Navigating the Ethical Dilemmas of Influencer Marketing: Finding the Right Balance

Access to information has evolved over time, as well as the challenges marketers face in order to stay up to date with the latest trends. Some, however, are unfamiliar with ensuring earned media is compliant with what Google and the FTC (Open Link in new window) define as ethical. The new FTC guidelines (in June) and constant posts about how to avoid being penalized by Google have left a lot of information out there, confusion around the rules (Open Link in new window), and a feeling of nervousness about how to be creative in marketing without getting in trouble at the same time.

Introduction

The Meta (formerly Facebook) company claims that from September 2021 to September 2023, the number of social media influencers in India has increased by 35% compared to last September.

Due to this authenticity in content has come to the forefront.  As one of the fastest growing industries worldwide, influencer marketing in India has a market capitalization of INR 900 crores and is expected to grow at a CAGR of 25% by 2025 to reach INR 2200 crores.

As of last year, the influencer marketing industry was worth $16.4 billion, and it will continue to grow, with revenues forecast to reach $143.10 billion by 2030. Since influencer marketing came into existence, there has been a lot of talk about how influencer marketing and social responsibility go hand in hand.

It stands to reason that influential individuals would use their large fan bases to help those around them. In spite of this, influencers and businesses have specific responsibilities when they collaborate with one another, as both have specific responsibilities to the communities in which they are part.

Responsibility Dilemmas 

It is ethically the responsibility of influencers to disclose their relationship with brands to their audience, but legally it is the brand that stands to lose when the disclosure is not done. Thus, brands are faced with the predicament of trying to control their earned media (Open Link in a new window) when it is not quite that easy.

There are some brands that go as far as reading through every earned post to ensure that it is labelled as sponsored, and there are others that leave it up to the content creators and hope for the best while other brands just leave it up to the creators.

As annoying as it may seem, Google and the FTC crackdowns aim to eliminate spammy link-building and dishonest marketing practices. Your brand will be safe for the most part if you are transparent as a marketer and if you ask your influencers to do the same when they generate content that mentions your brand.

Simplifying Disclosure

It was possible to find posts from well-known brands by searching for the word “sponsored” in influencer-generated content on Group High’s blog, Instagram, and YouTube pages. The following three posts are just a few examples of hundreds of thousands of posts illustrating how simple disclosure is.

These posts reveal that disclosure is not as difficult as it might seem. In these cases, the influencers are clearly disclosing that the giveaway is sponsored by the brand by using a single word.

Sponsorship Transparency and Gender Stereotypes

In order to be an influential person, one of the most important skills is honesty. Influencers make the most of their marketing campaigns by sharing personal tales and thoughts with their target audiences.

Celebrity does not live in a bubble of fame that very few of their followers will ever reach; rather, they live a lifestyle that is approachable and use items that their viewers will find useful. As a result of this approach, their incredible level of success has been greatly attributed to them.

The problem is that many influencers don’t play by the rules, especially when it comes to impressing brands they’ve partnered with, even though transparency is key to an influencer’s career sustainability.

Because of this, many people would think sponsorship disclosure is the most important ethical issue in influencer marketing.

In spite of the fact that transparency is essential to the sustainability of an influencer’s career, many influencers do not follow the rules, especially when it comes to impressing brands with which they have signed a deal. In light of this, many people think that one of the most important ethical issues in influencer marketing is the disclosure of sponsorships. 

Several agencies, including the Federal Trade Commission (FTC) of the United States, the Advertising Standards Authority (ASA) of the United Kingdom, as well as the Competition and Markets Authority (CMA) of the United Kingdom, have issued rules regarding influencers’ honesty in their posts and about their relationships with brands.

You risk losing the trust of your customers if you disobey the regulations, as well as facing penalties, fines, and legal bills if you violate the regulations.

It is also crucial to take gender stereotypes into consideration when utilizing influencers, as well as how people perceive men and women in different situations.

As of June 2019, marketing materials are no longer permitted to portray men and women in ways based on stereotypes, as the Committee on Advertising Practice (CAP) has stated.

It is forbidden for advertisements to use gender stereotypes that are likely to hurt or offend many people. There are some great campaigns that challenge gender stereotypes, like Nike’s “Dream Crazier.”

Improving Influencer Marketing’s Reliability and Authenticity

It is essential for influencers to be authentic and relatable when it comes to influencer marketing. Honest and relatable influencers are more likely to be listened to.

In addition to the moral problems, like mentioned above, brands and influencers have to also follow FTC rules, community guidelines, and terms of service on social media platforms.

Here are some things brands should consider for authentic and reliable influencer partnerships based on my experience as the chief growth officer for a global influencer marketing agency.

Make sure your brand follows ethical principles

Understanding the core principles of representing your business is the first step toward finding the ideal influencers. Most businesses start by determining their values and ethics early on.

They then use these to build their brand identity. It’s up to each company’s brand to decide where they will draw the line and how they will show their core values on social media.

It is worth noting that consumers place a high value on consistency in the way your company behaves. If your company says it wants to fight racism, but then partners with an influencer who has a history of making small slights against people of colour, those customers are likely to call out your company as being hypocritical.

