Social Media Influencers Concept Photo: Netbase Quid

Consumer Safety: Regulators to set new rules for social media influencers

*As advert expenditures have shifted to celebrities with large online following, the US Federal Trade Commission moves to strengthen its Guides Concerning the Use of Endorsements and Testimonials in Advertising that would affect Internet influencers

Gbenga Kayode | ConsumerConnect

Experts have said, that very early in the development of the Social Media, when someone with lots of followers on a platform announced that he or she really liked a product, sales of that item enjoyed an instant boost among consumers.

In the process, marketers took notice, and the Internet influencer was born, agency report said.

ConsumerConnect reports in modern times, nevertheless, billions of Dollars that were once spent on traditional advertising are now spent with Internet influencers, many of whom hold enormous sway over their followers on diverse Social Media platforms.

Influencer marketing has been described as “a form of social media marketing involving endorsements and product placement from influencers, people and organisations who have a purported expert level of knowledge or social influence in their field.”

For instance, celebrities, such as the Kardashians, have cashed in.

In the top echelons of Instagram influencers are Kylie and Kendall Jenner, along with Selena Gomez, Beyonce, and Ariana Grande, reports ConsumerAffairs.

If you are a celebrity, there is big money to be made from influencing other consumers to buy products.

According to Influencer Marketing Hub, Kylie Jenner currently earns between $673,528 and $1 million per post, report stated.

Lyle Solomon, Principal Attorney at Oak View Law Group and consumer finance expert, declared influencers are highly effective because they have the ability to entertain, capture, and engage with a very specific audience as they sell a product.

Solomon was quoted to have said: “This applies to various fields, be it a make-up influencer, a gaming influencer, or a political influencer.

“It ends up creating a lot of micro-communities, where each type of influencer has a good hold over the audience in that niche and makes it easy for brands to hire that influencer rather than an online video ad or an ad on a mobile app where the the majority of the people may not be interested in the brand’s products.”

Questions for regulators

For some regulators, however, this scenario raises troubling questions in regard to laws protecting consumers from deceptive advertising.

It is noted that, if an influencer is receiving compensation to promote a product, they may or may not really like the products they are promoting. They’re just doing a job.

Celebrities may appear in traditional broadcast commercials on behalf of a product or service, but on that medium, consumers generally assume they are being paid to promote the product.

Sam Browne, CEO of digital marketing agency HARO SEO, says nearly everyone on the Internet is now aware of influencers’ relationships with the products they are pushing, and they might not care.

Browne said: “Consumers are…aware of what commercial glamorisation is, and how it plays a role in their decision-making process.

“Meanwhile, if they idolise the influencer, chances are they would want to have that product.

“That’s how influencer marketing works.”

FTC considering tighter regulations to affect Social Media influencers

Meanwhile, in order to protect consumers’ interest in the digital marketplace, the Federal Trade Commission (FTC) is currently seeking public comment on a range of proposals to enhance and strengthen the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising that would affect internet influencers. Influencers who produce a YouTube video that promotes a product, for instance, are required to reveal any financial incentive in a “clear and conspicuous” manner, according to report.

It was gathered the FTC’s revised rules, therefore, would tighten the definition of “clear and conspicuous” to mean a disclosure that is “difficult to miss … and easily understandable by ordinary consumers.

The market regulatory agency is also addressing issues raised by “online technologies, activities, or features, such as sponsored and promoted advertising on social media platforms, advertising content embedded in games, and dark patterns,” which are subtle ways that consumers are sometimes manipulated when they are online.

Solomon also stated that he favours more oversight of influence advertising on the Web.

According to the expert, he has seen the promotion of scams or low-quality goods that are being done by all kinds of influencers, including celebrities.

Solomon further noted: “The worst aspect of this was seen during the crypto and NFT boom of last year.

“There were many cryptocurrency pump and dumps and scam NFTs that were being promoted by even established individuals.”

NFTs only exist in the digital world, which means they aren’t things that you can touch or feel.

That, critics say, makes it even easier for people to create fake NFT projects to sell digital assets that have no value.

Solomon also cites data from analytics firm Annalect and Twitter that suggest consumers are swayed by Internet influencers as much as they are by suggestions and recommendations from friends.

But Browne isn’t sure whether more regulation is needed since influencers are now part of the fabric of the Internet.

Advertisers have fully embraced influencers because the results are “instantaneous” and hard to ignore, said he.

Browne stated: “You will only need social media metrics to assess the number of clicked links, purchases, skips, and the like for a specific product, which are determinants to know the feasibility of a product and of an influencer.

“In addition, results are quicker since influencers already have an audience.”

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