As the influencer marketing industry continues to popularize, it’s becoming more and more necessary to put regulations and restrictions on sponsored content. Influencer ads are no longer the wild, wild west, and the FTC is cracking down on those not disclosing paid partnerships. The FTC isn’t the only one calling for regulations - consumers in 2020 are demanding transparency from brands and influencers. In fact, according to Sprout Social, 86% of Americans say transparency from businesses today is more important than ever.
Consumers online shop with a sense of skepticism. Brands must supply customers with enough information and authenticity on social media to break their dubious mindset in a matter of seconds (otherwise known as their attention span). It’s not an easy task to take on. For these reasons, transparency shouldn’t be looked at as a marketing effort, but rather a business strategy. With increased communication and transparency comes endless rewards: word of mouth, increased sales, higher quality leads, and loyal customers. It’s no wonder brands are embracing transparency as a part of their company values.. it has an immense pay-off.
In today’s flooded eCommerce landscape, consumers have a lot of power. It’s not a difficult equation to solve - if a potential customer isn’t getting the information or customer service they expect from your brand, they’ll buy from a competitor living up to their expectations. They can find the next best thing right off of your very own profile; it’s as easy as clicking the ‘suggested users’ button (that down arrow next to ‘follow’) on your page. Social media platforms have become an alternative to search engines, meaning a significant amount of the U.S. population head to Instagram, Twitter, Facebook, Pinterest, or Yelp to search for topics before Google. Although that claim may spark a head-scratch, it makes sense that the general population is moving towards this approach to find information for a few reasons.
Consider how accounts/people interact on social media platforms. As a social media user, you expect to engage and be engaged with. You expect to receive a response after commenting or direct messaging an account. We have higher standards for brands on social media, whether that’s getting a look at behind-the-scenes production, entertainment, hearing from the CEO, or being further educated on the product and brand. In other words, customers want a relationship with the brand they’re buying from. This desire for a human-feel is exactly why influencer ads are so successful. They’re authentic & they can say things the brand can’t. The influencers themselves typically have some sort of expertise, legitimizing the ad. Instagram users genuinely feel like they’ve developed a relationship with the content creators they follow. This relationship, although virtual, is powerful. When an influencer appears deceptive to their audience, they lose their trust. The ad has lost legitimacy. Their followers won’t click on a paid placement, and the brand effectively gets 0 return on their ad spend. A strong relationship between an influencer and their audience is essential to a successful influencer marketing campaign.
The influencer marketing industry continues to grow, and it's gotten more and more difficult to differentiate paid from unpaid content. For years, the Federal Trade Commission has tried to force influencers to disclose paid ads on social platforms and had little luck. It wasn’t until Lord & Taylor’s ran a non-disclosed Instagram influencer campaign, with 50 influencers in the same dress, that the FTC decided it was time to really crack-down on regulations.
As stated in the FTC endorsement guides, “the Guides reflect the basic truth-in-advertising principle that endorsements must be honest and not misleading.” The FTC is requesting for influencer advertising to live by the same principles that traditional advertising does.. and for good reason. If an influencer’s post isn’t a recommendation, but rather a paid promotion from a brand, wouldn’t you want to know? Wouldn’t that have an impact on your buying decision? Sprout Social’s data-findings confirm what we’ve all been thinking - 74% of shoppers make buying decisions based on social media. Consumers are relying heavily on recommendations and opinions from those they admire and respect, proving influencer instagram accounts have a notable impact on consumer buying behaviors today. That being said, hiding an incentivized partnership does feel deceptive and wrong.
The FTC has confronted these spiraling issues with updated endorsement guidelines and higher fines. For one, disclosure should now occur when there’s a financial, employment, personal, or family relationship with a brand. Following that addition, disclosure placements shouldn’t be hard to miss, and language should be simple and clear. Basically, any reasonable person should know straight away if there’s a relationship or paid partnership between a brand and influencer. In another effort to standardize endorsement guidelines, the FTC has implemented a $40,000 fine per day per post for every post that is not disclosed properly. It’s clear they’re starting to enforce regulations much more strictly, and it’s in the brand and influencers best interests to follow them.
Brands that prioritize transparency as an overall business strategy get rewarded for their honesty through brand reputation, sales, and referrals. As stated above, it’s easy for a consumer to be turned off from a brand lacking communication; they will simply move on to the next brand. We live in the age of the World Wide Web, after all, and they can find the next best thing in a matter of minutes.
