The New Era
of Influencer
Marketing

4 article number 4

Stricter Federal Oversight Means It’s Time for the Practice to Grow Up

Joe Flowers

Influencer marketing as a practice isn’t new, but its delivery certainly has changed. Traditionally, an influencer’s paid or sponsored endorsement was obvious – a celebrity crediting a designer for their award show look, an athlete drinking a soda in a commercial, or a game show host thanking a laundry detergent at the top of the program. The consumer saw these sponsored messages, knew they had been paid for, and let the endorsement affect or not affect their purchase decision.

But as social media has grown in popularity, consumers have found a way to connect with influencers on a deeper, more personal level, beyond just what they were paid to endorse. Through social media, influencers give us a curated glimpse into their own lives, including the snacks they keep in their fridge, the books on their nightstands, and all the little odds and ends they can’t live without. It was only a matter of time before we found a way to monetize it.

In 2017, with a new reality of more prominent disclosures on the horizon, the success of influencer marketing will rely on partnerships that are more authentic and feel more like brand advocacy.

Big Business

Influencer marketing is set to be a $5-$10 billion industry within the next five years. This makes it serious business for brands looking to get their products and services in front of the right audiences, especially when ad blocking software is supposed to cost brands more than $40 billion of potential revenue in 2016. For many brands, leveraging influencers in social media has helped level the playing field. Influencers can be engaged with something as simple as a product offer or a payment that can vary from hundreds to hundreds of thousands of dollars depending on the influencer’s following.

Government Intervention

Unfortunately, it has also become an ever-growing frontier with new channels constantly introduced, and some brands, influencers, and agencies have engaged in practices that make it hard to discern when a post has been paid for.

While brands including Cole Haan, Warner Bros., and Lord & Taylor all made news running afoul of the Federal Trade Commission (FTC) for their less-than-transparent influencer programs, it got even more serious when the organization issued an enforcement policy on deceptively formatted advertising in December 2015. The policy alerted the public that the FTC was prepared to start proactively going after those who did not play by the rules. It was the latest in years of policy updates from the organization in regard to how brands and influencers should represent themselves in the space, but it was one of the most impactful to date. The statement sent a very loud warning to the influencer marketing community that can’t be ignored – “we’ve been watching, now we’re acting.”

Lord & Taylor violated FTC guidelines when Instagram fashion influencers failed to disclose they were all wearing the same dress as a part of a paid promotion.
Lord & Taylor violated FTC guidelines when 50 Instagram fashion influencers failed to disclose they were all wearing the same dress as part of a paid promotion. (Source: The Huffington Post)

While the FTC is working to protect the best interests of the consumer, the organization is set to directly and indirectly impact influencer marketing in 2017 in several key ways: directly, with how relationships are disclosed in sponsored content; and indirectly, with how consumers perceive sponsored content and how it’s delivered to maintain value.

Up-Front Disclosures

The FTC is looking to brands and agencies to play by the rules, and it has made it clear not doing so could mean legal action and financial penalties. However, how to properly disclose may cause some confusion depending on how long you’ve been running influencer programs. Initially, the FTC mandated that posts where an influencer had received compensation or product needed to disclose just that. Then, posts needed to include the hashtags #advertisement or #sponsored or any of several variations; #ad, #spon, and #sp were also acceptable. Now, the abbreviations may not be as clear a disclosure, so #advertisement and #sponsored are the preferred method, but a hard rule on this has yet to be set.

Some influencers bury their disclosure in a sea of other hashtags, but not for much longer. According to Michael Ostheimer, deputy in the FTC’s Division of Advertising Practices, where they go in a post is important as well: “If consumers don’t read the words, then there is no effective disclosure. If you have seven other hashtags at the end of a tweet and it’s mixed up with all these other things, it’s easy for consumers to skip over that. The real test is, did consumers read it and comprehend it?”

The FTC has help in its pursuits. Consumer advocacy groups such as Truth in Advertising are also actively monitoring and reporting violations they encounter. In August 2016, these groups made national headlines when they found more than 100 posts across the Kardashian family’s accounts that failed to provide proper disclosures.

