Influencer marketing regulation – we saw it coming

We have seen influencer marketing grow exponentially in the past few years. Part of this rise can be attributed to the ease with which brands could use this marketing lever, and the robust effectiveness tracking that it offered. But with it now occupying anywhere between 15-40% of total advertising budgets of brands, questions are bound to arise.

The FTC will be a serious watchdog now, spying for any undisclosed influencer marketing (influencer marketing is larger than reported), which will call for penalties. When influencers make their viewers think that a post or a story about a product is not backed by a financial incentive, and is thus purely the views of the influencer, it places much higher credibility and validation in the product. While brands may think that this regulation will benefit only the consumers, they’re wrong. This is not only a false picture for the consumers, but it can potentially lead to conflicts between brands and influencers, in which brands will lose out - if influencers market products of multiple brands in the same space, all unsponsored or some sponsored content and some not, the brands will not be in a position to charge them with anything since it was not a contract or partnership to begin with, if it wasn’t sponsored content. Regulation will definitely help both consumers and brands and make influencer marketing more transparent. It will probably also become a more viable career option and we’ll see a bump in the number of influencers. FTC is still considering other rules and regulations and it will be interesting to see if the interest in influencer marketing will quiver, until brands incorporate this regulation in their day-to-day. I would also expect the exorbitant prices that some influencers charge to come into question, and regulatory agencies requiring disclosure from both brands and influencers.

Apart from the FTC, even the FDA is going to regulate the space – to monitor ads for drugs. At an initial glance this feels like something beyond the regular ambit of the FDA’s role, but as influencer marketing takes a central place in marketing and makes apps like Instagram one of the most used (and possibly effective) advertising platforms, regulation is expected to follow suit, especially in the case with highest consequences like healthcare.