The murky world of Instagram ads

If an Instagram post is an ad, this should be clear upfront. But we found that’s not always the case.

Image of women holding mobile phone with Instagram on the screen

“My skin has transformed! I no longer have combination skin with breakouts daily, which is a huge change for me!” raved the Instagram post. The miracle product? Koikki’s Intensive Repair Ampoules, just $89 for a month’s supply.

The post was put up by an influencer who received free products from the company. But you wouldn’t know this unless you read to the bottom of the 140-word post. Buried at the end sat a small disclaimer: “Ad/Gifted”.

It was among a flurry of Instagram ads that appeared last year, after Koikki launched. At first glance, you may not twig they’re ads. Many could be mistaken for genuine recommendations, sprinkled through the standard Instagram fodder of fashion and travel pics.

It’s not just small brands such as Koikki that are paying Instagram devotees – either in cash or in kind – to promote their brands. Countdown does it. So does rival New World. Other big-name brands – Bendon, Farmers, Lululemon and even Wattie’s – are in on the game.

When Wattie’s launched its Plant Proteinz soup range last year, several Instagram posts appeared pushing the product. Four posts had no disclosure at the beginning, stating they were an “ad”. The only disclosures were at the bottom of the post.

They were among 88 posts we found promoting 15 brands that failed to use the word “ad” upfront to tell followers the person posting them was paid.

Rise of influencer marketing

Influencer marketing on the rise

Hannah Carr, a content strategist for marketing firm Uprise Digital, said influencer marketing is growing.

"It’s pretty common to have a percentage of the [marketing] budget set aside for influencers, if a brand is working on a multichannel campaign,” she said.

Instagram is one of the most popular channels for influencers.

"How much of a budget an influencer may get depends on a number of factors …

For example, influencers with larger followings may get paid at a higher rate per post, while smaller micro-influencers may get paid less. Sometimes collaborators are offered free products in exchange for promoting [the brand].”

Carr said there’s been an increase in brands using influencers with smaller, more niche followings. Marketers see them as having a higher level of trust and often better “engagement” with their followers.

Figures published by the Social Club, which claims to be New Zealand's largest influencer marketing agency, reflect this trend. Its 2019 survey of 3000-plus influencers on its books found 70 percent were either “nano” (1000 to 5000 followers) or micro (5000 to 15,000 followers) influencers.

Of the 88 Instagram posts we analysed, 67 percent had been posted by people with a following of 15,000 or fewer.

The issue of disclosure

The Social Club also surveyed 100 brands about their use of influencers. Half said they wanted to work with influencers to increase “trust” with their audiences and intended to increase their influencer marketing budgets. Eighty percent rated this type of advertising as effective.

However, many companies have been reluctant to label these posts as ads. Only 20 percent of brands in the Social Club’s survey reported using the “#ad” disclaimer. Most preferred using the terms "sponsored" or "collab" (short for “collaboration”).

A quarter of the 88 posts we looked at contained no disclaimers they were ads. Where some form of disclaimer was given, only 15 percent of posts included it at the beginning.

Marketers fear that “if consumers know that a post is an advertisement, they will disregard it ". - Stacey Mulholland

That doesn’t surprise Stacey Mulholland, a PhD student at Auckland University who is studying influencers.

Influencers share details of their personal lives and interact with their followers, who may come to view them as friends, she said. Marketers fear that “if consumers know that a post is an advertisement, they will disregard it”.

Auckland University senior marketing lecturer Dr Bodo Lang agrees. If influencers are perceived “as just another advertising medium”, their worth to brands falls, he said.

On the surface, influencers may seem like a new source of entertainment and information, but the reality is there are strong commercial drivers, Dr Lang said.

Coming clean?

Last year, the Advertising Standards Authority (ASA) published new guidance on influencer marketing to support ad identification. This was prompted by complaints about Simone Anderson who has 313,000 Instagram followers.

The guidance states consumers should know a post is an ad when they first see it. “Labels or other means used to identify ad content must be obvious, clear, prominent and upfront, and they must be separate from other disclosures, hashtags or links,” it advises.

While hashtags such as #sp (sponsored) or #collab can be used in addition to “ad”, the authority advises they shouldn’t be used as a replacement, as their meaning isn’t obvious. Research by the UK’s advertising watchdog found most social media users struggled to recognise that posts with these disclaimers were paid content.

The guidance kicked in on 14 September. But disclosure remains a problem. Fifty-three of the 88 ads we reviewed were published after this date. Only 16 (30 percent) contained the word “ad” and none of them put it up front.

Alternative labels, such as “ambassador”, “giveaway”, “gifted”, “partner,” and “collab”, were instead preferred, making up 39 percent of the disclaimers. These labels can be hard to spot, often shown at the end of the post.

Smaller brands were more likely to have posts that had no advertising disclosure at all.

Since September 14, The Social Club has made it mandatory for influencers to put ‘AD’ at the beginning of paid content.

The ASA has received 157 inquiries about the labelling of influencer ad content since the guidance came into effect. Eighteen decisions have been released, and it is currently investigating 41 complaints, chief executive Hilary Souter said.

In January, it upheld three complaints about content shared by Simone Anderson that wasn’t clearly labelled. The ASA settled a further complaint in February.

