As influencers and celebrities post, filter, and hashtag their way to fame and fortune, brands are working with them to reach and communicate with consumers. Influencer marketing on Instagram alone is now a massive $1 billion industry.
In April 2017, the FTC sent notices to over 90 celebrities, brands, and influencers reminding them of the regulations. Celebrities and influencers on Instagram have been known to neglect proper disclosures on paid posts, and we wanted to know the extent of the problem. Over the course of one month, we assessed the top 50 celebrities on Instagram to find that just 7% may be in compliance with the FTC’s guidelines and regulations.
Like the rest of the advertising industry, celebrity social media endorsements and influencer marketing are monitored by the Federal Trade Commission (FTC), the government agency charged with consumer protection against unfair or deceptive business practices. Previously, the FTC had filed several notable complaints against large companies like Lord & Taylor for failure to require disclosures on sponsored content on social media.
See the full breakdown of the state of FTC compliance among Instagram’s top 50 celebrities below. For methodology and takeaways on our study, please see additional sections following the infographic.
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In our study, we evaluated the Instagram accounts of the 50 most followed celebrities on Instagram for a period of 30 days. We classified all posts that tagged or mentioned a brand as sponsored, but excluded mentions of personal brands, non-profits, music, and movies. For example, a post wherein an actor displays a trailer of a movie that he stars in will not be counted. Using these criteria, we found that at least 6% of the 2,200+ posts we assessed could be deemed as sponsored.
According to FTC guidelines, sponsored Instagram posts must include clear and conspicuous disclosures like #ad or #sponsored in close proximity to the post itself. Additionally, the FTC stipulates the specific verbiage “sponsored by [Brand]” as adequate disclosure. Hashtags including “#sp,” “#partner,” and/or verbiage including “Thanks [Brand]” are not considered by the FTC as adequate disclosure.
As such, we classified sponsored posts as compliant if they included the appropriate hashtags and verbiage and non-compliant if they did not. Of the sponsored posts we reviewed, only 7% may have complied with the FTC guidelines, while the remaining 93% did not include #ad, #sponsored, and/or the appropriate verbiage.
Of the top 50 accounts, 30 accounts posted sponsored content. Using the monthly average number of sponsored posts and the average number of FTC compliant posts from those 30 accounts, we found that celebrities who post sponsored content may, on average, post 3 FTC compliant posts a year vs. 58 posts that are non-compliant.
We classified the advertisers sponsoring the celebrities into eight categories: fashion, electronics, auto, beauty, apps, food and drinks, travel, and miscellaneous. Fashion advertisers were the most heavily represented, making up 61% of the advertisers working with celebrities on social media.
For the purposes of our study, we needed to evaluate posts as either sponsored or not, and then whether they met the FTC’s stipulations for adequate disclosure. While the FTC has set forth specific regulations for what works (or doesn’t work) as adequate disclosure, determining whether posts are sponsored raises the question, “what does the FTC consider a sponsored social media post between a brand and celebrity/influencer?”
In a post following the FTC’s send of 90 notices to celebrities and brands, the organization states:
In other words, a celebrity who has been given or comped a free resort stay, movie tickets, and/or valuable goods in addition to or in place of monetary compensation must disclose this material connection in adjoining social media posts featuring the brand or advertiser.
It’s easy to write off infractions as “just hashtags,” but these disclosures may have profound and far-reaching effects on consumers and the influencer marketing industry. Instagram and other social media platforms are seeing more activity from advertisers, which means that users’ feeds are seeing more native advertising and sponsored influencer content than ever before.
For the most part, social media users (particularly younger users) don’t mind branded content, provided it’s done well. Relationships between influencers and audiences are built on authenticity and trust, and when only certain brands and influencers abide by FTC rules, the credibility of all influencers and brands takes a hit.
An FTC compliance rate of only ~7% means that users are regularly coming across posts that could be interpreted as misleading where the material connection between a brand and a celebrity is ambiguous.
Many top brands on Instagram prove that Instagram influencer marketing isn’t a small effort taking place on the fringes of traditional advertising. It’s a huge market with a lot of power, and preserving the integrity of that market is vital.