Influencers are an increasingly popular and, when used correctly, effective marketing strategy for many startups. Startups may engage influencers directly to promote their products and influence the purchasing decisions of customers. In addition, platforms like Tribe enable businesses to propose a job to influencers based on their budget, and choose from a list of creative pitches for their next campaign.
However, there are some major legal risks to consider before engaging influencers.
This blog is the fourth in a series on Marketing your Startup: Risks, Tips and Traps which will highlight some key risks which startups should watch out for and some tips to avoid the risk of a legal claim. See our other blogs here.
What are the risks?
A common mistake businesses make is using influencers in their campaigns without the influencer disclosing it is a sponsored ad. This is contrary to the disclosure obligations required under the Australian Association of National Advertisers Code of Ethics (“Code”).
Section 2.7 of the Code provides that:
Advertising or Marketing Communication must be clearly distinguishable as such to the relevant audience
So what is “clearly distinguishable you ask?”
The Board has now given insight into what level of disclosure is expected under the Code following a determination involving an Instagram post from Kat Risteska, an influencer with over 14,000 followers, promoting self-tanning lotion Eco Tan.
It was claimed Risteska did not distinguish the post as an advertising or marketing communication by using #ad or similar. The post featured Risteska holding an Eco Tan product with a caption that was spruiking the product, its characteristics and how she was “hooked”. Rather than paying Risteska to post about the product, Eco Tan sent free samples of their product to Risteska with a request for her to write an honest review for her Instagram followers.
Ultimately, the Board adopted a realistic approach and dismissed the complaint, finding that while the post was in fact an advertisement and fell under the Code, it did not breach Section 2.7.
Are posts involving ‘gifted’ products advertising or marketing communications?
In short, the Board says yes. The Board found that sending a person free samples amounted to a business transaction and as such could be considered a form of payment.
Additionally, the Board held that the fact that Eco Tan requested a review of their product and then reposted Risteska’s material on its own social media account established the company’s ‘reasonable control’ over the post for it to be considered an advertising communication.
Was the post clearly distinguishable as advertising to the relevant audience?
The Board considered that the post was clearly distinguishable as an advertising or marketing communication because it read like a “press release” and because the use of ‘#ecotan’ and ‘@ecotan’ made it clear to Risteska’s followers and other users of Instagram that the post was promoting a product, even in the absence of #ad or #spon.
There is an increasing trend of ‘influencer hijacking’, where businesses repurpose an influencer’s intellectual property (usually their personal social media posts) and repost it on the business’ official social media channels. The influencer’s goodwill, reputation and personality is appropriated without their consent, and the posts create the impression that the influencer is associated with the business when in fact they are not.
Some businesses have even gone to the extent of altering influencers’ images to make it appear that photos of the influencer genuinely contain the business’ products.
This has the potential to breach copyright laws and may also amount to misleading and deceptive conduct under the Australian Consumer Law (“ACL”).
Earlier this year, a situation involving well-known influencer Pia Muehlenbeck arose where a ‘tea detox’ brand chose to leverage Ms Muehlenbeck’s influence by photoshopping their product into photos that Ms Muehlenbeck had uploaded onto her own social media channels, and then uploading the photoshopped photos to their own social media channels. The impression created by the posts was that Ms Muehlenbeck supported and used the brand’s products, which was not the case.
Not only had the brand allegedly used Ms Muehlenbeck’s intellectual property without obtaining her permission, they had completely altered her content to represent to their audience that Ms Muehlenbeck was endorsing and using their product. Understandably, Ms Muehlenbeck was concerned by this conduct and reached out for advice on Twitter. In our view, she could have also reached out for legal advice, as her rights were clearly infringed. Ms Muehlenbeck owned the copyright in the image, which was then scraped, altered and published without her permission.
See our blog on influencer hijacking here.
Another significant issue to consider is how such conduct could be seen as misleading and deceptive conduct, in contravention of the ACL. Sections 18 and 29 of the ACL prohibit conduct in trade or commerce that is misleading or deceptive or likely to mislead or deceive, or that falsely represents a sponsorship, approval or affiliation with another party that does not exist. The maximum penalty for engaging in such conduct for a company is $1.1 million.
Be clear on whether a post is an advertisement
Avoid influencer hijacking!
We hope you enjoyed our fourth blog in a series of blogs about Marketing your Startup: Risks, Tips and Traps
Please see our other blogs in the series here.
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