Dr Lang believes the ASA guidelines are a step in the right direction but thinks the authority should impose harsher penalties on brands and influencers who don’t clearly disclose their relationships.

Traders that aren’t upfront about ad content are also likely to breach the Fair Trading Act. Maximum penalties under the act include fines of up to $600,000. If you think an Instagram post is really an ad in disguise, make a complaint to the Commerce Commission.

Instagram 101

Influencer marketing on Instagram

Instagram is a photo- and video-sharing online social network, owned by Facebook. Launched in 2010, it boasts a billion users a month.

Instagram is favoured by influencers, individuals who have built a social media following. “Influencer marketing” – where brands pay influencers in return for endorsements and product mentions – is on the rise.

Insta-scam

Murky ad disclosures aren’t the only hazard on Instagram. What’s been dubbed “the Brand Ambassador Scam” has also been doing the rounds.

Scammers create fake business pages and send messages to Instagrammers inviting them to be brand ambassadors. Bogus incentives, such as free or heavily discounted products, are offered. If you take the bait, the scammer asks for your credit card details, purportedly to bill you for the discounted product or shipping costs.

A Netsafe spokesperson said it had received nine reports about the swindle, with about half reporting losses ranging from $30 to $122. The Commerce Commission has received two complaints.

What we found

If an Instagram post is an ad, this should be clear upfront. But we found that’s not always the case. Here are some examples.

Major retailers

Bendon

Instagram post, 9 November 2020: “Honestly – I am not usually a girl who will opt for an underwire contour bra but this Weightless Form by @bendonlingerie is a game changer.”

An influencer post endorsing Bendon lingerie failed to include any upfront ad disclosure. The only disclosure was at the end of the post, revealing the person was a Bendon brand ambassador.

Bendon social media executive Phoebe Stanford said the company would “do everything we can to make sure that influencers abide by [the ASA] guidelines going forward”. The post has since been amended to put the ad disclosure at the start.

New World

Instagram post, 29 September 2020: “Who else loves planting and growing a garden over spring and summer? We’re all ready to plant some of our @newworldnz Little Garden seeds!”

This influencer post plugging New World’s Little Garden promotion failed to include an upfront ad disclosure. The words “#Ad”, “#Sponsored” were at the end of the post.

It was one of four influencer posts promoting New World that had ad disclosures at the end. Foodstuffs head of corporate affairs Antoinette Laird believed all the posts could be identified as ads. However, she agreed to amend them.

Tasti

Instagram post, 28 October 2020: “You all know we love a good study snack and we have a brand new favourite this exam season – @tastinz Protein + Probiotic snack bars!!”

Two influencer posts for Tasti’s snack bars were ads but you didn’t find this out until the bottom of the blurb.

Tasti marketing manager Jodene Nigro had the posts amended. “Moving forward, we will now include communication that accompanies the Gifted/Sponsored Product. This will help clarify advertiser and consumer responsibilities, should the consumer/organisation wish to share content on social media,” she said.

Wattie's

Instagram post, 31 October 2020: “It’s no secret that I love soup! Although as much as I love cooking it, there’s nothing like ripping open a ready-made soup when you’re short on time, need an instant winter warm-up, or if you just feel like having a relaxing mealtime …”

We found four Instagram posts for Wattie’s, endorsing its Plant Proteinz soup range, which only included ad disclosures at the bottom of the posts.

After we contacted the company, just one of the posts was amended to include “ad” at the beginning.

Small brands

BePure Ben Warren

Instagram post, 22 December 2020: “I’ve been hitting @bepurebenwarren Collagen+ for a while now and I’m digging how hydrated my skin is.”

Several influencer posts for BePure collagen products failed to include upfront advertising labels. After we contacted the company, it updated the posts to include clear ad labels.

Clean Collective

Instagram post, 2 October 2020: “Kicking off the weekend with NZ made @cleancollectiveofficial I love the gin drinks. Also these are sugar & carb free.”

This post promoting Clean Collective products was an ad – but you didn’t find that out unless you noticed the disclosure at the bottom.

Clean Collective marketing director Holly McGrath said she “would take our feedback on board”. However, no changes were made to the post.

Good Buzz

Instagram post, 28 November 2020: “Ice cold @goodbuzznz + beaut day in the Bay = the perfect combo.”

An influencer post for Good Buzz kombucha didn’t include any disclosure it was an ad. Good Buzz chief executive Alex Campbell said it ended the contract with this influencer in December.

Koikki Skincare

Instagram post, 3 October 2020: “My skin is the happiest it has ever been! I am always very scared to try new products on my face … but I started using these @koikkiskincare ampules about a month ago and my skin has transformed!”

Several influencer posts promoting Koikki Skincare products failed to provide upfront ad disclosures. Koikki marketing manager Celina Kaitlin agreed to amend the posts. However, just one post was changed after we contacted the company.

Government spending

It’s not just brands that use influencers. Government agencies have also jumped on board. Since 2012, Tourism New Zealand has spent more than $7 million on influencer marketing. This year alone, it has already spent $303,000.

It doesn’t plan on slowing down spending any time soon. “With New Zealand’s border closed, and with the reach and popularity of social media, we expect our use of this marketing channel to increase,” Tourism New Zealand marketing director Tony Rogers said. 

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