90% of celebrity brand endorsements on Instagram are not compliant with US Federal Trade Commission regulations, according to a new study.
Brand “partnerships” with social media influencers to promote products and services have grown exponentially in recent years. Typically, influencers – those with high social media following – are paid cash, or goods and services in kind, to post a photo of themselves using the product on Instagram, Facebook or the like.
Captiv8, a researcher, says that an influencer with 3-7M followers charges on average $187,500 for a post on YouTube, $75,000 for a post on Instagram or Snapchat and $30,000 for a post on Twitter. For those with 50,000 to 500,000 followers, the average is $2,500 for YouTube, $1,000 for Instagram or Snapchat and $400 for Twitter.
Kim Kardashian West is the world’s most prolific and well-paid endorser. She reportedly charges more than US$500,000 to promote to her 100 million Instagram followers.
The US’s FTC flagged its concern last year that non-disclosure of commercial arrangements was in effect an unfair or deceptive business practice. In April, the Commission issued letters to 90 Instagram influencers and their brand sponsors reminding them that they should use an unambiguous hashtag such as #ad or #sponsored within the first three lines of a caption. They warned that failure to meet regulations could result in a brand being charged with deceiving consumers, and fined up to $40,000.
However, two months on, a new study by marketing agency Mediakix has found that the vast majority of Instagram posts endorsing brands ignore the FTC’s requirements. Studying 2,250 posts from the Instagram accounts of the 50 most followed celebrities, they found that 6% were sponsored, and only 7% of those sponsored posts complied with the FTC’s guidelines.
Authenticity and trust are essential in any brand relationship. Some marketers argue that their audience is savvy enough to know celebrity endorsements are sponsored.
However, adding a hashtag would seem to be a small price to pay to both ensure transparency with consumers and avoid a future fine.
And, as marketers, it’s ultimately in our and our customers’ best interests to self-regulate, rather than have new government regulations imposed.
Pictured: Social media’s most-followed celebrity endorser, Kim Kardashian West, using the #ad hashtag.