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Consumer Update – March 2018

Home Insights Consumer Update – March 2018

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Published on: March 06, 2018


Identification of advertisements: what is sufficient for social media?

The Advertising Standards Authority (ASA) has issued a new guidance note on the identification of advertisements. This will be of direct interest to companies looking to advertise their products through third parties on social media.

The ASA's code of ethics requires all content controlled directly or indirectly by an advertiser to be identified as an advertisement, irrespective of the medium used to distribute it. Importantly, the ASA considers that all parties to the advertisement (such as the advertiser, agency, media provider and the third party influencer) are responsible for ensuring compliance with this rule.

The ASA details two main steps to consider:

  1. Is the content being generated in relation to the advertiser's product or services an "Advertisement"?
  2. If the content is an Advertisement, is this being appropriately identified to the relevant audiences?

The ASA establishes that advertising can occur through "influencers" who have access to an audience due to their established credibility and authenticity. This includes bloggers, tweeters, journalists, celebrities, and people who are highly regarded in social circles, marketplaces or industries. Content created by influencers will constitute advertising if the companies have control over the content. Assessing whether content is "controlled" by a company is matter of degree – while a company providing a free product for an independent review will not meet the threshold, a company instructing the influencer in relation to the content for a review will constitute control.

If the content is an advertisement, it will be necessary to assess whether it is appropriately identified to audiences as an advertisement. If it not obvious that the content is an advertisement, this may require the use of an identifier on the platform.

These issues are not unique to the ASA's jurisdiction. The types of conduct identified by the ASA, especially given the proliferation of social media and its impact, can also raise issues under the Fair Trading Act, where the Commerce Commission has jurisdiction. The Commerce Commission's counterparts overseas have raised issues in relation to paid-for social media promotions and advertorials not being appropriately identified as advertisements. Guidance from those overseas cases include:

  • If you use native advertising, consider the context. “The watchword is transparency. An advertisement or promotional message shouldn’t suggest or imply to consumers that it’s anything other than an ad.”
  • If there is a material connection between your company and an endorser, disclose it, as a connection between the endorser and the seller might materially affect the weight or credibility a consumer gives the endorsement.
  • Disclosures of material connection must be clear and conspicuous. Businesses should put the disclosure in a location where consumers will see it and read it rather than in an obscure footnote or hyperlink.
  • Train your affiliates and monitor what they’re doing on your behalf. Instruct them about their responsibilities for disclosing their connection to you, periodically search their advertising and social media posts to make sure they’re following your instructions, and follow up if you uncover questionable practices.

Given these developments in-house counsel should ensure they have visibility, and provide guidance, about how their marketing teams are engaging in "new" efforts to promote products.

If you have any questions about the potential implications of this decision on your business’s marketing practices, please contact one of the contributors below.

This publication is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter of this newsletter, please contact the partner/solicitor in the firm who normally advises you, or alternatively contact one of the partners listed below.

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