The announcement that James Watt of Brewdog has paid out almost £500,000 to winners of the company’s “solid gold” beer can promotion, following the Advertising Standards Authority’s decision that social media posts in connection with the promotion were misleading, suggests it can be costly to get these things wrong.

The ASA’s finding, after receiving 25 complaints in relation to three social media adverts, was that it was misleading to state that the can prize was made from “solid gold”.  But it’s also misleading to think the payments are being made as a result of the ASA’s decision.

The ASA’s sanctions do not go so far as being able to impose compensation orders, so if an advertiser does not follow an ASA ruling about its misleading advert, what can the ASA actually do?

Where the misleading statements or advertising is on the business’ own website or in other non-paid- for space under their control, such as social media accounts, the ASA can: add their name and details of the issue with their advertising to the ASA website; ask search engines to remove paid-search ads; place the ASA’s own paid-search ads to highlight the advertiser’s name and non-compliance; and work with social media companies to have non-compliant content removed.

In the case of social media influencers who routinely fail to clearly disclose when they are advertising, again the ASA can add their details to their website and also run their own ads alerting users to the influencer’s failure to disclose they are advertising.

Offline breaches are dealt with through the Committee of Advertising Practice which can issue alerts to media owning members suggesting they withhold access to advertising space; and ask that relevant ads are disqualified from any industry awards.

Where the adverts are broadcast, broadcasters are required by a condition of their broadcast licences to enforce ASA rulings. If they fail to withdraw any misleading ads they run the risk of being referred to Ofcom which can impose fines and even withdraw the licence to broadcast.

For the business itself, the ASA’s sanctions may affect reputation, but there is no immediate financial penalty. So why has James Watt made this personal payment?  Could those who were misled by Brewdog’s adverts about solid gold cans be entitled to compensation? In a contractual sense, they could argue that they bought the cans expecting to win a solid gold can – but they got what they paid for – cans of beer – if they found a gold can it was a bonus not part of the contract.  So were they induced to buy more beer believing they would win a solid gold can?  But how much more beer did they buy only because they thought they might win a solid gold can?  And again their loss can only be the price of the beer they bought – did they really buy £500,000 worth?

So if Brewdog wasn’t exposed to potential claims why pay out? Purely a goodwill gesture or could it provide additional publicity?  Now that might be worth paying for.