Influencer marketing on Instagram has risen to the apex of popularity that it’s become an industry by itself. In fact, a study has shown that these hidden ads are now worth about $1 billion, and the number of businesses using this advertising strategy is expected to grow more than three times compared to 9.7 million users just a year ago.

Influencer marketing on Instagram has risen to the apex of popularity that it’s become an industry by itself. In fact, a study has shown that these hidden ads are now worth about $1 billion, and the number of businesses using this advertising strategy is expected to grow more than three times compared to 9.7 million users just a year ago.

 

For instance, if Kim Kardashian is trying to promote a face mask, she should divulge the material connection with the brand. “That connection should be clearly and conspicuously disclosed unless it is already clear from the context of the communication.” If not, Instagram should categorically state that it’s a paid partnership.

It’s a novel way to get your product out there. Instead of traditional advertising platforms like TV or print, celebrities or famous personalities promoting products to their followers in a more organic manner proved to be more effective in terms of ROI.

However, with that amount of month going around on Instagram hidden ads, regulators are bound to sit up and take notice.

And that’s just what happened when the Federal Trade Commission issued a statement on April 19, 2017,where it reportedly reminded influencers and marketers—about 90 of them—to disclose their ties to brands whenever they promote a product or service.

Instagram hidden ads and the influencer marketing
Instagram hidden ads and the influencer marketing

Is This the Death of Instagram Hidden Ads?

Facebook has been very conspicuous about whether or not a particular post is sponsored, which means the brands are paying to be prominently displayed on the pages of their target market. Instagram has no such filter, which is curious considering that the latter is also owned by Mark Zuckerberg.

In explaining its decision, the social media site said the “paid partnership” tool is still being fine-tuned with the help of some business but will be rolled out to more users “in the coming months along with an official policy and enforcement guidelines.”

“The new tool will allow a creator to quickly tag the business they have a relationship with,” the statement said. “The post or story will appear with a sub-header that reads Paid partnership with, followed by a tag to the business partner’s account.”

It’s too early to tell if this will have a major impact on a growing industry. The Instagram hidden ads via influencer marketing are seen to hit $2 billion in 2019, but that was before the FTC “reminder.”

Cutting the Legs off from Under Micro-Influencers

But really, will Kim Kardashian saying that she’s being paid to post a product on her Instagram have a negative effect? Everybody knows that she’s not just promoting something out of the goodness of her heart, right? (Just to give you an idea of what her “heart” is worth – the reality star is paid as much as $500,000 per post.)

Where this new clampdown on Instagram hidden ads really is going to hurt would be the pockets of micro-influencers.

As opposed to famous celebrities, micro-influencers are ordinary individuals who happen to have a good following on Instagram (no less than 1,000 would do). But do people really listen to a non-celebrity? Research says they do.

According to a Nielsen study, more than 8 in 10 Americans trust the recommendations from individuals that they know. It makes sense, of course, when Amy down the block endorses a weight loss product, and you can actually see for yourself the “before” and “after.”

Now, micro-influencers do not really earn that much, ranging from $800 for somebody with over 100,000 followers on Instagram to just $100 for somebody with 1,000 followers.

Pretty soon, micro-influencers would be forced to add the brand to the location tag and disclose that it’s a “branded content.” Now, would you be as keen on listening to Amy when you know that her weight loss product was a result of a “paid partnership?”

Will they suspend offender's account?
Will they suspend offender’s account?

Can You Just Ignore the Guidelines?

If you are already heavily invested in social media influencer marketing, you are probably going to be concerned and already thinking of some workaround. Sure, some product endorsers do write hashtags #sponsored or #paidad on their Instagram posts, but nobody was really paying close attention to the FTC guideline about the disclosure being “clear and conspicuous.”

What does this mean? Well, the FTC says the disclosure should be:

  • close to the claims to which they relate
  • in a font that is easy to read
  • in a shade that stands out against the background

For video postings, the endorser should state the relationship in words embedded on the screen for the viewer to read or state the disclosure clearly in a manner that can be clearly understood.

But the social media site has not yet revealed if brands or influencers will be penalized if they do not adhere to the guidelines on Instagram hidden ads. Most probably, the account of the offender will be suspended. The only question that remains is for how many days.

Hyper targeting gives businesses and entrepreneurs a distinct advantage
Hyper targeting gives businesses and entrepreneurs a distinct advantage

How Can You Take Advantage of This New Feature?

Just like Facebook, Instagram hidden ads work because of one thing: hyper-targeting. This is a tool utilized by Google and Facebook to determine preferences and tendencies by users when they go online. This gives businesses and entrepreneurs a distinct advantage of having an even more narrowed focus in terms of their digital marketing campaigns.

With this tool, instead of wasting your ad on Instagram users that do not care for your product, you will be able to reach primed consumers who only need a little push to spend their money online.

This new Instagram transparency feature will probably send small ripples to the industry during the initial phase of implementation. But the industry will probably rebound eventually. The fact remains that influencer marketing works as it generates about $6.50 ROI for each dollar spent.

Of course, it’s very hard to gauge industry reaction when the changes on Instagram hidden ads won’t be fully rolled out until the coming weeks.With that said, businesses probably can’t just close their eyes to the cost-benefit of investing in social media influencers. The ROI, for now, is just too big to ignore.

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