Just because you are rich does not mean you are immune and Celebrity Instagram Accounts are ripe for FTC action if they do not brush up on sponsored advertisement rules, according to a new study
Influencer marketing utilizes leaders or “influencers” on social media to drive awareness to a brand, product, or service from that influencer’s audience and follower base. Today, it is one of the most effective ways in which companies can reach and engagement with individuals online. On Instagram alone, influencer marketing amounts to $1 billion industry in 2017.
Fast growth in influencer marketing, however, has been accompanied by growing pains in consumer policy, particularly with the Federal Trade Commission (FTC), the government agency in place for consumer protection. The FTC guidelines outline specific requirements brands and influencers should adhere to for paid social media posts and endorsements (e.g. including the use of hashtags #ad, #sponsored, and/or disclosing the advertisement in an approved and conspicuous way).
Influencer marketing company Mediakix evaluated the top 50 most followed celebrity Instagram accounts. All Instagram posts for each account were evaluated over a 30 day period. Instagram posts that tagged or mentioned a brand were categorized as sponsored. All posts mentioning personal brands, non-profits, music, and movies were discounted. Posts were considered FTC compliant if it mentioned #ad or #sponsored in the caption—popular hashtags #sp and #spon are not considered proper disclosure by the FTC.
Based on this criteria, Mediakix found that 7% or more of the total posts during the 30-day period may have been sponsored. Moreover, of the sponsored posts, 93% were not FTC compliant and could be considered misleading.
Of the 50 celebrity Instagram accounts surveyed, 30 accounts posted content that could be deemed as sponsored. Using a monthly average number of sponsored posts per celebrity, a celebrity who posts sponsored content will likely only post 3 FTC compliant posts as compared to 58 improperly disclosed sponsored posts in a year.
Additionally, BuzzFeed’s senior editor Katie Notopoulos categorized each sponsorship and endorsement in the following 5 ways: long-term sponsor, big freebie, small freebie, pay to post, and unclear.
Long-term sponsors represent sponsorships wherein an influencer is engaged in a brand partnership for multiple posts over an extended period of time. Freebies, while not sponsorships, represent free merchandise, products, or services given to an influencer in exchange for a post. The FTC requires disclosure whenever a material connection is involved whether payment is cash or a product or service of value (i.e. resort stays, airfare, concert tickets).
Pay-to-post sponsorships represent brand endorsements given by influencers in exchange for money. Unclear posts are deemed sponsored, but the type of payment is not clear. Almost half (49%) of sponsored posts on the top celebrity Instagram accounts were sponsored by a long-term sponsor, and 16% of sponsored posts may have come with a big freebie.
Finally, assessing the brands observed, 61% of brands sponsoring the top celebrities come from the Fashion industry and 8% of the observed sponsored posts were backed by Travel-related brands closely followed by Food & Drinks (7%).