With the surge of popularity of influencer marketing, its ethics have slowly come under greater scrutiny.

Though the world of traditional advertising has been under the watchful eyes of the advertising standards bureaus, influencer marketing has flown largely under the radar. This began to change however when last year the FTC (Federal Trade Commission) updated the guidelines specifically for the social media world and influencer marketing.

https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking

As younger generations especially are influenced more and more by social media personalities, the ethical and legal implications of influencer marketing are now under the microscope.

So as we enter Q3 of 2016, where does the industry stand? Do we have enough regulations and more importantly, are people sticking to the ones we have?

“BUT, I DIDN’T KNOW THAT WASN’T ALLOWED”

A recent study in the UK found that 6 out of 10 marketing and PR professionals admitted to flouting the rules of the ASA (Advertising Standards Association).

http://www.prweek.com/article/1390325/brands-agencies-admit-flouting-uks-rules-influencer-marketing

Of 500 professionals surveyed, 37% stated that they completely stuck to the CAP (Committees of Advertising Practice) code of conduct. But troublingly, more than one third who were familiar with the code chose not to stick to it.

https://www.cap.org.uk/Advertising-Codes.aspx

The ASA takes this seriously, stating ”we take a dim view of marketers who admit to ignoring the ad rules. Not only do they risk having their ad banned and the resulting negative publicity and damage to their brand, they could land in hot water with the Competition and Markets Authority for potentially breaking the law.”

The question is however, if people know the rules, why would they break them?

THE CONUNDRUM OF INFLUENCE

Simply put, the unspoken view is that disclosing content as ‘sponsored’ undermines its effectiveness. If people know that Brand X pays Izzy the Influencer to endorse their product, her endorsement is less valid because she is receiving compensation. So the line of thought goes.

As a result, some brands (and influencers alike) may not be so up front with sponsored arrangements.

Hoping to get the most bang for their buck from a campaign, many opt for simply not mentioning the arrangements.

Though there may be short term gains, this approach is not sustainable. Murky product endorsements undermine the integrity of brands, influencers and the industry as a whole. Not only that, but it is counter intuitive.

Influence is built on trust. Without it, the industry is ineffective.

TRUST ME, I’M AN INFLUENCER

Influencers have established their positions of influence by building a following of people who trust them. Their audience trust them as experts, they trust their opinions and they trust them to be honest.

Remove that trust and they cease to be influential. And if they are no longer influential, they are no longer valuable to brands. This is why it’s in the best interest of the industry to embrace the regulations and stick to them.

Trying to obscure sponsored arrangements will undermine trust and damage the industry.

The ethics of disclosure are clear, but the penalties are perhaps not strong enough to persuade people to stick to them.

That’s not to say there aren’t consequences though.

Just ask Machinima, a video game company who settled a court case with the FTC after they were found to have broken section 5 of the FTC Act. In a campaign to promote the Xbox One, the company had paid big sums (up to $30,000 each) to YouTubers to promote the console in their videos. As the company outlined no responsibility to disclose the relationship, it was ruled to be deceptive marketing.

https://www.ftc.gov/news-events/press-releases/2015/09/xbox-one-promoter-settles-ftc-charges-it-deceived-consumers

In another case in 2014, to support the launch of a “Lick Race” campaign, Oreo paid popular YouTubers to feature the promotion and the product. The ASA found that many of the videos were not clearly disclosed as paid content and the videos had to be revised. Though the penalty may not be huge, the impact on trust and damage to the credibility of the brand and influencer is real.

UK Ad Watchdog Says Oreo & YouTube Stars Violated Disclosure Standards

It’s time we embraced honesty and transparency and let the industry move forward.

IF YOU BREAK IT, IT’S HARD TO GET IT BACK

Despite the appeal of quick wins, the true future of influencer marketing lies in trust and transparency.

Sure, it’s possible for brands and influencers to integrate sponsored content in their posts without mentioning the relationship, but this is building on shaky foundations.

Without trust, an influencer ceases to be effective. After all, how can you influence an audience who doesn’t trust you?

Though it may be tempting for brands and influencers to pass off sponsored content without clearly highlighting it as such, the long term impact isn’t worth it. Instead, influencers should be positioning themselves as someone who only endorses products they believe in.

By upholding a higher ethical standard, they can maintain the value of their opinion and still be transparent about sponsored content.

The regulations encourage us to attain a higher standard. Influencers must work harder to maintain their reputation to only endorse what they believe in, likewise brands should search for influencers who not only have the right target market, but who are genuinely supportive of their product or service.

Trust lies at the core of influence and without it, influencer marketing cannot exist.

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