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Deep Dive 5 Jul 2020 - 5 min read

Influencer marketing - cowgirls, cowboys, brands, agencies prepare for regulatory scrutiny, cash-for-comment disclosure, measurement pressure

By Paul McIntyre - Executive Editor

L-R: Publicis' Patrick Whitnall; AANA's John Broome; Von Muenster's Stephanie Scott and Totally Awesome's Sarah Letts

In a bid to avoid fines of up to 10 per cent of turnover and get a fatter share of marketing budgets,  media and talent agencies have put together an influencer code of practice. In a world where just about anyone with a social media account can now be a walking billboard, it's time to sharpen up, says Publicis Media's Patrick Whitnall, Totally Awesome's Sarah Letts, Von Muenster Solicitors' Stephanie Scott and the AANA's CEO John Broome, .

“Trust deficit opportunity”

Amid growing concern about the blurring of lines and the spectre of fines, Australia now has its first influencer marketing code of practice. According to those behind it – media agencies and talent groups corralled by the Audited Media Association of Australia – not before time.

They say influencer marketing is likely to come under the ACCC’s gaze as it probes the broader media supply chain. Marketers, agencies and influencers already risk fines if they breach competition law (specifically, the Competition and Consumer Act 2010, commonly referred to as the ACL).  Regulators around the world are starting to take a tougher stance – and they are starting to coalesce around core issues of data privacy and consumer harm.

Commercially meanwhile, the influencer category, estimated by PwC to be a $240m market in Australia, is unlikely to move out of the minor league unless brand marketers can trust what they are buying. There’s a “trust deficit opportunity”, according to AANA CEO John Broome.

The industry must collectively step up if it is to avoid the stick and take a bigger bite of the carrot – which is precisely what the Australian Influencer Marketing Council hopes to enable with its new code.

“We are already seeing a clampdown in other markets. The Federal trade Commission in the US said earlier this year it will be fining brands for fraudulent or non-disclosure ... and I expect to see the ACCC will have influencers on its watch.”

Patrick Whitnall, Publicis Media

Walk the line or risk a fine

Globally, influencers are attracting an increasing share of marketing budgets, as much as 10 per cent, according to eMarketer. But in Australia, it’s still relatively small beer, though Patrick Whitnall, head of content and sport at Publicis Media and deputy chair of the Australian Influencer Marketing Council thinks that PwC figure “might be understated”.

Just as the precise market value is unclear, precise numbers on influencer reach are also fuzzy given the category’s fragmented nature, “but certainly they're delivering big audiences that advertisers want to connect with”, says Whitnall.

Advertisers, however, like metrics, and are rightly questioning where their money is going. If influencer marketing wants to take a bigger share of the spoils, the sector needs to mature. Hence AIMCO coming up with its code.

Unilever’s crackdown on transparency and fraud announced at Cannes in 2018 (by then CMO Keith Weed, now an investor in Australian influencer platform, Tribe) kick-started conversations about trying to introduce some law and order, says Whitnall.

Closer to home, both the Australian Defence Force and the Health Department have been stung by revelations that influencers they had paid had previously expressed inappropriate views (Defence Force) or were also taking money to promote wares, such as alcohol, in direct conflict with campaign goals (Health Department). Both of those cases were essentially a result of poor vetting, something the code covers in detail.

While those examples were brought to light by the media rather than regulators, Whitnall thinks the watchdogs are starting to find their teeth – and says it will increasingly be in the interest of all in the food chain to adhere to the code.

“We are already seeing a clampdown in other markets. The Federal trade Commission in the US said earlier this year it will be fining brands for fraudulent or non-disclosure [of paid relationships]. In the UK in April a large influencer called Zoella and retailer ASOS were warned for not disclosing their partnership in an [Instagram] ad.”

As such, he says the mercury is starting to rise around disclosure in particular, “and I expect to see the ACCC will have influencers on its watch”.

“The AANA measures community sentiment and trust in advertising - and when you see that broken down by my channels, there's clearly a ‘trust deficit opportunity’.”

John Broome, AANA

Consumer law and legal risks

Misleading and deceptive practice is the relevant legal aspect for marketers, agencies and influencers, says Stephanie Scott, a solicitor at law firm Von Muenster and a guiding councillor to AIMCO.

She says the simple legal test is whether the average person would perceive that there is a commercial relationship between influencer and brand. So if it’s not obvious, both parties are running the risk of prosecution.

While the ACCC is yet to slap social media influencers and marketers with fines under the ACL, that outcome looks increasingly likely as the Commission burrows deeper under the skin of platforms and media.

But even now, it's an everyday risk - and with sufficient bandwidth, it's likely the watchdog could take countless brands, agencies and influencers to task today for technical infringements.

According to legal firm Bird & BirdBreaches of the ACL are enforceable and court action can be brought against all parties involved (e.g. the brand, agency and influencer). Penalties for breaches of s29 of the ACL can reach up to $500,000 for individuals, and for corporations the maximum fine is the greater of $10 million, three times the value of the benefit received or 10 per cent of the organisation's annual turnover (if the benefit obtained cannot be calculated).

So clear disclosure that a paid post is an advert is key for marketers, agencies and social media influencers to avoid the risk of hefty fines.

“We've seen more and more cases where people are brought to task in Australia, where the media is picking up on things,” says Scott, citing the Defence Force and Health Department fallout, as well as some earlier issues around non-disclosure by influencers being paid by Australia Post.

“So it's something that we're going to see more and more. And we think with the code is going to create some really important and necessary parameters for people to understand what their disclosure requirements are and what they need to do and actually implement that.”

Sarah Letts, who heads up content partnerships and influencer talent management at Totally Awesome, says audiences want disclosure – and that influencers, many of whom have no formal business or marketing training, are glad to have a template that enables them to confidently walk the legal line.

