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Do Influencers Need to Tell Audiences They’re Getting Paid?

by | Oct 15, 2020 | Uncategorized

In 2018, 19% of all U.S. consumers — including 36% of those aged under 25 — purchased a product or service because a social media influencer recommended it. Unsurprisingly, U.S. companies have taken note: 75% relied on influencer marketing in 2018 and 92% of marketing managers declared their belief in its effectiveness.

The Federal Trade Commission (FTC) has taken note. Concerned that commercial interests would drive peer-to-peer interactions, the FTC has since 2017 “invited” companies and influencers, with its“endorsement guides,” to disclose brand relationships, displaying the hashtag #ad or the mention “paid partnership” in a prominent position.

Many companies are pushing back: 28% of influencers were requested by their sponsoring brands not to disclose the partnership (not much changed from 29% the previous year). It’s not hard to understand why: the whole point of influencer market has traditionally been based on the perceived neutrality of the influencers. Companies fear that the credibility associated with electronic word-of-mouth (e-WOM) will be compromised by disclosure.

Our research, based on surveys taken between 2015 and 2018, calls that belief into question.

First of all, while influencer disclosure did appear to make a small, though significant difference on consumers’ attitudes towards brands during 2017 in the immediate aftermath of the FTC recommendation, that no longer appears to be the case. The likelihood of viewing a brand positively following an influencer’s recommendation was roughly the same whether or not a relationship between the brand and the influencer had been disclosed.

Survey data on influencer trustworthiness mirror these findings. Disclosure of sponsorship negatively affected consumer responses to influencers in 2017 to a small extent but a year later the difference was even less.

Our most interesting findings relate to purchase intentions. We find that in any particular year, disclosure makes almost no difference to the impact of the influencer’s recommendation on the purchase decision. We also find that influencers’ recommendations have become steadily more important in the purchase decision from 2015 to 2018, and the 2017 growth in disclosures has made no difference to that rise.

In fact, disclosure may actually have reinforced the importance of influencers in purchase decisions. In late 2018, 88% of consumers surveyed indicated their belief that influencers in general recommend brands because they are paid to do so, implying that people simply assume that influencers are brand-sponsored whether or not there is any disclosure. In this context, disclosure becomes a positive signal: savvy consumers value the perceived transparency and authenticity of influencers who volunteer a disclose.

Other influencer experts have found that disclosures also signal expertise. According to influencer marketing expert Stefan Bisoux (of Ogilvy Social Media Lab), influencers see the formal relationship with a brand as a proof of competence in terms of giving advice to consumers. This would explain why some influencers are claiming to be sponsored when they aren’t.

From the perspective of a brand manager, these findings suggest that online marketing strategies should be based on long-term relationships with influencers. In this approach, brand managers carefully select a limited number of influencers to closely engage with the brand and anchor its online communications.

David Jennings

Blog Author

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