In a bid to bring accountability and promote responsible advertising, the government is set to introduce rules to regulate social media influencers, including penalising them by as much as ₹50 lakh for failing to disclose financial ties with brands, Central Consumer Protection Authority (CCPA) chief commissioner Nidhi Khare said.
The guidelines are expected to be released in the next 10 days.
“Guidelines for social media influencers are ready and will be released shortly. Influencers will have to disclose their ties while marketing a product, failing which they will be fined up to Rs 10 lakh," Khare said on the sidelines of a press conference as per a Livemint report. “For a subsequent offence, it will be Rs 20 lakh, and it can go up to Rs 50 lakh."
Brands across categories have latched on to influencer marketing like never before. From personal care, auto to even unregulated cryptocurrency platforms are being promoted by influencers and often without clear disclosure. Many social media influencers often refrain from inserting brand names into their posts, making them appear authentic.
In view of this, the impending guidelines are expected to bring transparency so that consumers can make informed choices.
Burgeoning industry, lack of accountability
The Indian influencer marketing industry is estimated to grow at a compound annual growth rate (CAGR) of 25 percent till 2025 to reach a size of Rs 2,200 crore, according to GroupM INCA’s India Influencer Marketing Report.
In May 2021, the Advertising Standards Council of India (ASCI) officially launched the influencer marketing guidelines for 'consumers to distinguish between something that is promoted with an intention to influence consumers' opinion or behaviour for an immediate or commercial gain'.
In July last year, ASCI also started monitoring digital and social media platforms for violations of its influencer advertising guidelines about labelling paid promotions by influencers.
Rules to bring accountability
Digital advertising and marketing experts believe that due to the personal connection and trust that influencers have with followers, influencer marketing has become an essential tool in brands' marketing mix. However, it still lacks accountability and fair practices.
"So far, the guidelines issued by ASCI are not being followed to the T - sometimes by creators, while many times by brands as well, who require the content to look more authentic and organic. There is definitely a need to be transparent to the audience about a paid association, which allows them to know whether the opinion is biased or unbiased. Government guidelines will help enforce that strongly," says Rohit Agarwal, founder & director, Alpha Zegus, a marketing agency specialising in the domains of gaming and lifestyle.
Deepak Sakhuja, co-founder, Ripple Links, notes that it is heartening to note that the government of India is coming up with a guideline on the same.
“This lends recognition and respect to the influencer marketing ecosystem and will also make the workings of the industry transparent, benefitting all stakeholders in the entire value chain. This step will standardize the disclosures giving a formal framework to this sector,” he says.
Upside and downside
Anjali Malthankar, national strategy director, Tonic Worldwide - a digital-first creative agency notes that while ASCI has already attempted to do so in the interest of the consumers, Centre’s guidelines will be adding a stamp of approval on some of them in intent.
“There are two sides to this action. Consumers will start seeing influencers as advertisers/broadcasters of the brands rather than reviewers. On the other hand, brands will have to look at the usage of influencers afresh. Maybe this change will lead clients to consider influencers more for top of the funnel awareness than the bottom of the funnel,” she adds.
Malthankar further states that it will also bring responsible behaviour but it will also bring fear resulting in slowing down innovative approaches to the influencer campaigns.
“For instance, it will pose challenges in creating teaser strategies for a campaign. However, for influencers, being transparent should help in gaining more trust from their followers,” she notes.
Influencer marketing, if done right, is highly rewarding in terms of consumer connect and brand building. However, lack of guidelines have also led to many influencers taking consumers for a ride which needs to be curbed.