27 February, 2017
From 1 March 2017, the Australian Association of National Advertisers (AANA) Code of Ethics (Code) will include a new provision that requires advertising and marketing communications to be clearly distinguishable as such to the relevant audience.
Brand owners who engage in native advertising should be aware that:
- from 1 March 2017, the Advertising Standards Board (ASB) will have the power to adjudicate on consumer complaints regarding advertisements that are disguised as editorial content. The changes to the Code provide a new and fairly straightforward way to challenge native advertising.
- advertisers who fail to make adequate disclosures may be required by the ASB to discontinue or modify their advertising. Non-compliance may have significant PR consequences.
- the AANA has issued a Best Practice Guideline for Clearly Distinguishable Advertising to assist advertisers understand their new disclosure obligations. The new Guidelines indicate that the degree of control that an advertiser has over content is a key issue when it comes to assessing the need for, and nature of, any required disclosure.
How will the new provision of the AANA Code be applied?
The Guidelines do not require all advertisements to be identified. Nor do they mandate the format in which disclosure must be made. Advertisers will have flexibility as to how they communicate that content is commercial in nature.
In some circumstances, it will be sufficient to reference the relevant brand, and/or to clearly delineate the material from editorial content by way of a border, font or other device. In other circumstances, a clear disclaimer such as #sponsored or #ad will be required. In each case, the overall appearance of the content must be considered, particularly the similarity with any non-advertising content that may appear in combination with the marketing communication.
The new rule gives rise to some interesting questions, particularly in the context of influencer marketing where brand owners typically exercise a degree of control but do not actually draft the content. It is currently unclear whether disclosure is required where an ambassador agreement is in place but the brand owner does not pre-moderate content posted by the influencer. What if the ambassador has a general obligation not to act in a manner which may bring the brand into disrepute? Is disclosure required where consumers have come to expect sponsored content from high profile celebrities? These, and similar, questions may soon be tested now that consumers have a clear avenue to file such complaints under the Code with the ASB.
How does the new provision of the AANA Code fit within the existing regulatory landscape?
While the application of the Australian Consumer Law in this area is largely untested, general ACL provisions which prohibit misleading or deceptive conduct and the making of false representations clearly have a role to play in this area. The ACCC has also issued a Guide relating to Online Reviews, outlining principles of relevance to native advertisements.
The ACCC has also recently endorsed the International Consumer Protection and Enforcement Network (ICPEN) which require digital influencers to:
- disclose, clearly and prominently, whether content has been paid for;
- be open about other commercial relationships that might be relevant to the content; and
- give genuine views on markets, businesses, goods or services.
In addition, brand owners should consider whether the relevant platforms (such as social media platforms) on which native content is published impose any specific prohibitions on paid endorsements or require specific types of disclosure, such as tagging to differentiate sponsored or marketing content from organic content.
Other jurisdictions
Regulators in various countries are grappling with the challenges of requiring transparency in the face of sophisticated and innovative marketers. For example:
The Federal Trade Commission (FTC) in the United States has issued a number of prescriptive guidelines to help ensure that advertisements are readily identifiable to consumers. According to the FTC, advertisers should avoid terms such as "Promoted" as these are ambiguous and could suggest that the advertiser has sponsored the post but did not influence the content. However, terms such as "Ad," "Advertisement," "Paid Advertisement" and "Sponsored Advertising Content" may be acceptable.
The Advertising Standards Authority (ASA) in the United Kingdom has taken an aggressive approach towards native advertising in recent years, finding that labels such as "sponsored," "in association with," "Recommended by" and "Brand Publisher" may not necessarily be sufficient to identify native advertising as marketing communications.
According to the Advertising Standards Authority in New Zealand, paid endorsements on Twitter must feature the hashtag #ad.
Conclusion
In the context of the new AANA Code provisions, brand owners should carefully consider whether sponsored content, particularly in an online context, is clearly distinguishable to the relevant audience. It will be interesting see how the ASB approaches complaints and decisions, and it is also likely that the ACCC will monitor and take an interest in how the ASB handles native advertising matters before it considers taking further action in this space.
For further information, please contact:
Elisabeth White, Partner, Baker & McKenzie
elisabeth.white@bakermckenzie.com
