28 June 2023
5 min read
#Technology, Media & Communications
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Ad Standards recently released its 2022 Review of Operations, offering brands and advertisers helpful insight into the types of advertisements most likely to attract complaints and the most topical issues for consumers and regulators.
In summary, consumers made 2,601 complaints in 2022. Their top areas of concern were:
Ads broadcast via free-to-air television received the most complaints (57 per cent), followed by social media (14 per cent).
Of the complaints made, only 298 resulted in a formal assessment by Ad Standards. Ad Standards explains that the primary basis for dismissing complaints before a formal assessment is that they raised issues that are consistently found not to breach the advertising codes administered by Ad Standards – for example, mildly offensive language used with gentle humour typically would not breach the codes.
Of the complaints assessed by Ad Standards, 61 ads were found to breach the advertising codes.
Ad Standards identified an increase in two key categories of complaints this past year:
Distinguishable advertising
In 2022, Ad Standards observed a 300 per cent increase in complaints regarding distinguishable advertising.
Section 2.7 of the AANA Code of Ethics (Code) provides “advertising shall be clearly distinguishable as such”.
The purpose of this obligation is to ensure that marketing and advertising content is not disguised as news, independent market research, user-generated content, private blogs or independent reviews.
In recent years, the issue of distinguishable advertising has become increasingly topical in the context of brands using social media influencers to promote their products. For brands, an influencer partnership can offer a pathway to a highly engaged group of followers who are more readily converted to purchases. Influencer promotions tend to pique the interests of regulators if followers could potentially mistake a paid advertisement for an authentic review or testimonial by that influencer.
Where an influencer or an affiliate accepts payment or free products or services from a brand to promote that brand’s goods and services, the relationship must be made clear and expressed in a way that is clearly understood.
One way of doing this is by influencers and affiliates using obvious hashtags such as #ad, #advert, #advertising, #paidpartnership and #paidpromotion. Labels that are less clear, such as #sp, #spon, #gifted, #affiliate, #collab, #thanksto, or merely mentioning the brand name may not be sufficient.
Regulators are also concerned about the potentially misleading effects of advertising that blurs the line between a recommendation and a paid promotion. The Australian Competition and Consumer Commission (ACCC) announced earlier this year that it is cracking down on misleading testimonials and endorsements by social media influencers. Earlier this year, ACCC began a sweep of social media to identify content that is not clearly distinguishable as advertising.
Greenwashing
Ad Standards is also reporting an increase in consumer complaints that brands are making false, vague or misleading claims about the sustainability of their products or services. These complaints have been made across various industries such as mining, vehicles, petroleum, banking and superannuation.
As environmental and supply-chain sustainability has become more important to consumers, brands are increasingly seeking to substantiate their products’ “green credentials”. However, advertisements that overstate those credentials (often referred to as “greenwashing”) can result in a breach of the AANA Environmental Claims Code and can risk a claim of misleading and deceptive conduct under the Australian Consumer Law.
Consumer scepticism about brands’ sustainability claims has been growing for some time and regulators are responding.
The ACCC recently announced it had undertaken an internet sweep of greenwashing claims on the internet. The consumer protection watchdog warns that terms such as “environmentally friendly”, “green” or “sustainable” can get businesses into hot water if they are not backed up by reliable third-party certifications, transparent supply chain information or scientific reports.
On the corporate governance front, the Australian Securities and Investments Commission (ASIC) has published numerous guidance materials to help companies avoid greenwashing of financial reports and investment materials. ASIC has also taken 35 enforcement actions against companies that it considers have overstated themselves on sustainability. Most of these actions have involved less formal measures – for example, an infringement notice or a direction to make a corrective disclosure – however, ASIC has commenced civil penalty proceedings against one company. You can learn more about those proceedings by reading our article.
These trends reflect a global economy-wide push for accuracy and transparency in sustainability claims, with companies such as Volkswagen, BP, ExxonMobil, Nestlé, JP Morgan, Citibank and Bank of America recently facing greenwashing controversies abroad.
It can be hard to predict whether a consumer will lodge a complaint about a particular advertisement. With that said, Ad Standards’ 2022 Review has some key takeaways for businesses:
You can find the Ad Standards’ Review of Operations 2022 here. If you have any questions about your advertising claims, please get in touch with a member of our team below.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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