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Influencer Marketing: Rules, Regulations, and ROI

Influencer Marketing: Rules, Regulations, and ROI

Influencer Marketing is not a new concept. In fact, in 1940, a study on political communication came out stating that “people are influenced by secondhand information and opinion leaders.” Now, in the age of social media, Influencer Marketing continues to evolve and become a vital part of social media advertising, especially for fashion and cosmetic companies.

Around 71 percent of consumers are more likely to make a purchase based on a social media reference, about 57 percent of beauty and fashion companies use influencers as part of their marketing strategies, and businesses generate $6.50 for every $1 invested in influencer marketing. As Influencer Marketing grows, the lines are starting to blur more and more when speaking to advertising ethicality.

Influencer Marketing Rules & Regulations

The Federal Trade Commission (FTC) has applied general advertising laws to Influencer Marketing, but as technology and social media continue to change and evolve at a pace faster than ever before, the FTC continues to have trouble regulating these laws. The FTC has laid out two appropriate ways for influencers to speak to a product or brand that has paid them:

  1. “Company XY gave me this product to try…”
  2. “Some of the products I’m going to use in this video were sent to me by XY’s manufacturers.”

Some influencers have also chosen to do hashtags such as #ad or #paid included in their posts as a way to meet these guidelines.

But, what happens if they don’t? That’s still up in the air.

Micro-influencers get away with a type of non-disclosure method because their videos and posts don’t garner enough traction and views to create a real problem. It’s also known that – with big influencers and brands – the FTC can take away all return on investment (ROI) profits from a singular post that is not up to FTC standards.

As Influencer Marketing continues to grow, the effect of peer-to-peer advice is lessening. It’s quite obvious to consumers when influencers post on Instagram and attempt to promote a product. With that being said, if the ad is done correctly, it is still just as effective.

Leveraging Influencer Marketing

How do marketers get the same ROI impact as a peer-to-peer recommendation while still abiding by FTC regulations?

  1. Targeted reach
  2. Seamless integration
  3. Easy platform for consumer purchases

Often when marketers are first launching a brand, product app, etc., we predict a different audience than what we ultimately find in our research. For instance, when launching a trivia game app, you may predict that the general targeted audience will be people in their mid-20s to early 30s. But, in actuality, one may find that there is a huge market within that space for people in their 50s. This is another way that Influencer Marketing can aid your brand in terms of finding your true target market. In many cases, this could be multiple mini niche audiences, and that is where micro-influencers are essential.

Influencer Marketing will continue to evolve and grow with the evolution of social media and its various platforms. Here are some quick tips to maximize your Influencer Marketing ROI:

  • Targeted Reach – don’t pick a vegan makeup guru to show off your product that practices frequent tests on animals. If the influencer takes their job seriously they will either not advertise for your brand or give it a bad review. Likewise if your targeted audience is people who are vegan, advertising with a brunch guy who frequently posts about bacon, probably isn’t the best use of your time and money.
  • Seamless Integration – If you have a product that you truly believe in and you know makes a difference then use that to your advantage. Influencers that truly like your brand will go out of their way to advertise it more. At the end of the day they want their followers to stay with them and by recommending good products is the reason that followers stay, tune in, and check their feeds.
  • Easy Platform for Consumer Purchases – Social media has been a major driving force for most consumer brands. With newly rolling out features such as in-app purchases and tags (for instance Kate Spade’s post below) it’s becoming easier and easier for consumers to purchase within seconds. With the help of influencer marketing this is continuing to drive online sales and actually deplete in store purchases making social easier to track and creating more conversions and ROI.

As influencer marketing continues to evolve, the FTC and marketers with continue to evolve with it. Influencer marketing is quickly becoming a pivotal component to any broad digital marketing strategy, and social media marketing campaigns. It’s here to stay and it is up to marketers and influencers to keep it ethical.

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