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Boom! Influencer Marketing Is Having a Huge Influence…..on Regulators.

Updated: Mar 29, 2019


Photo by John Allen on Unsplash

The Importance of Transparency

Influencer marketing has grown exponentially in its impact. However, much of that impact has been to reach consumers through covert and deceptive advertising practices. For any brand contemplating influencer marketing knowing the rules of engagement is critical to preventing consumer deception and enabling consumers to make informed decisions. Transparency benefits not only consumers but brands and influencers who risk losing credibility when consumers learn the extent of influencer-brand nondisclosures or discover that they have been misled by people they thought were authentic and trustworthy.


Monetizing Trust

Broadly speaking, influencer marketing leverages people who become influencers by sharing personal insights and views and by posting images and videos of their daily lives. Regular people transform into ‘professional influencers’ by gaining followers, promoting brands through partnerships and collaborations, and (by the very definition of influencer) impacting what people purchase through either perceived or real authority, knowledge, or expertise. According to an executive from Instabrand, an influencer, as a “trusted voice speaking to their personal audience ... is the most effective and organic exposure a brand can get.”


Initially, influencers purchased the products they promoted but as the discipline of influencer marketing grew so did the opportunities to monetize the ability to influence consumers. In many cases, this led to product endorsements and testimonials where consumers were left struggling to determine the nature of the relationship between the influencer and the brand. This lack of transparency drew the attention of advertising and marketing regulators; groups tasked with devising and enforcing guidelines that educate and protect consumers from deceptive and covert advertising practices.


Regulating Trust

The problem is that regulators have often failed or declined to enforce guidelines leaving the decision to disclose material connections (i.e., payments) up to brands, influencers, and market forces. However, according to Bladow’s detailed study, self-regulation is unlikely to correct covert advertising practices because the transparency inherent in disclosures jeopardizes the status and power that influencers enjoy as ‘consumer peers’ and ‘trusted authorities’.


Until relatively recently, the lack of effective endorsement enforcement requirements enabled influencers and brands to act as though they are invincible and untouchable. According to research conducted by Brian Solis, some brands and influencers knowingly disregard transparency and disclosure requirements. Solis found that only 50% of brands require influencers to disclose relationship connections and 25% of influencers reported that brands specifically request that they not disclose their material connections.


In 2016, Warner Bros. Home Entertainment ran afoul of the guidelines set out by America’s Federal Trade Commission (FTC) in their influencer marketing campaign to promote the video game ‘Middle Earth: Shadow of Mordor’. According to the complaint, Warner Bros. misled consumers by instructing influencers to hide sponsorship at the bottom of the video in the description box; visible only if consumers clicked the ‘show more’ button.


In 2017, the FTC sent out warning letters to 90 Instagram influencers. The letters pointed out the lack of clear and conspicuous disclosures in posts. For example, the letters argued that when multiple hashtags or links are used at the end of a post, consumers are unlikely to see them. Furthermore, the letters argued that hashtags such as #sp, #partner, or #Thanks[Brand] are unlikely to be fully appreciated by consumers as ads.


More recently, in March 2018, the UK’s Advertising Standards Agency (ASA) launched a project to crack down on influencer marketing. The ASA plans to address the lack of consumer knowledge around the use of hashtags as sponsorship disclosures and the mistaken belief among consumers that influencers are not regulated in the UK. The project follows a 2016 study conducted by Takumi that found that 60% of UK marketers openly disregard ASA guidelines. For notable examples, see The Drum’s extensive list of ads that have been banned or investigated as a result of the ASA probe.


Influencers as Paid Brand EndorsersAccording to regulators, influencers are brand endorsers because they advertise messages that consumers are likely to believe and they endorse opinions, beliefs, findings, and experiences that may or may not necessarily be those of the sponsoring brand. Influencer-endorsers differ from traditional celebrity endorsers because, as regular people on social media, they are more relatable and their endorsements appear more authentic. An influencer’s endorsement is often equivalent to a peer recommendation, which can carry significant weight with consumers and/or followers. According to the 2015 Nielsen Global Trust in Advertising study, 66% of respondents reported that they trust online consumer opinions (the third most trusted format after friends and family (83%) and branded websites (70%)).


Know and Respect the Rules

The message to brands and influencers from federal regulators such as America’s Federal Trade Commission (FTC), Advertising Standards Canada, the Australian Association of National Advertisers (AANA) and the UK’s Advertising Standards Agency (ASA) is loud and clear:

  1. Be transparent about relationships by clearly and conspicuously disclosing all material connections

  2. Monitor the content of every paid post to make sure that influencers are transparent about sponsorship

  3. Use accepted hashtags to disclose sponsorship. For example, the FTC prefers #ad and #paid and (see below) #XXPartner

  4. Carefully consider hashtag placement for each social media platform. Adweek has some great tips.

For influencers and brands that value the connection between building a trustworthy reputation and consumer-interests, it can be as simple as allowing consumers to see which brand paid for the ad or post by using the hashtag #ad or #sponsored on an influencer’s account. Although online disclosure guidelines such as this one from the FTC can be lengthy and extensive, the FTC has suggested an alternative to #ad on its #101influencer Twitter feed: #XXPartner where XX is the brand name.



Clear and conspicuous disclosure reveals to consumers that what they believe is a consumer-to-consumer recommendation is actually a paid advertisement. Transparency allows consumers to be objective when placing value on someone’s opinion because the consumer knows that economic benefit motivates the endorsement. Without clear and conspicuous disclosure, consumers cannot effectively determine whether an influencer’s endorsement should be given the weight of a trusted friend or of a brand’s paid endorser. Champions of transparency in digital marketing such as Unilever (Unilever plans to set its own standards of viewability: they want 100% of an ad to be visible in a browser) and Proctor & Gamble are prepared to clean up the murky landscape of influencer marketing by cutting ties with unethical stakeholders to regain consumer trust. What are you prepared to do?


Contact Dreamline Digital to find out how your brand can achieve greater digital media transparency and go fraud-free.

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