For example, if you have a company that promotes equal pay for equal work and yet pays female influencers less than it does male influencers, for example, by participating in the pay gap between male and female influencers, you’re maintaining it. As a consequence, you will likely lose the trust of these customers.

Collaborate with real influencers

In order to use influencer marketing effectively, one of the best ways to adhere to these principles is by collaborating with real-life influencers in your field. Choosing the right influencers is vital to establishing consumer trust in your product.

It is imperative that you identify which influencers are authentic and credible to your intended audience. The best way to determine their authenticity and credibility is to look at how many people engage with their content, and how good it is.

It is important to pay close attention to the writing style of influencers, the brands they have worked with, and the accuracy of their reviews. Even though engagement numbers are very important, they tell only part of the story about an influencer’s reliability.

Develop a long-term partnership

If you have found a group of authentic, influential people with whom you are able to collaborate successfully over time, it is crucial that you remain in touch with them over time.

The influencers that are authentic, no matter how much they are paid to review a product, always give honest opinions. As a result of following all the rules, the spectators can have a higher degree of confidence in them.

If you find any disclaimers in the influencer’s content feed, ensure they adhere to the disclosure guidelines in the first point, as well as check for branded articles.

It is possible to increase consumer trust by consistently partnering with the same influencers, as you are just as concerned about their success as they are, thus showing that you care just as much about them as they do about their success.

Fine of Rs 50 lakh under Indian Law

Branded Content was introduced around the world in 2014 when it first became a concept. In India, 2016 was the year when social media influencers gained prominence as brands began considering influencer marketing as a strategy.

A combination of authenticity and credibility of influencers became crucial to brand success. Niche influencer marketing and content-driven influencer marketing were developed and applied.

In 2019 it was noted that authenticity in influencer marketing and brand collaborations on Instagram and YouTube saw a sharp increase in popularity.

As a result, since then, it has steadily grown as brands have shown a growing preference for collaborating with influencers online rather than using celebrities to advertise on television.

Influencer marketing on social media is expected to take over 73% of the market share by 2021, leaving celebrities with only 27% of the market share. As an added bonus, the behemoth has expanded beyond traditional sectors such as food and beverage, personal care, fashion, and technology to now include other sectors such as BFSI and fintech as well.

By using social media tools, such as sharing links to product pages, using influencer-specific discount codes, and posting reviews of their own use, influencers can have a positive effect at all levels of the funnel, including lead generation and conversion.

They drive user engagement through social media tools such as sharing links to product pages. In order to identify influencers, brands need to look at their efforts to generate leads or encourage sales.

As people are increasingly relying on influencers to understand personal finance, discover new BFSI services, and make crucial financial decisions, brands are partnering with influencers as well within the BFSI sector

Throughout the years, brands have become more and more reliant on influencer marketing as a way to provide value, and influencer marketing has proven to be more effective than other marketing techniques.

According to the India Influencer Marketing Report of 2021, 80% of brands that have collaborated with influencers believe that influencer marketing produces a better return on investment than any other marketing channel.

It is now possible for social media influencers to face a fine of $62,000 if they fail to disclose their financial ties. In spite of the fact that the Social Media Influencer Based Marketing sector is growing rapidly, there are genuine concerns regarding dubious market practices since there is no governing body for this type of marketing.

As part of the Advertising Standards Council of India (ASCI)’s Influencer Advertising Guidelines, the Advertising Standards Council of India began monitoring digital and social media platforms in July of 2021.

It is anticipated that ASCI and the Department of Consumer Affairs will hold a virtual meeting in May 2022 to discuss fake reviews on their platforms with stakeholders, including e-commerce companies.

The central government announced last week that it would introduce new guidelines for social media influencers to regulate the sector by making collaborations more transparent.

Within two weeks, the new guidelines will be released. In addition to disclosures about paid reviews and paid promotions, social media influencers and creators will be required to disclose their earnings. Creators and influencers who fail to disclose financial ties to brands will also be penalized up to INR 50 lakhs.

The central government has unanimously endorsed the decision of the government to introduce these guidelines after receiving support from a variety of content creators and influencers from different parts of the country.

The guidelines are intended to encourage transparency in sponsorships, promote responsibility in the promotion of products on large platforms, and curb scams associated with such platforms.

As more and more brands utilize this platform for brand awareness and customer acquisition, influencer marketing in India will grow and continue to evolve. This move will also bring clarity to users and recognize influencers as legitimate professionals.

As influencer marketing continues to innovate and upgrade itself in India’s vibrant startup ecosystem and bigger established brands seeking to expand their customer base, it is set to have a bright future.

Conclusion

It is possible for influencers to become successful by consistently providing their followers with high-quality, authentic, relatable content. In addition to the FTC’s guidelines, influencers and brands must adhere to social media platforms’ community guidelines and comply with the FTC’s terms of service.

Influencer marketing can be ethical and legal if you follow some best practices and know the expectations. As more and more brands utilize this platform for customer acquisition and brand awareness, influencer marketing in India is expected to grow and continue to evolve.

Considering India’s vibrant startup ecosystem, as well as the number of established brands looking to expand their customer base, it is clear that influencer marketing is poised to have a bright future in the country, as it continues to evolve and upgrade