As marketers struggle to reach new audiences in the social media age, influencer marketing has become increasingly important. By connecting with the right influencer, marketers can gain access to that individual’s social circle – and potentially create a positive buzz about their products and services.

Because these communities have grown organically around a specific influencer, they become a useful demographic for marketers to tap into. AdWeek magazine suggests that sponsored posts cost an average $300 each, representing a relatively low outlay for direct access to a targeted audience. As with any media spend though, sponsored posts for influencers with millions of followers are much more expensive – tapping into Kim Kardashian’s 90 million plus Instagram followers costs around $500,000 per post.

Influencer marketing is a growing sector too. According to one estimate published by CNBC, brands are already spending $1 billion annually, and that figure continues to grow.

Like any other marketing channel, influencer marketing must adhere to specific legal guidelines. Worryingly, despite the boom in channel growth, just 55% of marketers know what the latest FTC guidelines say about working with influencers.

Which suggests there may be a serious problem waiting to happen.

The Fyre Festival disaster

In a few short months, the Fyre Festival has achieved legendary status as a social media disaster. Billed as an exclusive music festival held in the Bahamas, the event was heavily promoted by some of Instagram’s most famous influencers – who were handsomely compensated for their posts.

A cautionary tale of when Influencer Marketing goes horribly wrong https://t.co/VKSkZVIOmA #fyrefestival pic.twitter.com/Xzqy6sw2zd — James Breen (@JamesWBreen) May 11, 2017

When bands failed to show, accommodation was not as billed, and guests were left without proper food, the festival quickly descended into chaos. In the aftermath, celebrity influencers have come under the microscope. Stars like Emily Ratajkowski and Kendall Jenner are being asked to share some of the blame for the Fyre Festival disaster – especially after it emerged that Jenner had received $250,000 for one (undeclared) sponsored post.

Naturally, the FTC took a keen interest – as did the lawyers of festival goers who had paid thousands of dollars each to attend.

Guidelines exist to protect customers

Influencers, as the name implies, have influence with their followers who tend to trust what is said. Where significant sums of money are trading hands, it is easy to see how this trust could be abused.

FTC regulations are intended to protect that trust by preventing celebrities from endorsing products that they do not themselves use, or in which they have an undeclared interest. Influencers are supposed to declare these interests, making it clear which posts have been sponsored. Unfortunately many choose to do this using obscure hashtags at the end of their posts which mean nothing to their followers, effectively obscuring the fact that a business is behind the message.

Marketers must share some of the blame too, however. 25% of social media celebrities claim that the brands sponsoring posts specifically ask them not to disclose paid promotion. Which means that a quarter of influence marketers are actively undermining FTC guidelines.

The FTC takes action

Failing to declare sponsorship reflects badly on brands, influencers, and the social networks themselves. Instagram has introduced a new sub-header that is applied to all sponsored posts, meeting FTC obligations and helping keep users informed that what they are reading is technically an advertisement.

Source: Press

The FTC has also stepped up their efforts to prevent abuse of influencer marketing channels. In April this year, the FTC wrote to 90 Instagram influencers including Kourtney Kardashian, Chrissy Teigen, Kris Jenner, and David and Victoria Beckham, providing guidance on how promoted posts should be structured in future. The letters were issued in response to concerns that the individual influencers were obscuring key details that would help followers identify sponsored posts.

In September, further letters were sent to another 21 Instagram influencers, issuing similar guidelines for sponsored posts. This was on top of an undisclosed settlement with two YouTubers, Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell, who had failed to “unambiguously disclose their connections to brands and companies they are promoting”.

The FTC is taking influencer marketing very seriously – so we expect to see more letters and court cases in the near future if brands don’t start taking their responsibilities seriously.

The FTC guidelines

Legal frameworks are typically quite complex; fortunately, the FTC has issued some simplified guidelines to help brands and influencers ensure they are compliant.

1. Be open about the relationship between influencer and brand

Influencers must inform their followers whenever a post has been sponsored in some way. By telling followers that the influencer has been paid, sponsored, or supplied with free products or services, they are better able to assess the review and opinions expressed for themselves. The FTC would prefer that these disclosures are made at the beginning of the post or review.

2. Make the relationship obvious

Some influencers use obscure hashtags to obscure their sponsored posts – the FTC would prefer it if they didn’t. Instead, influencers are asked to use clear language (“This post has been sponsored by…”) to make the relationship as clear as possible to their followers.

If the influencer has been commissioned to make several sponsored posts, they should issue a disclosure with each too.

3. Be honest about results

Every product or service has an average result – this is the level that any customer should expect when making a purchase. If an influencer has an above-average experience, they must make it clear that this is not the norm, and that buyers may experience different results for themselves. It is also essential that influencers do not make claims about the brand which do not have documented proof.

4. Express your true opinion

Obviously, brands would prefer influencers to have a great experience and to emphasize the positive aspects of the product or service in their review. However, the review must be an honest reflection of the influencer’s opinion or they will discredit the brand. The post will also fail to comply with the FTC Endorsement Guide.

Brands may need to take a gamble, accepting the bad with the good. Remember that it is the influencer’s opinion that followers listen to – compromising the influencer’s integrity with a fake experience is certain to backfire.

Honesty is the best policy

Many brands worry that disclosure of sponsorship will somehow devalue their message. The reality is that people are aware that influencers are paid for posts – they (and the FTC) would simply prefer that celebrities and brands were more transparent about which posts are sponsored.

For more advice on building a successful influencer marketing program, please download your free copy of the Falcon Influencer Marketing Handbook.