3 Reasons to Exercise Caution When It Comes to Influencer Marketing

October 23, 2019

By Cliff Campeau

Enis Aksoy/Getty Images

Given what we know, it is natural to wonder what could possibly be fueling the meteoric growth in influencer marketing. The hypothesis driving marketing spend in this area is that consumers are more likely to buy from someone they trust and that influencers can instill a level of trust between consumers and brands.

Influencer marketing campaigns seek to achieve this desired end by incorporating social content and or sponsored blog posts by individuals who have purportedly cultivated a large base of engaged followers. The hope among marketers is that positive feedback on a brand from these influencers can enhance their brand’s appeal and drive sales to a greater extent than they could through direct-to-consumer advertising.

As a result of this belief, influencer marketing will reach $15 billion by 2021, up from $2 billion in 2017, and will enjoy a 40 percent annual rate of growth for the next five years (source: Business Insider Intelligence). Clearly, the industry has taken the words of Alvin Toffler, American writer and futurist to heart: “It is better to err on the side of daring than the side of caution.”

However, as the industry has seen with the rapid rise of programmatic media, just because a market sector is growing, does not mean that it is effective, efficient or without risks and therefore worthy of an increased share of an advertiser’s media spend. We believe that there are three reasons why marketers may want to exercise a little dose of caution when it comes to their influencer marketing investment.

  1. It is important to recognize that most consumers make the distinction between peer-to-peer advice and influencer marketing. This has become even more pronounced given that the FTC has introduced guidelines to prevent influencers from accidentally or intentionally misleading their followers, requiring them to disclose their relationships with the brands and companies that they are writing about. These guidelines include using disclosures such as “#ad” or “paid for by” at the beginning of a post or a video and prohibits misleading endorsements or the use of unsubstantiated claims by influencers that a product marketer couldn’t legally make. Additional regulatory action in this area, however difficult to police, will make the blurring between influencer recommendations and paid advertising even more apparent to consumers. The question is; “What impact will the need to more overtly identify influencer posts as paid endorsements have on the appeal this type of marketing?”
  2. U.S. internet users continually seek to avoid the myriad of frustrating digital advertising practices employed by marketers. This can be evidences by the rate at which people are opting out of cookies and deploying ad-blocking software to insulate themselves from commercial and or inauthentic messaging. How prevalent is this you ask? According to eMarketer, one-in-four U.S. internet users currently utilize ad-blocking software. Yet as influencer marketing grows and the regulatory environment has tightened, the potential for unethical behavior has also risen, presenting challenges to both marketers and social media platforms. These challenges include fake follower and or user bases, the publishing of inauthentic posts and fraudulently representing vanity metrics, such as social followers. To mitigate this risk, some social platforms have begun to move away from vanity metrics, focusing more on the quality of an influencer’s content, which, ironically is counter to what many brands seek (e.g. influencers with at least 10,000 followers across a number of social platforms). Earlier this spring, independent investigations into Amazon’s “review economy” found that of the more than 200 million reviews analyzed, over 11 percent were untrustworthy. If such activity were to occur and to become known to consumers, who are already frustrated by such practices, the potential damage to a brand could be significant.
  3. Influencer marketing is fraught with transparency and fraud challenges. At a minimum, this makes it very difficult for marketers to assess the efficacy of the fees paid and results attained by their social media campaigns. One of the challenges is that marketers will often employ specialist influencer agencies to manage their influencer marketing initiatives. Like with programmatic digital media, the presence of non-transparent mark-ups and masked commissions makes it difficult to truly assess the fees being generated by such agencies and the amount of a marketer’s influencer marketing investment that is actually passed on to the influencers themselves. On the fraud front, marketers clearly bear the brunt of the risk. Sadly, too many of the stakeholders in the influencer marketing supply chain (i.e. agencies, influencers, and platforms) all benefit from inflated user metrics. Thus, the motivation for reform may be less intense than marketers may desire. Let’s face it, fake followers (bots) have plagued influencer marketing from the onset, sparing few if any social platforms:
    • Facebook proactively closed-out 1.3 billion “fake accounts” in 2018.
    • A study by the University of Southern California and Indiana University found that up to 50 million Twitter accounts could be bots rather than genuine users.
    • YouTube has often been in the news for “fake” views. Significant in that views are the currency by which the platform and people who make a living posting to this platform earn money.
    • MediaKix recently estimated that 1 out of 10 Instagram users may be bots.

Sadly, when companies, individuals and or platforms choose to employ the use of bots to falsely drive their social media metrics it isn’t often readily detectable and to date, has not been preventable. According to CBS Interactive, 15 percent of influencer marketing spend is lost to fraud, costing marketers $1.3 billion annually.

For brands that desire to get their content to potential customers through the use of influencers, proceed with caution. The value proposition of this marketing channel is compelling, but the difficulty in quantifying a true return-on-investment in this area is equally as challenging.

Cliff Campeau is a Principal at AARM | Advertising Audit & Risk Management. You can email him at ccampeau@aarmusa.com.


The views and opinions expressed in Marketing Maestros are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.


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