Influencer marketing disclosure and the algebra of deterrence

Why the algebra of deterrence is out of balance when it comes to effectively disclosing influencer marketing ads

Professor Scott Galloway talks of the algebra of deterrence. The New York University lecturer, podcast host and serial entrepreneur describes the algebra of deterrence: the probability of getting caught for doing something wrong or illegal multiplied by the size of the penalty for the wrongdoing should exceed the benefit of flouting the rules and regulations in the first place. 

algebra OF DETERRENCE

probability of getting caught  X  severity of punishment > upside of getting away with it   

Prof. Galloway often uses the term when describing Facebook’s behaviour. In 2019 the Federal Trade Commission dolled out a $5 billion fine to Facebook. A colossal sum of money by nearly any measure. It is the largest ever fine imposed on any company for violating consumers’ privacy and almost 20 times greater than the largest privacy or data security penalty ever imposed worldwide. For Facebook, however, the fine was tantamount to losing a fortnight’s revenue; like taking an unpaid summer vacation. Here, Mark Zuckerberg’s money-making algebra is more powerful than the regulator’s algebra of deterrence. 

Hollyoaks star fails to disclose

Last week, UK soap star Jennifer Metcalfe got rapped by the Advertising Standards Authority (ASA) for failing to ensure an advertisement posted to her Instagram Stories was obviously identifiable as an ad.

The Hollyoaks actor, who plays Mercedes McQueen in the show, promoted hair brand, Haircybele by posting an image of herself holding a hair styling device. Accompanying text stated “hair goals”, with a further line exclaiming “Me again! Use code JEN70 for 70% off! @HAIRCYBELE Swipe up to view website”.

So far, so average. Just another day at the Shoreditch office for the UK regulator. The case, however, highlights two fundamental issues within influencer marketing. 

How sharp are the watchdog’s teeth?

Firstly, the sharpness of the regulators’ teeth. In the assessment of the complaint, the ASA commented that it “was concerned by Jennifer Metcalfe’s lack of response and apparent disregard for the Code.” The ASA was forced to “remind her of her responsibility to respond promptly to our enquiries.” 

Current influencer marketing compliance and disclosure rules are sufficient and fit-for-purpose. Awareness of current compliance and disclosure rules and regulations are sufficiently well understood by creators and consumers alike. However, the sanctions at the disposal of the regulators, and the process for triggering those sanctions, should be revisited. 

In June the ASA launched a non-disclosure website spotlighting several repeat-offending influencers and internet celebrities. 

Chloe Ferry, Chloe Khan, Jodie Marsh and Lucy Mecklenburgh all made it onto the ASA’s new wall of shame. Why were these women singled out? According to the ASA they were “all contacted by our compliance team and asked to provide an assurance that they would include clear and upfront ad labels in their advertising posts. They either failed to provide that assurance in the first instance or subsequently reneged on it”.

In other words: these internet celebrities knew the rules along with the risks and made a commercial decision to take a punt anyway. The algebra of deterrence is not weighted in favour of the regulator - or, by extension, society at large. 

Until there is a real fear of loss of earnings, some celebrities-come-influencers will continue to flout the rules and show apparent contempt for the regulators.

“If named influencers continue to break our rules around non-disclosure, we have further sanctions we can implement, including taking out ads against them, working with social media platforms to have their content removed or referring them to statutory bodies for possible fines”, reassures the ASA. That’s a terrifically long run-up to a ‘possible fine’. And, there’s no mention of the potential size of the possible fine, either.

Objective-setting, measurement and evaluation

The second point raised by the investigation centres on measurement. Haircybele admitted to the ASA  “there was no mechanism for sales to be tracked back to the content from consumer ‘click throughs’ or sales”. 

WTAF? 

What. Is. The. Point? If you don’t set objectives and can’t measure outcomes, why are you even running the campaign in the first place? 

There will be an uptick in similar cases. Social media platforms are opening up their own marketplaces endeavouring to match brands with creators. But having access to tools is not the same as possessing the skills to operate these tools. 

Influencer marketing is increasingly nuanced; increasingly sophisticated. It requires talented and experienced practitioners to run successful campaigns. 

We’ve been here before with media databases housing contact details for journalists. Media relations is more involved than emailing a journalist with a press release and asking them to write about your brand. Influencer marketing is more than contacting a TV soapstar, telling them to hold up your product on the ‘Gram and offering them a discount code to share with their followers.

A version of this article first appeared in the Fourth Floor weekly newsletter. You can sign up for the newsletter here.

Image by ThisisEngineering via Unsplash