While US lobbyists demand transparency on social media endorsements; India lags behind

Some celebrities and influencers like Kim Kardashian use #ad when they post endorsements of products. There are also about 5 lakh posts that use #advertisement and three million posts that use #ad on the photo sharing social media platform

e4m by Venkata Susmita Biswas
Published: Dec 8, 2016 8:25 AM  | 5 min read
While US lobbyists demand transparency on social media endorsements; India lags behind

In a recent development, consumer advocacy groups in the US want the Federal Trade Commission (FTC) to hold social media influencers accountable. In a letter sent to the FTC on November 30, four advocacy groups urged the Commission to enforce its policy which states that paid endorsements on social media sites should be identified with #advertisement, #ad, #gotitforfree or #gotacoupon, etc.

The trend of employing social media influencers to endorse, market and advertise products online has become popular over the last couple of years. In fact, product endorsements on social media are increasingly coming from a new brigade of celebrities – the microinfluencers. These are social media users with 500-5000 highly engaged followers. Influence marketers employ microinfluencers to simulate word-of-mouth marketing among consumers. The math is really simple. Consumers are more inclined to believe that the latest product from a cosmetics or electronics brand is worth a try if a friend or acquaintance whom they follow on social media recommends the product.

In India and other markets around the world, social media influencers like bloggers, YouTubers, and Instagrammers receive newly launched products like newly launched electronic gadgets, health and cosmetic products, and on-trend apparel. Social media influencers often share posts endorsing these products without disclosing if they received a payment in return or the product itself for free.

Digital media planners whom we spoke to unanimously agreed that for the benefit of the consumer, a paid endorsement must be disclosed. Unlike the Federal Trade Commission (FTC) in the US, the Indian marketing and advertising watchdog – The Advertising Standards Council of India (ASCI) – does not have any regulation on social media endorsements from microinfluencers like bloggers or Instagrammers.

Shweta Purandare, Secretary General, ASCI, said that while ASCI currently doesn’t monitor online paid or otherwise social media endorsements or advertisements in specific but it is looking at ways to monitor advertisements in social media just like it currently monitors for misleading advertisements in Print and TV under its NAMS program.

She also said that if a paid advertisement passes off as an editorial content or a blog without being clearly identified as an advertisement then that advertisement may be considered as violating Chapter 1 clause 1.4 of ASCI code which warns against misleading ads. “In the past ASCI’s CCC has upheld complaint where an advertisement in print media was passed off as editorial content and not clearly identified as an advertisement,” she said.

The FTC on its website says that anyone who receives payment or something of value to mention a product or receives free products or other perks with the expectation that they’ll promote or discuss the advertiser’s products in their blog and bloggers who are part of network marketing programs where they sign up to receive free product samples in exchange for writing about them must disclose the relationship with the brand.

Self-regulation is the norm

Disclosures of paid recommendations on social media portals thus far are limited and primarily voluntary. Brands and the community of microinfluencers are yet to pay attention to the possible outcomes of deceptive marketing and advertising. “Marketers do leverage the reach of influencers, but none of this is a concern or an issue as of now,” said Rajiv Dingra, CEO WATConsult. According to Sanjay Mehta, Jt. CEO Social Wavelength, because rules are very loose on social media activities media planners, brands and influencers have no policies on paid social media endorsements.

Last year, the Haridwar FDA issued Madhuri Dixit a notice seeking an explanation from her about the nutritiousness of Maggi and the basis for making a claim about the product she was endorsing. It was not the first time that a celebrity was pulled up for advertisements that made false claims. Soon, influencers will collectively have massive following like celebrities and it will therefore become all the more pertinent for influencers to ensure credibility of their reviews and recommendations.

Mehta pointed out that this onus of providing credible and honest reviews lies completely with the influencer. “If an influencer gives favourable reviews to all products, then s/he will lose credibility.” In essence, in the absence of regulations and a common policy, microinfluencers must self-regulate keeping the best interests of the consumers in mind.

This self-regulation and call for monitoring paid endorsements has resulted in around 8,500 posts using #gotitforfree, about 2,000 posts using #gotacoupon, and 71,000 posts using #freesample on Instagram at present. Some celebrities and influencers like Kim Kardashian use #ad when they post endorsements of products. There are also about 5 lakh posts that use #advertisement and three million posts that use #ad on the photo sharing social media platform.

Implementation of guidelines

The concern among social media planners is about the implementation of any rule that calls upon paid endorsements to be disclosed. Recognising that not disclosing paid endorsements is a bad practice, Mehta said, “There should be regulations and some standards. Although, the problem is that even if there are regulations, the implementation is a concern.” Echoing his concerns, Dingra asked, “We would all want paid endorsements to be disclosed for the benefit of the consumers. But how would one validate and check undisclosed endorsements? What would the punishment be? And what kind of disclaimers must microinfluencers use?”

Scope of microinfluencers

The budget that is set aside for employing influencers is not very high currently, thereby making it a favourable option for marketers with small budgets. That said, the impact of influencer marketing is not a factor of the budget, said Mehta. “You need one big incident to be noticed.”

Dingra hopes that when the Indian audience matures and the reach of these microinfluencers reaches a critical mass, regulations will be put in place to monitor undisclosed paid endorsements. “But I do not see that happening in the next 2-3 years,” he added.

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