Influencer marketing is continuing to grow, with more brands and even platforms (such as Instagram) adjusting their strategies around it. Influencers are earning more than ever before and companies are finding influencer marketing to be more effective than traditional advertising in certain cases. However, all the hype, popularity and money at stake means transparency and honesty can take a backseat for some, which is what the U.S. FTC wants to snub.
In a statement published earlier this month, Rohit Chopra, the FTC Commissioner, highlighted some of the issues surrounding influencer marketing. He started with how advertisers are pouring money into influencer marketing and some companies can ‘launder’ advertising by paying or forcing influencers to hide the nature of their relationship.
Commissioner Chopra is rightly concerned about influencers not tagging their posts as sponsored or paid, which can give their followers the impression that it is not a compensated endorsement but an organic recommendation (which holds a lot more weight).
Given how each post is an opportunity for influencers to make money, it is common for them to only endorse paid products and services, including but not limited to clothing, food, drinks, travel destinations, hotels, restaurants, makeup items, and healthcare products.
As with every industry, there are naturally those who prioritize profit over honesty, and Commissioner Chopra wants to deter such deception and address fake reviews. However, instead of focusing on influencers, he targetted companies and advertisers, which is a smarter move.
“When companies launder advertising by paying an influencer to pretend that their endorsement or review is untainted by a financial relationship, this is illegal payola,” wrote Commissioner Chopra. “The FTC will need to determine whether to create new requirements for social media platforms and advertisers and whether to activate civil penalty liability.”
Currently, the FTC guidelines for influencers highlight cases where disclosures are required, and how they should be made, but the recommendations are deemed largely ineffective. With the possibility of civil penalties, companies and brands may take new regulations more seriously and we could see more transparent influencer marketing and advertising.