco J Martínez-López (n 12) 1805.
[18] Bladow (n 3) 1129.
[19] Statista Research Department, Influencer marketing market size worldwide from 2016 to 2021 (Web Page, 14 October 2021) <https://www.statista.com/statistics/1092819/global-influencer-market-size/>.
[20] Carpenter and Bonin (n 4) 260.
[21] Kyle Asquith and Emily M Fraser, ‘A Critical Analysis of Attempts to Regulate Native Advertising and Influencer Marketing’ (2020) 14 International Journal of Communication 5729, 5736.
[22] Carpenter and Bonin (n 4) 272.
[23] See e.g Nicholas Sun, Influencers Under Fyre: The Case for Greater Enforcement of FTC Endorsement Guidelines Against Social Media Influencers (Blog Post, 13 August 2019) <https://journals.library.columbia.edu/index.php/CBLR/announcement/view/184>.
[24] Ibid.
[25] Ibid.
[26] Ibid.
[27] Ibid.
[28] Aikaterini Gavrielatou and Anca-Alexandra Raita, ‘The Social Media Influencer Effect on Consumers’ Behavior: A qualitative study on macro social media influencers within the cosmetic industry’ (Thesis, 2 June 2021) 29.
[29] Ibid 28.
[30] Carpenter and Bonin (n 4) 272.
[31] Gavrielatou and Raita (n 28) 29.
[32] Margareta Nadanyiova et al, ‘Influencer marketing and Its Impact on consumer lifestyles’ (2020) 8 Forum Scientiae Oeconomia 109, 116.
[33] Australian Association of National Advertisers, Code of Ethics (Web Page, 1 February 2021) <https://aana.com.au/self-regulation/codes-guidelines/code-of-ethics>.
[34] Australian Association of National Advertisers, Code of Ethics (Code, February 2021) 3.
[35] Australian Association of National Advertisers, Code of Ethics – Practice Note (Practice Note, February 2021) 13.
[36] Ibid.
[37] Australian Association of National Advertisers, Clearly Distinguishable Advertising – Best Practice Guideline (Guideline, November 2016) 1.
[38] Australian Association of National Advertisers, Code of Ethics – Practice Note (n 36) 13.
[39] Ibid.
[40] Ibid.
[41] Ibid.
[42] Australian Association of National Advertisers, About (Web Page, 2022) <https://aana.com.au/strategic-priorities>.
[43] Competition and Consumer Act 2010 (Cth) sch 2 (‘Australian Consumer Law’).
[44] Ibid s 151(5) and (6).
[45] B&T Magazine, ‘ACCC Admits It Doesn’t Penalise Influences for Breaking Sponsored Content Rule’ B and T (online, 7 August 2020) <https://www.bandt.com.au/accc-admits-it-doesnt-penalise-influencers-for-breaking-sponsored-content-rule/>.
[46] Australian Influencer Marketing Council, Australian Influencer Marketing Code of Practice (Report, 1 July 2020) 3.
[47] Australian Influencer Marketing Council, ‘Influencer Marketing Code of Practice’, AiMCO Codes & Resources (Web Page) <https://www.aimco.org.au/best-practice>.
[48] Carpenter and Bonin (n 4) 261.
[49] Therapeutic Goods Administration, TGA social media advertising guide (Web Page, 31 March 2022) <https://www.tga.gov.au/tga-social-media-advertising-guide>.
[50] ASIC, ‘ASIC issues information for social media influencers and licensees’ (Media Release 22-054MR, 21 March 2022).
[51] Ibid.
[52] Therapeutic Goods Administration (n 49).
[53] Carpenter and Bonin (n 4) 262.
[54] Ibid.
[55] Bladow (n 3) quoting Federal Trade Commission v Garvey (9th Cir, No 03-55179, 8 November 2001) slip op 18.
[56] Nathaniel J Evans et al, ‘Disclosing Instagram Influencer Advertising: The Effects of Disclosure Language on Advertising Recognition, Attitudes, and Behavioral Intent’ (2017) 17(2) Journal of Interactive Advertising 138, 144.
[57] Carpenter and Bonin (n 4) 267.
[58] Australian Association of National Advertisers, Clearly Distinguishable Advertising – Best Practice Guideline (n 37) 2.
[59] Ibid.
[60] See, eg, Dan Milmo and Alex Hern, ‘‘Stop trying to be TikTok’: how video-centric Instagram sparked a revolt’ The Guardian (online, 31 July 2022) <https://www.theguardian.com/technology/2022/jul/31/tiktok-video-instagram-revolt-update-kardashians>.
[61] Carpenter and Bonin (n 4) 263.
[62] Australian Association of National Advertisers, About (n 42).
