Social media influencers can be an incredibly powerful tool for marketers. Having someone with a large following endorse a product can lead to a huge boost in sales.
However, the Federal Trade Commission (FTC) is now considering new rules for influencers, as billions of dollars worth of ads have now shifted to celebrities with a large online following.
For celebrities, there’s big money to be made from influencing consumers’ purchasing decisions. Mid-range influencers make between $500 and $5K per post, and the highest paid celebrity mega-influencers can make up to $1 million per post.
Because of this, regulators have raised concerns about the current laws that protect consumers against misleading online ads.
The Federal Trade Commission (FTC) is currently seeking public comment on a range of proposals to enhance and strengthen the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising – a set of policies that affect online influencers.
At the moment, promoters are required to make it clear when they are being paid to promote a product. But, the new rules would tighten the definition from “clear and conspicuous” to “difficult to miss … and easily understandable by ordinary consumers.”
The agency is also addressing issues raised by “online technologies, activities, or features, such as sponsored nd promoted advertising on social media platforms, advertising content embedded in games, and dark patterns.”
Although influencers are now required to make it clear when an endorsement is a paid ad, research has indicated that, in some cases, social media influencing can lead to problematic patterns of behavior for followers – as well as generating large amounts of revenue.
Influencing is a $13.8 billion industry, and most people follow influencers with established credibility. Followers often trust influencers’ content as it appears authentic.
However, they are incentivized financially to promote a product or brand and many are very skilled in attracting followers, keeping them engaged, and subtly influencing their behavior.
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