The Risk of Paying Influencers

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The widespread involvement on social media platforms has led to a huge population of users gaining massive amounts of followers, and these “influencers” are finding ways of turning their audience into income. The problems caused by these “influencers” stems not only from the previous lack of regulation, but also the dishonesty many sponsors experience through doing business on social media.

Influencers gained so much attention from advertisers because the position allows for a symbiotic relationship – influencers want to capitalize on their acquired audiences, and paying an influencer is certainly cheaper for any company than advertising on YouTube or on television. It was only in 2017, however, that the Federal Trade Commission put into place guidelines that must be adhered to by the influencers and their sponsors, but many users purposefully ignore these regulations.

In a 2019 article published by CNBC, writer Taylor Locke writes about the growing number of millennials and Gen-Z’s that want to make money from posting content online. As Locke states, “86% of Gen Z and millennials surveyed would post sponsored content for money, and 54% would become an influencer given the opportunity, according to the report by research firm Morning Consult, which surveyed 2,000 Americans ages 13 to 38 about influencer culture”. The article goes on to explain that not only do users look for opportunities to profit from their online presence, but they are much more likely to trust an influencer endorsement than any other type of celebrity product recommendation.

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More than just a greater following, however, these influencers are getting paid extremely large sums of money for their endorsements. In Fox Business’ article “How Much Money do Social Media Influencers Make?”, they explain that influencers can be paid anywhere from $50 to $50,000 for only a single post (Conklin). Then comes the issue experienced both by readers and the sponsors, and that is the influencers being transparent for the sake of honesty, but also to comply with the 2017 Federal Trade Commission’s guidelines on disclosing a sponsored relationship.

Because of how new the trend of social media is and how quickly the turn to users profiting arose, the FTC only caught up in 2017 in putting out a set of guidelines specifically geared towards these individuals. In an interview with former Director of FTC Bureau of Consumer Protection, Jessica Rich, she remarks, “[we] need to prevent harm before it occurs and not wait until consumers have already been injured. That’s why the FTC Act specifically charges the FTC with preventing unfair and deceptive practices. Also, deception has been widely understood to be per se harmful because it distorts the marketplace, prevents consumers from making choices, disadvantages truthful companies, and creates risk”. The FTC guidelines put in place are rooted in the same thinking presented by Rich; the main infringements come from users not explicitly stating their advertisement has been sponsored. There are a lot of risks involved from a brand’s standpoint in paying these influencers, they have full control over what content gets put on their page and this makes it extremely easy for them to lie to their following, or worse not mention that the product they are plugging is a paid advertisement.

More often than not, when influencers ignore the FTC guidelines, it’s usually blatant. As Enrique Dans points out in his article published for Forbes, “Influence works when it is credible. When it is corrupted, where there is no transparency, when it is based on lies or when we’re clearly being taken for fools influence doesn’t work”. This purposeful disregard causes hundreds of thousands of users to be swindled by their feed. Influencers have a certain level of accountability to their sponsors for sure, but even more so for their followers. If influencers take the more insidious route of lying to consumers to make their sponsorships seem more genuine they are slowly works towards discrediting all of the influencers on social media.

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