“There has been an incredible response to the code online – influencers are really grateful to have some guidance,” says Letts. So far, she says the platforms have taken their usual approach to responsibility for content – with the familiar line that they are just platforms and placing the onus on influencers to disclose. But she says they are starting to provide the tools to properly label content, though a cynic might suggest the platforms are doing this in a bid to convert organic influencer reach to something that lines their own coffers.

“Ultimately it is up to the influencers to take responsibility,” she says. “And that is why this code is key to the growth of influencer marketing. It is only going to help [influencers] to grow their business.”

Patrick Whitnall says the code also enables influencers to better understand what agencies and brands require, while AANA CEO John Broome says by codifying requirements – and if market participants adhere to the rules – marketers will have increased confidence to invest in the sector.

“The AANA measures community sentiment and trust in advertising - and when you see that broken down by my channels, there's clearly a ‘trust deficit opportunity’ for online,” says Broome. “So any methods of restoring trust or building trust through disclosure, for example, in the way that Sarah says audiences want to see is only a good thing for that for that channel and for this marketing mix opportunity.”

“I think marketers approach this channel in their 70:20:10 principle. [Influencer marketing spend] sits in the 10 per cent bracket. There is not enough really to justify going beyond that - and that's the opportunity going forward.”

John Broome, AANA

Increase rigour, get more budget

When it comes to the rigour usually applied to marketing investment, Broome says the influencer category today has enjoyed “a lot of leeway”. But he says it must now open the hood and align with other channels in terms of measurement in order to get a bigger share of spend.

Broome says brand safety is also key to attracting more dollars. Marketers, he says, “want to be able to invest with a level of confidence and some level of what I'd call predictability around the environment from a brand safety perspective”.

Without those two aspects, he thinks influencer marketing will struggle to get beyond the shallow end of budget pools.

“I think marketers approach this channel in their 70:20:10 principle; they invest 70 per cent of dollars in areas they really trust and 20 per cent in areas where they have some understanding but are prepared to take more risk. This sits in the 10 per cent bracket. There is not enough really to justify going beyond that 10 per cent. More is needed - and that's the opportunity going forward.”

“If the metrics that are important to you aren't delivering, then you just either don't work with that talent or you don't work with that channel again.”

Patrick Whitnall, Publicis Media

Vetting: do or die

Brand safety is always a risk in environments that are not fully controlled.  While many influencers are model professionals, they are also human – and many have grown up posting their lives on social media without necessarily thinking about how it might affect them in a professional context. As the Australian government found to its cost, failing to properly vet influencers can cause problems.

No surprise then that vetting is the number one item on AIMCO’s code of practice. It stipulates that agencies or third parties must inform marketers if they have not vetted an influencer, and breaks down in detail what is expected from a vetting process – from running through past posts, to other brand engagements, to gauging ‘suspicious’ audience activity.

While some platforms claim to have clever algorithms to help with vetting, Sarah Letts, whose firm is active in the under thirteens market, says it is still very much a manual process – and that due diligence is essential to minimise risk.

While ‘suspicious activity’ largely means fake followers and engagement, Patrick Whitnall claims the buying market “has matured” beyond basic audience metrics.

“Yes, of course look at audience, follower volume. But look at impressions, video views, average reach, demographic - engagement metrics are very important. But importantly, where is your data coming from?” says Whitnall. First party data, he says, allows marketers to get a handle on the level of fake followers, and whether it’s a problem. That means either a screenshot of an influencers key stats, or being granted access to their first party data. If they have a high number of followers but low engagement, “then you should be calling that into question, perhaps they are not a selection for your campaign because they are not performing”.

Like any other channel, says Whitnall, “if the metrics that are important to you aren't delivering, then you just either don't work with that talent or you don't work with that channel again. So I think the fake followers can still be there. But you shouldn't be choosing influencers based on follower volume alone”.

“Nano influencers are really interesting. Oftentimes, their engagement rates are much higher than the macros and the megas because they're really connecting with their audience.”

Sarah Letts, Totally Awesome

Rate card and running the numbers

While Whitnall indicates that use of engagement metrics should incentivise influencers to keep their numbers honest, the category is defined by follower counts – which may be counterproductive.

According to Sarah Letts, there are mega, macro, micro and nano influencers:

  • Mega influencers have 1m+ followers. “They are very professional. It is a business for them. They are developing their own IP,” says Letts. “And that is disruptive.”
  • Macro influencers are defined as having 100k-1m followers and are “more niche”, says Letts.
  • Micro influencers have 10k-100k followers. “They're often very credible and are considered more specialists in their field,” suggests Letts.
  • Nanos are those with up to 10k followers. “Nanos are really interesting,” says Letts. “Oftentimes, their engagement rates are much higher than the macros and the megas because they're really connecting with their audience. Oftentimes it’s local community. They really have a very loyal following and a lot of influence over that smaller number of people that follow them.”

So depending what a brand wants to achieve, “you mix and match your influencer menu”.

While Australia doesn’t have a influencers on the Kardashian/Jenner scale, there are local influencers that can command six figure sums for brand campaigns, adds Letts.

At the other end of the spectrum, she says costs start as low as $50 per post. Either way,  once a post is live “it sits there for a client in perpetuity … so they can be expensive, but they can also be very cost effective”.

Moreover, given people are growing up with social media and that even those with relatively few followers are now considered advertising vehicles, the sector is only going to grow, Letts suggests.

“Influencer marketing is not going to go away. A bit like reality TV, people thought it wouldn’t hang around. But it is here to stay, so lets embrace it and have fun.”

See the AIMCO code of practice here.


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