[63] B&T Magazine, ‘Australian Influencers Still Failing to Disclose #Ads Despite AANA’s Crackdown’ B and T (online, 11 May 2021) <https://www.bandt.com.au/australian-influencers-still-failing-to-disclose-ad-despite-aanas-crackdown/>.
[64] Australian Association of National Advertisers, Self-Regulation (Web Page, 2022) <https://aana.com.au/self-regulation/>.
[65] Ad Standards, The advertising complaints process (Web Page, 2022) <https://adstandards.com.au/about/advertising-complaints-process>.
[66] Carpenter and Bonin (n 4) 271.
[67] Megan K Bannigan and Beth Shane, ‘Towards Truth in Influencing: Risks and Rewards of Disclosing Influencer Marketing in the Fashion Industry’ [2019-20] 64 New York Law School Law Review 247, 257.
[68] Carpenter and Bonin (n 4) 271.
[69] Ibid 272.
[70] Ibid 272.
[71] B&T Magazine, ‘Australian Influencers Still Failing to Disclose #Ads Despite AANA’s Crackdown’ (n 63).
[72] Ad Standards Community Panel, Case Report (Report No 0063-21, 9 June 2021).
[73] Ad Standards Community Panel, Case Report (Report No 0065-21, 24 March 2021).
[74] Carpenter and Bonin (n 4) 268.
[75] Ibid.
[76] Australian Association of National Advertisers, Submission to Australian Communications and Media Authority, Contemporary Community Safeguards Inquiry (15 July 2013), 5.
[77] Ibid.
[78] Sarah Mackay, ‘Food Advertising and Obesity in Australia: To What Extent Can Self-Regulation Protect the Interests of Children?’ [2009] MonashULawRw 8; (2019) 35(1) Monash University Law Review 118, 125.
[79] Federal Trade Commission, Notices of Penalty Offenses (Web Page) <https://www.ftc.gov/enforcement/penalty-offenses>.
[80] Ibid.
[81] Ibid.
[82] Lesley Fair, Latest FTC Notice of Penalty Offenses tells 700+ national advertisers that deceptive endorsements can lead to financial penalties (Blog Post, 13 October 2021) <https://www.ftc.gov/business-guidance/blog/2021/10/latest-ftc-notice-penalty-offenses-tells-700-national-advertisers-deceptive-endorsements-can-lead>.
[83] Carpenter and Bonin (n 4) 256.
[84] Ibid 277.
[85] Ibid 256.
[86] Federal Trade Commission, Notices of Penalty Offenses (n 79).
[87] Kyle D Logue, ‘Solving the Judgment-Proof Problem’ (1994) 72(6) Texas Law Review 1375, 1375.
[88] Federal Trade Commission, ‘A Brief Overview of the Federal Trade Commission's Investigative, Law Enforcement, and Rulemaking Authority’, About the FTC (Web Page, May 2021) <https://www.ftc.gov/about-ftc/mission/enforcement-authority>.
[89] Bladow (n 3) 1156.
[90] Ibid 1157.
[91] Bannigan and Shane (n 67) 250.
[92] Gönenç Gürkaynak, Olgu Kama and Burcu Ergün, ‘Navigating the Uncharted Risks of Covert Advertising in Influencer Marketing’ (2018) 39(1) Business Law Review 17, 17.
[93] Ibid 17.
[94] Bannigan and Shane (n 67) 259.
[95] Ibid.
[96] See e.g., Tina Tessitore and Maggie Geuens, ‘PP for 'product placement' or 'puzzled public'? The effectiveness of symbols as warnings of product placement and the moderating role of brand recall.’ (2013) 32(3) International Journal of Advertising: The Quarterly Review of Marketing Communications 419.
[97] Samantha Kay, Rory Mulcahy and Joy Parkinson, ‘When less is more: the impact of macro and micro social media influencers’ disclosure’ (2020) 36(3—4) Journal of Marketing Management 248, 267. See also, Evans (n 56) 144.
[98] James Harrison, ‘The Monetization of Opinions: Consumer Responses to Covert Endorsement Practices on Instagram’ (2018) 6(3) Journal of Promotional Communications 395, 407.
[99] Kay, Mulcahy and Parkinson (n 97) 269.
[100] Bladow (n 3) 1133.
[101] Carpenter and Bonin (n 4) 277.
[102] Bladow (n 3) 1161.
[103] Carpenter and Bonin (n 4) 271.
[104] B&T Magazine, ‘Australian Influencers Still Failing to Disclose #Ads Despite AANA’s Crackdown’ (n 63).
[105] Bladow (n 3) 1154.
[106] Ibid 1158.
[107] Ibid.
[108] B&T Magazine, ‘Australian Influencers Still Failing to Disclose #Ads Despite AANA’s Crackdown’ (n 63).
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