Sometimes, Instagram users with a relatively modest following of just a few dozen followers can get the opportunity to promote products from various companies, just like the Kardashians and other big stars. These users are called “micro-influencers” in the industry and receive a variety of incentives for their promotional activities, such as discounts on future purchases from a brand or free products. While having social media users act as promoters for a brand is a standard practice, it can be a problem if those users don’t disclose the fact that a post is an advertisement and that they’ve received incentives for making it.
This has caused criticism from consumer watchdogs and various advocacy groups, such as Public Citizen. The group has recently contacted US regulators, such as the Federal Trade Commission (FTC), in order to bring attention to the growing number of Instagram posts that are obviously made for the sole purpose of promoting a product.
Companies that act as middle-men between social media influencers and brands have been specifically mentioned in letters sent by Public Citizen to US regulators. The concern is that these digital advertising industry firms don’t ensure that their marketers comply with all FTC disclosure rules, which require users making promotional posts on behalf of a brand to include a disclosure that clearly states that they have received payment or some other type of benefit for making the post. Any form of compensation, even if it doesn’t involve cash payments, such as free products or services, has to be disclosed.
A few firms that work with micro-influencers have caught the attention of consumer advocacy groups as a result of disclosure practices that may not meet FTC regulations. Examples include only requiring that users include a “thank you” line in their post in exchange for receiving free products, using hashtags like #ad, #sp, #sponsored or #promo, or putting the word “sponsored” in small type at the bottom of a review or unboxing video for the first few seconds. According to previous statements made by the FTC’s Ad Practices Division, such disclosures are often not enough, as they’re too vague, easily missed by users and don’t make it clear that the post is a promotion.
As TV ads are losing their marketing power, brands are increasingly moving to social media in order to capture the attention of consumers, especially young adults. Recent reports show that brands are now spending over $255 million per month on Instagram influencer marketing alone. Many businesses are using social media influencers, as social media users are more likely to see their content as authentic and trustworthy when compared to marketing messages posted by the brands themselves.