AN470 Smiley Prevention
I assume your pic was of a practice plate and not an actual airplane part. One thing I have not seen mentioned yet is to ensure that you secure/clamp your work properly. If your gun's air pressure is too high, AND the parts you are riveting are allowed to move/bend/flex/vibrate too much, this can also cause the rivet set to bounce off or reposition itself at an angle to rivet head, resulting in a smiley.
So ensure that your parts are clamped down and apply consistent pressure with the gun against the rivet head, and verify the parts cannot move or flex too much. Then experiment with different air pressures on the gun. Start low and work your way up, and this will allow you to get the feel for how the gun needs to be held on the rivet head as you reach the correct air pressure.
I also use the tape on the rivet set, and I also ground down a very small amount of metal on the tip of my cup set and smoothed/polished the edges, which I personally think resolved more of my smiley problems than anything else. I got that tip from a post that mentioned that the rivet sets from some companies tend to grind the cup a little too deep, making it very easy for the edges to contact the skin surfaces and create smileys. The goal is to remove just enough metal on the tip so the cup is still covering the dome of the rivet, but the edges will sit just a bit higher against the work.
Another tip is to ensure that your body/arm position is as directly in line with the rivet gun as possible. if you stand to one side or extend your arms to the side of the gun too much, this has the tendency to cause the gun to skew to one side or the other as you start pounding the rivet.
While the instructions to place the rivet set/gun "perfectly" square to the rivet head is the ultimate goal, I don't think I have ever been able to tell when my gun and cup set are truly square to the AN470 rivet head. So you do the best you can with that, and combine that with all the other techniques and tool/air changes suggested in these comments, and you should be able to overcome most of the smileys.