As a result of this, big brands like Unilever are taking a stand. Just recently, CMO Keith Weed called for Instagram to take action on bad practice, and stated that the brand will not work with influencers who buy followers.
But is it really up to the social media platforms themselves to spearhead change?
To gain some clarity on this issue, I spoke with Christoph Kastenholz, who is the co-founder and CEO of influencer marketing agency, Pulse Advertising & Management, to hear his perspective on the matter. Pulse have just opened a new office in London in order to expand partnerships with UK brands.
I began by asking about Pulse’s own approach to transparency, and whether or not the term ‘sponsored’ has a negative impact on consumer perception.
According to Chris, transparency can only be a good thing, with success typically stemming from the creativity of the campaign itself as well as brand alignment. “Ultimately”, he says, “we feel that if you have matched the right influencer with the right brand, it doesn’t hurt.”
As it happens, Pulse has closely worked with social media platforms in the past to pilot new ways of clarifying sponsored content.
“We were actually the first to introduce the pilot of the ‘paid partnership’-label together with Instagram. Instagram worked on the feature, and we piloted it with the sports brand Puma.”
Chris states that this type of disclosure is a necessity – not an option – now that budgets for influencer marketing are skyrocketing. “Regulation needs to happen. We want to drive that as much as possible because, at the end of the day, it only helps us, and it makes it easier for brands to be active in the space.”
Interestingly, despite Pulse’s desire for more regulation, Chris suggests that it’s perhaps unfair for the spotlight to be on influencers when other industries have been misleading consumers for years.
“The first two pages of a magazine are the most expensive in terms of advertising. If a fashion or beauty brand advertises here, you will probably find them featured later on in the magazine too, in an editorial where it’s not labelled paid partnership.”
“That’s a negotiation people make. A brand will say ‘we’ll buy this ad space, but only if you feature our product in an editorial’. The big media houses don’t label it as advertising, and I don’t think that’s fair.”
Chris goes on to explain that, as consumers, we typically realise that relationships of this kind exist, so, it begs the question: “Is it really necessary to label everything?”
The point Chris is making here is that – either way – it should be the same for all industries, so “either everything is labelled, or everything is not labelled”.
This is a big challenge, of course, but Chris goes on to highlight how it’s unfair to put the responsibility on the shoulders of the influencers themselves – especially those with no media background. He also expresses empathy for their point of view.
“These young influencers are looking at James Bond and thinking ‘he doesn’t say Aston Martin is a sponsor’. Neither does Vogue magazine say ‘this is paid for’… so why should I?”
“This, coupled with the fact that governments are being too slow, and other parts of the media are happy to mislead consumers, means it’s unfair to blame influencers who are essentially innovating an industry.”
So, whose responsibility is it?
Chris admits that from a business point of view, both agencies and influencers have to make the best of what they’re operating with. In other words, “to compete within the regulations and legal systems in place.” No flouting of the rules allowed, essentially.
From a wider perspective, however, he is vehement that it’s not enough to expect people to work within the current rules, and that it is up to governments and officials to coordinate a better framework.
He rightly points out that “it’s not only people within your country who can see your content, meaning that just the UK regulatory board can decide, for instance.” Rather, “on Instagram, it’s likely your following might be 20% UK, 20% France, 30% Russian and so on.”
Ultimately, this means that there are a lot of people who have to align on a common goal. Chris is sceptical as to whether this will happen any time soon, but also states that it is a work in progress, with Pulse now actively approaching governments in an attempt to pioneer change.
It’s unsurprising that influencer agencies themselves are becoming more and more frustrated. As a global agency, the blurry nature of the regulations means that Pulse is conflicted when it comes to labelling sponsored content. Chris cites one example of a regulatory authority in Germany that recommended the word ‘sponsor’.
“They actually gave out a guide to influencers. It wasn’t black and white, but more of a suggestion. And now, one year later, a judge has now ruled that this is not sufficient. This shows what a confusing field it is”.
Ultimately, he re-emphasises, “there needs to be a clear direction from government, and then agencies like us can support it and help enforce it”.
So, will influencer marketing budgets continue to expand, despite concern about how campaigns are regulated?
Chris thinks they will grow, suggesting that fraudulent activity will eventually be weeded out. Again, he uses television as an example of another industry that has previously been guilty of misleading consumers, with channels claiming to reach certain audiences in order to attract advertising.
“In a way, that’s an inflated or bot audience, just like an influencer might have. Both are wrong. However, bot followings are largely being identified and pushed out of the picture, so it’s just another way the influencer industry is evolving.”
But what about virtual influencers like Lil Miquela? Can this brand-creation be classed ‘fake influence’?
— Miquela (@lilmiquela) June 13, 2018
“Can Lil’ Miquela represent a product?”, Chris ponders, using fictional examples like the Simpsons to suggest that, yes, perhaps they can.
With influencer marketing predicted to be worth $5bn by 2020, and agencies like Pulse pushing for tighter regulation, it might well be the next chapter in this continually evolving industry.