The now-mainstream tactic is increasingly blemished by bots and bought likes, pointing to a potentially broken system.
Influencer marketing — a space that’s largely driven by the currency of social capital — is a booming industry that’s hit the mainstream with the ubiquity of smartphones and social media, reeling in nearly $2 billion in revenue in 2016.
The tactic is nothing new, as paid endorsements and product placements have roots dating back well before YouTube or other social channels came into play. However, it’s quickly become a key tool for marketers. Research from Bloglovin found that 32% of marketers using influencers see the tactic as essential to their overall marketing strategy, and 41% reported more success with influencer campaigns than with traditional advertising, as it often delivers 11x higher ROI.
But as significant as social influencers’ role in the marketing mix has become, it doesn’t come without its challenges like murky success metrics and the continued blurring of the line between organic and sponsored content — not to mention a growing number of examples of fraud, like a vending machine in Moscow where people can buy likes, favorites and followers for all the top social media channels with a quick swipe of their credit card.
“I think there’s nothing more powerful than word-of-mouth and someone saying ‘I trust this brand, you should try it too.’ But with the way influencer marketing is set up today and how it’s operated from a brand and influencer perspective, it’s very very broken,” said Brian Salzman, founder and CEO of RQ agency. “It’s a pay-to-play model where brands are paying people to say certain things without experiencing the brand, without living the brand and without being connected to the brand.”
Losing its luster
The prevalence of fraud has put influencer marketing in the hot seat, leading to the Federal Trade Commission’s (FTC) recent issuing of “reminder letters” to nearly 100 influencers and marketers — including Johnson & Johnson, Chanel and Heidi Klum — for failing to adequately disclose that their endorsements on social media were paid ads. Noticing that many of the people included disclosures like #ad or #sponsored beneath Instagram’s “more” button, the FTC drew up stricter guidelines, adding that disclosures should appear in the first three lines of a post’s text above the fold. The effort has also led to a number of marketers getting slapped with up to 20 years of sanctions for failing to police influencers that pushed content without properly communicating it was paid for.
“[…] the way influencer marketing is set up today and how it’s operated from a brand and influencer perspective, it’s very very broken.”
RQ agency founder and CEO
The lack of disclosure isn’t restricted to major celebrities. According to Eric Dahan, CEO of Open Influence, the bigger problem stems from smaller influencers who can more easily fly under the radar as watchdogs like the FTC simply don’t have the bandwidth to monitor everyone.
“They don’t have the target painted on their back from the legal perspective in the same way, so they’re more likely to game the system and try to skirt around disclosure requirements,” he said…
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