Tighter Regulations Equal More Influencer Marketing

Tighter Regulations Equal More Influencer Marketing
November 1, 2016 Becky Griffin


Over the past year or so, as influencer marketing and celebrity endorsements on social media have drawn a lot of attention by the MSM media, the FTC has been under pressure to take measures against those who do not disclose that certain posts on their social networks, were in fact sponsored.

Earlier this spring, the FTC issued an official complaint against retailer Lord & Taylor for paying fashion influencers to create posts about one particular dress on Instagram, but did not disclose that they paid for the posts and gave the influencers the dresses for free. According to the FTC, any compensation, including free products — should be disclosed.

The main concern of advocacy groups pushing for action is the effect on children,  who do not have the ability to differentiate between advertising and an authentic recommendation by their role models. The organization’s main complaint is that both influencers and advertisers are not necessarily complying with the Federal Trade Commission disclosure regulations.

Another campaign that caused a commotion involved the royal family of America’s celebrity endorsements, the true rulers of influencer marketing — the Kardashians. When the family started to post selfies of themselves with a certain tea brand, the world took notice, and the debate around sponsored ads posed as “portraits of real life” became a TMZ item.

Guess what? Even when adults know these Instagram posts are actually a new form of a commercial, it still works as efficient advertising due to the massive amount of exposure to specifically targeted audiences. Take this “investigative journalism” piece  dedicated to check what products endorsed by the Kardashian clan live up to the hype. The result? Just like conservative old school advertising — you can take a product so far with an effective marketing strategy. The bottom line will always be determined by the quality of the product, the IRL truth in the advertising.

In July, Instagram saw a rise in hashtags  designed to expose the money exchange behind the social media curtain. “While we can’t ignore it, we need to make sure it works,” Kevin Systrom, Instagram’s CEO told Bloomberg taking a stand: “It’s not OK to not know something’s an ad”.

The discourse around celebrity marketing and endorsements raised another set of questions in the international markets as well. For example, Supermodel Bar Refaeli and her mother are under investigation for tax fraud in Israel, for failing to report that certain pictures that Refaeli posed for and posted on her social media, were actually work contracts — since that is precisely what she does for a living. When the news broke, Israeli celebrities became extremely cautious about what they posted in order to not face similar repercussions.

With all that said, it appears like the debate and controversy have only done good for those who post the endorsements, and the companies that pay them to do so. This is proof that influencer marketing is (still) on the rise. Brands spend more than $255 million on influencer marketing every month just on Instagram, according to Captiv8.

Why? Because people trust recommendations from their friends, more than commercials. The real influencers may not have millions of followers like the celebs do, but they have a loyal community that they respect, appreciate, and take their endorsements very seriously in order to not lose credibility.

Just like them, there are the creators, the content people, the Casey Neistats of the world. The storytellers. They are loyal to the audience that is loyal to them, and aim at providing first and foremost — good content. Such creators enjoy ad revenue directly from YouTube, the first network to monetize on creativity, and internet stardom, leading the way for Instagram, Facebook, Twitter, and even Snapchat to redesign business models that incorporate shared revenue between creators and social media/network.

So, while the landscape of marketing is changing at a rapid pace, the regulations on social media influencers and creators has only created more demand for the most effective ones, forcing companies to spend more money on individual authentic #ads, and less on banners, print ads, and televised commercials.