#TBH: Influencer business must iron out flaws in the ecosystem
Why the sector needs rigorous monitoring is because social media stars peddling products through their content wield more power over their followers. Depending on their qualifications, credentials, popularity, and level of audience engagement, influencers have an impact on consumer behaviour.
With the government mulling guidelines for influencers who promote brands and products in the healthcare, nutraceuticals and wellness category, influencer marketing, slated to touch Rs 2,800 crore by 2026, continues to hit headlines. The new guideline will make it mandatory for influencers pushing health products to declare their qualifications for dispensing health advice.
Earlier this month, influencer business made news for the wrong reasons when a startup convention promoted by known social media influencers turned out to be fraudulent, highlighting the need to closely examine the influencer marketing industry.
The influencer business grew more than 50% during the covid-induced lockdowns in 2020 and 2021, spawning lakhs of influencers and hundreds of agencies to manage them. Brands, too, rushed to engage influencers to promote their products and services as millions of consumers spent several hours on social media and online shopping.
To rein in the burgeoning industry, in January the Consumer Affairs ministry unveiled rules, aligned with Advertising Standards Council of India’s (ASCI) guidelines, making it mandatory for social media influencers to disclose any promotional content they create for financial consideration. All influencers must declare monetary or material payments by brands or services they endorse. Violation of guidelines could invite a ban on publishing content, fines and even jail terms.
Pratik Gupta, founding partner Zoo Media, a network of specialist agencies, said both ASCI and the government have been quick in regulating influencers. “They are adding new rules for different segments and the laws are still evolving. The sector is bound to get further regulated,” he said, adding that it should not be seen as a rogue industry in view of the recent episode.
“The startup convention fiasco was a one-off scam that can hit any industry if the organisers are not honest,” said Gupta who runs influencer marketing firm Pollen as part of Zoo Media. Rules of engagement followed by brands, social media influencers and marketing agencies are pretty standardised and fair, he said. ASCI secretary general and CEO Manisha Kapoor said that the consumer protection act itself mandates that all endorsers, irrespective of size or type do their due diligence before endorsing a brand. “Influencers are advised to research, review and satisfy the claims made by the advertisers in order to substantiate the claims before promoting the products,” she said.
Yet others in the industry feel the sector is marred by chaos. “Ethics and self-regulation are next to nil. It is tough for enforcement agencies to monitor it in real time and take action. Right now, this whole business is a low hanging fruit with zero entry barriers, where everyone is out to make quick gains,” said Sanjay Sarma, founder at SSARMA Consults, a boutique branding & communication advisory.
Even though the government has been vigilant and quick to introduce regulation, very few understand the ambit of the law and its implications. “Brands and influencers themselves have little knowledge about the prevailing guidelines, and even if they do, they try to find ways around it,” Sarma said.
Why the sector needs rigorous monitoring is because social media stars peddling products through their content wield more power over their followers. Depending on their qualifications, credentials, popularity, and level of audience engagement, influencers have an impact on consumer behaviour. “Influencers tend to be more unfiltered and relatable (as compared to celebrities), and come across as more persuasive through their conversational/ storytelling narratives. They are perceived as more authentic and genuine. Even though in reality, they may not be,” said Sarma.
Gupta doesn’t agree. Celebrity brand ambassadors have far greater reach, he said. And though people may be far more invested in the journey of an influencer, they know that influencers get paid to say things so their persuasive powers may be limited, he added.
Besides, social media influencers are only one component of the media plan for a brand. Influencer marketing cannot be a strategy on its own. Brands which are banking only on this media vehicle are struggling, Gupta said.
The crazy growth rates that influencer business saw during covid have also plateaued. Marketers are back to deploying money in experiential marketing, events and in-store promotions. Even influencers are struggling to keep themselves relevant today. “The X-factor they had two years ago is now becoming boring. They are becoming predictable. And unlike film star celebrities they do not have a second facet or a film release that can refresh them,” said Gupta. He foresees a shakeout both in the number of social media influencers as well as agencies that had mushroomed to cash in on the boom.
Even as industry growth rates normalise, marketers are not giving up on this form of advertising any time soon. It will remain a vital box they need to tick in their marketing plan. Though advertising veteran Rajappa D, founder and managing partner of Aamrass Digimarc, a consulting firm, doesn’t understand why. “Unless these social media influencers are doing something meaningful in a particular sector or contributing something valuable, just picking up any influencer for his or her followers, does not work well for a brand as there is no brand fit,” he said.
The fad may be here for a while before people start questioning its efficacy. “In advertising 50% wastage is a given until and unless you have meaningful measurement metrics. In this industry the numbers are generated by the platforms. There is no independent, third party data or audit to corroborate those,” he added.
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Sandeep Goyal, managing director of Rediffusion, is no fan of influencer marketing as the system can be gamed, he said. “There have been scams in the past related to inflated followers of influencers and that hasn’t changed. First, we should fix this and audit and certify the number of followers every influencer has. Then we can go on to other meaningful regulation for the sector,” he said.
Experts back laying down a verification process that filters out the bad actors.
ASCI’s Kapoor said that social media and influencer marketing have been on a rise and ASCI believes in creating a safe ecosystem that benefits brands, influencers and consumers. In its Influencer Trust Report, it highlighted that transparency and honesty are the key reasons why consumers trust influencers. “Brands need to realize that influencers who indulge in malpractices like buying followers and paying for views might deliver the anticipated results, but they will fail to sustain them in the long run. Trust is the keyword here,” she said.
Shuchi Bansal has been a business journalist for over 30 years covering media, advertising, marketing and consumer economy.