Impact on Value

Ideally, the FTC would like a paid influencer’s post to have a disclaimer at the beginning of the copy to immediately let anyone know the post has been influenced in some way. While this is a relatively simple ask, it has the potential to make a huge impact on how influencer content is perceived.

More than 300,000 posts on Instagram included the hashtag #sponsored or some other relevant abbreviation in July 2016, more than double the number for the same time period in 2015. As that number continues to grow, it’s not hard to imagine an Instagram user being exposed to several sponsored posts from influencers on any given visit. When all those posts are preempted with a hashtag disclaimer, will they hold the same value they do now or will they feel more like the commercials we skip, the magazine ads we blindly thumb past, and the display ads we block?

The Silver Lining

If anything, stricter disclosure regulations will help – if everyone has to play by the same rules, it pushes us all to create better work. Content is still king, which means influencers still hold a lot of value no matter how the partnership needs to be disclosed. In a recent blog, Sprinklr AVP of Marketing Solutions Lynn Murray pointed out the best influencer marketing examples should feel like brand advocacy, not an ad. Looking ahead to 2017, there are a few things brands can do to continue to capitalize on their influencer marketing strategies:

  • Partner with the person first, not the followers. An influencer with 10 million followers may sound like a great idea for getting maximum impressions, but a recent study found more followers often means less engagement. Find a partner that naturally fits with your brand ideals. Odds are their audience will also be a fit.
  • Influence with a message, not a product. When developing an influencer strategy, develop it with a “message-first” approach, not a product-centric one. Consider an influencer as an extension of how you envision your brand, not as a salesperson trying to push a product. Dove is a consistently good example, and its #MyBeautyMySay campaign is stunning.
  • Make a connection, not a promotion. Work with your influencers to create a connection that goes beyond the product. It may be hard to connect with a product on an emotional level, but it’s not impossible. Consider the foundation of your organization and find the right influencer to bring that to life. Anthony Bourdain partnered with Balvenie to create a video series that seamlessly connects the brand to local craftspeople in an authentic way.

Disclaimer: If this had been a post sponsored by The Richards Group and not a voluntary opportunity, this would be considered a buried disclaimer and a violation of FTC guidelines. 

  • Joe FlowersJoe Flowers

    Digital Strategy
    Joe has spent time since graduation managing digital and communications strategies in a variety of industries, including nonprofit, healthcare, consumer packaged goods, and sports and entertainment. He applies his experience to clients including Sewell Automotive Companies, World Pancreatic Cancer Day, AAA, and Go RVing. When he isn’t going the extra mile for his clients, Joe can typically be found at a concert, hunting for the best taco joint in Dallas, or going the literal extra mile outside as an accomplished runner.

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References

  1. Hall, Gina. “FTC Says Hashtags May Not Be Enough to Identify Sponsored Posts on Social Media.” Silicon Valley Business Journal, August 8, 2016.
  2. Horn, Leslie. “Kardashians in Hot Water Over Sponsored Instagram Posts.” Vocativ, August 23, 2016.
  3. The FTC’s Endorsement Guides: What People Are Asking.” Federal Trade Commission.
  4. Warner Bros. Settles FTC Charges It Failed to Adequately Disclose It Paid Online Influencers to Post Gameplay Videos.” Federal Trade Commission, July 11, 2016.
  5. Murray, Lynn. “Why We Should Stop Freaking Out Over the Death of Influencer Marketing.” Sprinklr, May 26, 2016.
  6. Persad, Michelle. “Why Lord & Taylor Had 50 People Wear the Same Outfit on Instagram This Weekend.” The Huffington Post, April 1, 2015.
  7. Bachman, Katy. “FTC Dings Cole Haan for Wandering Sole Promo on Pinterest.” Adweek, April 3, 2014.
  8. Raw Craft With Anthony Bourdain – Episode One: Borough Furnace.” BalvenieUS, YouTube, February 4, 2015.
  9. Ware, Sarah. “Micro-influencers Bring Mega ROI for Brands.” Entrepreneur, September 9, 2016.