Why it’s good business for influencer marketing to embrace disclosure rules

Influencer marketing creators and brands stand to gain from proper disclosure

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Regulators are cracking down on brands and influencers who fail to adhere to the rules governing online advertising, sponsorship and endorsements. Effective disclosure of influencer marketing content falls into three domains:

Regulation
Ethics
Commercial success

As consumers we don’t like feeling hoodwinked. To obfuscate a commercial arrangement between brand and influencer does far more harm than good to both parties. We won’t buy from brands if we feel duped. We won’t follow influencers if we feel they haven’t been honest with us.

Influencers should be led by the carrot of enlightened self-interest rather than be feel hit by the stick of regulation.

Disclosure regulation for influencer marketing

Six in 10 marketing and PR professionals admit to flouting the UK’s official code around influencer marketing according to a survey by Takumi, an Instagram broker connecting creators with brands.

Reported in PR Week the survey of 500 communications professionals found that just 37% admitted to fully adhering to the Committee of Advertising Practice (CAP) code of conduct, while one in eight people surveyed said they did not know “at all” what the code was.

Worst still out of those that were familiar with the recommendations, over a third actively chose not to adhere. This is down either a reluctance to be transparent about paid-for content or a lack of understanding about the what and hows of complying with the code.

Apparent widespread non disclosure of paid-for content is not confined to the UK. Adweek reports that in the United States if the Federal Trade Commission (FTC) decided to audit publishers’ native ads today, around 70% of websites wouldn’t be compliant with the FTC’s latest guidelines, according to a report from MediaRadar.

Influencer Marketing and the law

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In the UK misleading readers or viewers falls foul of consumer protection law and could result in enforcement by either the Competition and Mergers Authority (CMA) or Trading Standards Services, which may lead to civil and/or criminal action.

Stephen Waddington, has written about how the CMA is placing sponsors under closer scrutiny in a post UK government agency spotlights disclosure in online ads and sponsored content.

Further guidance on the Consumer Protection Regulations can be found on the CMA’s webpages.

In the US the FTC is exerting its authority ensuring visibility of sponsored and advertising. US national retailer, Lord & Taylor has agreed to settle FTC charges that it deceived consumers by paying for native advertisements, including a seemingly objective article in the online publication Nylon and a Nylon Instagram post, without disclosing that the posts actually were paid promotions for the company’s 2015 Design Lab clothing collection.

It was the second such enforcement by the FTC which has also announced its final consent order in the case with Machinima, a YouTube gaming network for their failure to disclose payments to YouTube “influencers” surrounding an Xbox promotion.

The ethics of disclosure and influencer marketing

The ethical behaviour of successful – or at least savvy – influencers transcends regulatory requirements.

Nikki Parkinson, professional blogger at Styling You talks about the ethics of influencer in a guest post for mUmBRELLA, a leading online publication for PR, marketing and events in Australia.

“I disclose the relationship. I disclose on the Instagram and Facebook posts that I’m a guest of the brand. I disclose this on any subsequent posts on my blog” says Parkinson.

“I don’t do this because I’m governed by any code of ethics, but because it’s simply the ethical [thing] to do. I don’t want to deceive my readers.”

Business benefits of disclosing in influencer marketing

So, for influencers, being honest and upfront about the business relationship surrounding the content you’re producing is the legal thing to do. It’s the ethical thing to do. But it’s also best for business.

Adam Smith, the 18th Century Scottish moral philosopher and father of modern economics describes the concept of enlightened self interest.

Writing in An Inquiry into the Nature and Causes of the Wealth of Nations Smith says:

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.”

Influencers are influential because they consistently create compelling content that is relevant and resonates with their select audience. If they shill too many brands or start promoting brands, which seem at odds with their values, influencers will lose their authenticity, and shortly after, their ability to influence their following.

Once they lose that ability to influence they lose any ability to command money from brands from promotional work.

Parkinson appears to agree. Continuing in her mUmBRELLA post she writes:

“I’m upfront about commercial arrangements, giving them the opportunity to click away. Only 4% of them do [according to Styling You/The Remarkables Group annual readership survey 2015 comprised of 1200 respondents]. 96% of my readers are more than happy with sponsored content appearing on my blog or social media because they trust that I’ve made good choices about whom I work with in the first place.

Successful online influencer businesses are successful because the influencer values their community and works hard every day to maintain the trust of their community.”

In a post called How to master native advertising best practice I made the observation that “consumers don’t want to feel bamboozled, hoodwinked, gulled, tricked or suckered by publishers or the brands pushing their content.” The same holds true for influencers publishing to their social media feeds, YouTube channels or blogs.

When posting content produced by a brand, co-produced with a brand or paid for by a brand influencers must make this clear to their audience. Consumers appreciate it. Regulators demand it. It’s the right thing to do for legal reasons, ethical reasons and overall commercial reasons.