Transparency has a much bigger impact on brand reputations today than it ever did previously. In fact, Social Sprout found that 9/10 people are more likely to give brands that are transparent a second chance after having a bad experience. In other words, transparency has the power to regain trust from customers. On top of that, brands that are open and honest on social media are more likely to stay top of mind for interested consumers. All in all, people today want to buy from brands that they feel morally good about. This goes even further than paid partnerships - buyers want to know where goods are being produced and if they’re produced ethically. When a brand prioritizes and maintains transparency, social media users remember. Not only do they remember, they’re more likely to refer friends and write positive reviews. Brand transparency → loyal customers → referrals / reviews → increased brand awareness & sales.
Transparency is what can sway a consumer to buy. It is what can determine the success of a brand or influencer. Although prioritizing transparency may seem like a big commitment, the rewards from doing it won’t fall short.
Social media platforms have recognized the importance of disclosing paid ads on their platforms, and they’ve started to introduce tools that encourage and simplify ad transparency. Instagram and Facebook have both made it easier for influencers to disclose paid partnerships in a more natural, unobtrusive way. There’s no longer the need for hashtags like #ad or #partner, there’s now the Paid Partnership tag and Branded Content Ads.
Instagram introduced the Paid Partnership tag in 2017, which allows influencers to add a tag to the top of their Instagram post or story. The tag visibly displays the brand sponsoring the post, eliminating any confusion regarding paid promotion disclosures. The Business Partner title also acts as a hyperlink directly to the business’ social page. It provides brands with a few advantages over classic influencer posts: post approval, live data, & insights.
Last year, Facebook and Instagram introduced Branded Content Ads - giving brands an additional way to disclose partnerships and have control over Instagram influencer assets. Branded Content Ads give brands even more control and insights than the Paid Partnership tag. Brands are provided with audience information, metrics, influencer identity (handle), and influencer content to boost. Branded Content Ads display paid partnerships a little bit differently than the paid partnership tag. The sponsored tag on the top of the post or Instagram story still exists, but brands can boost the content to include a clickable CTA at the bottom of the ad (leading to the brand’s Instagram page, website, a specific product page, etc). Active users see “Paid partnership with” and the brand name on each post.
Does the term dark posting ring a bell? Branded Content Ads brought dark posts to the forefront, giving brands the ability to boost content under the social media influencer’s handle, rather than reposting directly from the brand’s profile. Brands can say something they couldn’t under their own identity, and speak to their audience in a much more relatable way. On top of that, Branded Content Ads let advertisers target audiences beyond Instagram’s algorithm (drastically improving ad reach). Here’s a rundown of how to run influencer ads as dark posts. As you can see, Branded Content Ads are so much more than a transparency tool. It’s an influencer marketing strategy that increases reach, engagement rate, brand awareness, & ROI.
True transparency goes far beyond utilizing social media platform tools for Instagram influencer marketing. For one, utilizing the company CEO to speak about the brand speaks volumes. Not only does it make the brand seem more human, the act of transparency trickles down throughout the company, ultimately making it a value that’s prioritized in customer service and more. Things like a brand owning up to their mistakes, responding to customer questions, and sharing their manufacturing practices on social media can build and maintain consumer trust. For a breakdown of other ways that brands can demonstrate transparency on social media, see the marketing chart below.
As brands and influencers get more pressure to be open from consumers and the FTC, both parties will likely start to take different approaches to their partnerships.
For one, influencers will probably be much more selective of partnerships they take on. Fans are becoming more and more educated on paid placements, and influencers need to maintain their brand reputation in order to keep making money. As paid placements become more common, so does transparency. Instagram users nowadays expect sponsored post disclosures, and will often lose trust for an influencer altogether if they’re skeptical. Losing trust from followers = losing important brand partnerships.
Secondarily, brands are being forced to change how they communicate with consumers. Customers are interested in what happens behind closed doors, where brands stand politically/socially, and engaging directly with the brand. They want a lifestyle brand. This means it’s incredibly important for brands to be more selective on who they partner with. The more natural an influencer partnership is, the more effective your influencer marketing efforts will be. Selecting the right influencer partner could be what leads to long-term trust from an active user on Instagram, ultimately leading to loyal customers. Here’s some tips for finding the right influencer partners. Overall, this evolution in influencer marketing and social media means transparency is a necessity to maintain customer loyalty and convert new customers.
To conclude, it’s essential that both brands and bloggers maintain transparency in order to stay afloat in today’s world. Not only is it a necessity, but it’s an advantage. Brands and influencers that make ad transparency a social media marketing strategy will find themselves with loyal, high quality fans. Brands utilizing social platform tools will have more precise targeting, and have eyes on data that strengthens their campaigns. The brands that are able to adapt to consumer demand are the ones that will survive.