Reaching consumers, especially 20-somethings, is increasingly difficult because of television’s waning marketing power. So say Sarah Frier and Matthew Townsend of Bloomberg.
The result of TV’s irrelevancy is that marketers have turned to social media in order to target this sought-after demographic. And one powerful way of reaching people in this age group is through influencer marketing.
[clickToTweet tweet=”Influencer marketing is when brands pay celebrities to use particular products. ” quote=”Influencer marketing is when brands pay celebrities to use particular products. “]
Companies hope that fans will buy the products based on their admiration of those influencers. People who qualifiy as “influencers” can include those who are extremely famous or only moderately well-known.
One high-profile example is DJ Khaled, who has over six million followers on Instagram. Another is YouTube star PewDiePie, who has over 55.7 million subscribers.
But, surprisingly, the most impactful influencers are “micro-influencers.” These are people who have less than 100,000 followers, and sometimes only thousands.
Research shows that micro-influencers have a more powerful reach than their counterparts who have followers in the millions. [clickToTweet tweet=”Smaller audience sizes give micro-influencers more opportunities for meaningful engagement.” quote=”Smaller audience sizes give micro-influencers more opportunities for meaningful engagement.”]
While a lucrative industry, influencer marketing has turned into sticky territory. It is the job of the Federal Trade Commission (FTC) to enforce fair business practices.
Recently the agency has gotten tougher on influencers whom it believes have not fairly disclosed the fact they are selling something.
A recent study by Mediakix found that about 93% of celebrity endorsements on Instagram violate the FTC’s guidelines.
Such violations can be costly. Sony, Xbox, and Warner Bros. are all brands that have settled high profile cases with the FTC for failing to adequately disclose the fact they were advertising.
In April of 2017, the FTC sent 90 warnings to various brands and influencers, reiterating its disclosure regulations.
The FTC’s stipulations include that abbreviated hashtags for #sponsored, such as #sp or #spon, are not sufficient. It is also important that hashtags revealing that a post is advertorial are not buried at the bottom of a list of other hashtags.
The FTC wants hashtags such as #ad or #sponsored displayed prominently. It also wants wording that makes it clear that a brand has paid for a post, as opposed to a generic thank you to the brand.
You might think it’s fairly obvious that users should know whether or not the content they’re viewing is selling something. We all want to know that people are genuinely recommending something because of its value. If money alone is motivating them, why should we listen?
But the issue is a little more complicated than you might think. Some point out that a celebrity posting content featuring a brand is not really different from the product placement that is common in a movie or TV show.
A movie isn’t an advertisement, i.e., a commerical. But everyone knows that those products are only in the movie because brands paid for them to be there.
In the same way, if Selena Gomez were to post about her favorite hair product, most people will assume that she’s selling that product because she’s so famous.
Those coming from this point of view also argue that influencers would only choose a brand they genuinely like anyway. So what’s the big deal?
Is the Situation Fair?
Another point to consider is that it’s very difficult to enforce penalties impartially. What if a micro-influencer is paid to post about her favorite hair product and does not disclose that someone paid her to do so?
It will not be obvious to users whether or not someone did in fact pay her. She’s not as famous as Selena Gomez.
It’s easy for the FTC to find and warn rule violators like Jennifer Lopez and Kourtney Kardashian. But micro-influencers can be guilty of the same failure to disclose while easily flying under the radar.
Just because the FTC is trying to make an example out of the “major offenders” does not mean it will be able to enforce its policies fairly.
To further complicate the issue, there are people online who are posing as influencers. They use the hashtags #ad or #sponsored to create the illusion brands are paying them, when no one actually is.
The obvious attraction in this move is for the fakers to make themselves seem more renowned online than they actually are.
Good Solution to the Influencer Marketing Problem?
In light of the difficulty of fairly enforcing FTC regulations, Chuck Moran of Marketing Land argues that the answer is for “industry participants to come up with clear, implementable standards for disclosure.”
He cites OBA AdChoices and the Children’s Advertising Review Unit as examples influencer marketers could follow.
He believes that “It’s in everyone’s interest at this point — the brands, the influencers, the platforms and the consumers themselves — to arrive at a clear methodology for adhering to emerging standards for disclosure across all of the major influencer platforms.”
Moran argues that the FTC’s enforcement is proof of the worth of influencer marketing. There is a way to do influencer marketing well, i.e., when influencers promote brands they believe in.
But sometimes it becomes clear that money is the only motivator for an influencer’s posts (as in the case of Scott Distick). Even when followers merely perceive this is the case, influencer marketing as whole suffers.
Regulations are necessary, but it is not in the power of the FTC to enforce them consistently. That is why it is in the industry’s interest to self-regulate.
Effective Disclosure Needed
The “microphone” that influencers have allows them to draw attention to issues and brands they believe in. But with that power comes the ability to abuse it. When this abuse occurs, influencer marketing is worse off.
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