Sponsored content on Instagram is becoming as commonplace as brunch pics. Instagram has seen massive growth in the last year, adding over 200 million users and launching Instagram Stories, a Snapchat-like feature that, on its own, outscores Snapchat in daily active users. Going hand-in-hand with Instagram’s growth, the influencer marketing industry on Instagram has seen major gains.
Influencer marketing on Instagram alone will be a $1 billion industry in 2017 and is projected to increase to over $2 billion by 2019. Sponsored posts on Instagram, or #Sponstagram, is a major (and growing) phenomenon, which may lead to more regulation and monitoring from the Federal Trade Commission (FTC) and from Instagram itself.
The burgeoning influencer marketing industry has pushed the FTC to adjust its guidelines and regulations to account for social media endorsements. As #sponstagram has boomed, FTC concerns over the proper disclosure of advertising content have mounted. A recent study from Mediakix shows that 93% of sponsored posts from Instagram’s top 50 celebrities aren’t properly disclosed according to FTC guidelines, and the history of FTC violations suggests that the winds of change are blowing for sponsored content on Instagram.
Instagram’s well aware of the lack of FTC compliance in sponsored posts on the platform, and it’s making its own changes to curb violations. Just this week Instagram announced a new paid partnership tag that will allow influencers and creators to tag the brands they’re partnering with for paid content in a subheader that reads “Paid Partnership With…”
The paid partnership tag isn’t any easier than adding “#ad” or “#sponsored,” though, and influencers will still have to be willing to disclose. Instagram anticipated challenges in adoption and added incentive to the tool. Using the tag will give influencers and brands post metrics that aren’t available on regular posts that will give them insights into the success of a post.
Instagram’s attempting to make sure that using the tag is in brands’ best interest because clear disclosure and transparency are good for the health of the community. When fans can trust influencers and creators, the community grows and everyone from Instagrammers to advertisers benefit.
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Since 2014, a number of major FTC cases in influencer marketing have changed and shaped the landscape of compliance in the industry. Though occasionally derided for being vague, FTC guidelines for influencer and celebrity endorsement aren’t difficult. In fact, on Instagram, #ad or #sponsored in close proximity to the post and not obscured in a mess of hashtags is considered compliant.
In 2014, Sony came under fire for the FTC for a promotional campaign for the PS Vita when its ad agency, Deutsch LA, asked employees to post favorably about the device and its features but failed to require disclosures. In 2015, the FTC filed a complaint against Machinima for failing to require proper disclosures in a campaign with Xbox One to promote the console ahead of release. 2016 brought two more FTC cases, this time against Lord & Taylor and Warner Bros., both of whom worked with influencers to promote a paisley dress and a video game, respectively, but failed to require and enforce FTC compliant disclosures on influencer content.
More recently, the Fyre Festival fiasco has reignited interest in proper disclosure. In April 2017, festival goers were treated to a nasty surprise when they arrived in the Bahamas for the luxury experience they’d been promised only to find a disorganized disaster that quickly went from inconvenient to potentially dangerous. Fyre Festival worked with influencers like Bella Hadid and Emily Ratajkowski to promote the festival, and their involvement lent a degree of glamorous credibility to the event.
These influencers didn’t disclose that they were being paid to post, though. A number of lawsuits (some claiming up to $100 million in damages) have been filed since the festival went south, and the influencers who posted without disclosing may find themselves in legal trouble right alongside festival organizers.
To date, the FTC hasn’t held influencers personally responsible for disclosure violations, but that could change. The FTC sent 90 letters to influencers earlier this year reminding them of the rules and pointing out specific instances wherein they personally violated the rules. It was a clear indication that the FTC is watching sponsored content on Instagram and signaled that it may be taking more steps to hold influencers accountable.
The FTC might not hold influencers personally responsible yet, but it certainly holds brands accountable for violations. It’s important for brands and advertisers to know the rules and the tools at their disposal to make sure that posts are FTC compliant so they can avoid backlash and potential legal fallout. Sony, Machinima, Lord & Taylor, and Warner Bros. are proof that the FTC is more than willing to go after brands. In some cases, the FTC’s even extended the responsibility to agencies working with brands, which was in the case in the FTC’s complaint against Sony and Deutsch LA.
Instagram’s new paid partnership tag, like Facebook and YouTube’s branded content tool, is aimed at making it easier for brands to require and standardize disclosures. With the added metrics through the paid partnership tag, there’s clear incentive for brands to encourage influencers to use the tool. Whether or not the paid partnership tag catches on en masse once it’s made more widely available, the growing influencer marketing industry and FTC violations are shaping the future of Instagram, and #Sponstagram likely isn’t going anywhere anytime soon.