The presence and power of social media in daily life have transformed consumer shopping habits, exploding in the past two decades as millions worldwide tune into these digital platforms for entertainment and information. Not only have these platforms become hotbeds for personal interactions, but they have swiftly integrated commerce into the social fabric. Advertisers have identified these digital domains as fertile ground for influencer marketing, leveraging what appears to be the authenticity of ordinary users to promote various products and services. Yet, beneath this veneer of authenticity lies a growing concern about inadequacies in transparency. Many influencers neglect to disclose their commercial affiliations, raising ethical and regulatory questions about consumer deception and the authenticity that bolstered this marketing strategy in the first place.
Disclosure Choice and Regulation
In the realm of traditional advertising, a stringent set of regulatory controls ensures that transparency prevails, from child-directed marketing restrictions to mandatory disclosures of paid endorsements. However, the rapidly evolving landscape of influencer marketing seems to sit in a gray area, marked by an ambiguous legal framework. Influencers, often self-made and not trained as professional advertisers, encounter uncertainties about how traditional advertising rules might apply to them. Moreover, advertisers often encourage less conspicuous forms of disclosure to maintain the influencer’s aura of authenticity. While regulatory bodies have attempted to enforce transparency, suggesting measures such as using the straightforward hashtag “#ad,” enforcement has appeared lackluster. In the United States, penalties remain almost nonexistent, with none imposed directly on influencers for non-disclosure and merely one brand facing repercussions. This regulatory leniency has been scrutinized as influencers venture into political arenas, where transparency might arguably play an even more critical role.
Despite attempts to solidify disclosure rules, empirical analysis on whether influencers adhere to them is scant. Although some audits have been conducted, notably in the EU, their scope was constrained to a limited set of influencers. Similarly, U.S. enforcement actions, such as the Federal Trade Commission’s (FTC) sending warning letters, have targeted a small cohort of high-profile influencers, leaving the overall landscape of commercial influencer disclosure largely unexamined. This gap in oversight underscores the complexity of interpreting the transparency of influencer content as handled by the wider influencer community, not just the select few who break into mainstream visibility.
Empirical Analysis of Disclosure Rates
Addressing this apparent deficiency, researchers embarked on a substantial study to scrutinize disclosure rates among a wide array of influencers over an extended timeline. Through data harvested from a major platform from 2014 until now, involving millions of posts highlighting prominent U.S. commercial brands such as Walmart, Netflix, and Coca-Cola, a pattern emerged. In the vast ocean of over 100 million tweets analyzed, only about 2 million were acknowledged as sponsored. Discerning undisclosed sponsored content posed a significant challenge because it often blends seamlessly with organic posts created without financial incentive. These researchers harnessed the potential of linguistic differences, detectable through sophisticated text-based classification technologies. By utilizing disclosed sponsored posts as a proxy and assuming that influencers might employ similar language in both disclosed and undisclosed content, the study was built on sophisticated machine learning models to differentiate between undisclosed sponsored content and pure organic material.
One striking revelation from this research was the substantial rate of non-disclosure. Astonishingly, about 95% of the posts that the classifier identified as sponsored lacked the requisite disclosure hashtags. Although slight variations existed among brands and across different points in time, these were minimal. From data extending from 2014 to the present year, a modest decrease was observed, with the rate of non-disclosure dropping from 98% to 94% on average. Even among the brands exhibiting the most compliance, the rates only fell from 90% to just below 80%. This negligible improvement is remarkable considering the FTC’s persistent efforts to shed light on disclosure rules through guidance issued in 2015, 2017, and 2019.
Differential Compliance Among Brands
A notable factor in the non-disclosure phenomenon relates to the variation of compliance among different brands. Established brands from more traditional industries, such as BestBuy, FootLocker, and Disney, generally appeared more adherent to disclosure regulations compared to younger brands founded post-2000. Additionally, companies with a profound social media presence showed a tendency to overlook these regulations. This observation is particularly pronounced among novice or emerging brands heavily reliant on influencer marketing. These brands often capitalize on the spontaneity and perceived genuineness intrinsic to influencer content, aspects that might somewhat oppose the traditional marking of ads with explicit commercial identifiers.
As disclosure percentages continue to lag, they highlight a persistent challenge in integrating transparency into the digital marketing ecosystem. Such characteristics of differential compliance underscore how the dynamic nature of social media platforms could hamper uniform regulatory implementation. When observing younger brands, the seemingly low disclosure rates may not see significant improvement in the near term unless substantial regulatory and perhaps cultural shifts occur among both influencers and their partnering brands. The variance in compliance is more than a statistical anomaly but rather emblematic of the cultural and operational dichotomy between pioneering social media-forward brands and traditional entities.
Consumer Perceptions and Distinguishing Content
The issue of non-disclosure significantly affects consumers, who may struggle to discern whether content is genuinely personal opinion or a paid advertisement. In a survey conducted via Amazon Mechanical Turk, respondents found it difficult to accurately identify sponsored content when disclosure cues were missing. When exposed to samples of disclosed posts with hashtags omitted, only two-thirds of participants could correctly recognize them as sponsored. Furthermore, the survey revealed that there was little consensus among respondents when discerning commercial from non-commercial content, indicating a broad confusion among social media audiences. This challenge of distinguishing content is not merely an academic concern but has practical implications for consumer behavior and trust. Increased difficulty in identifying sponsored content can lead to decisions based on misperceived information, potentially undermining consumer confidence in both brands and influencers. The discrepancy between commercial and non-commercial posts blurs the lines, leaving audiences unable to fully trust the authenticity of the content they consume. As social media continues to evolve, developing more effective measures for identifying and signaling sponsored content remains crucial for maintaining consumer trust and ensuring ethical advertising practices.
Implications and Conclusions
Researchers took on a comprehensive study to delve into the rates at which influencers disclose sponsored content. They analyzed data from a well-known platform, covering the years from 2014 to the present, featuring millions of posts promoting major U.S. brands like Walmart, Netflix, and Coca-Cola. In this extensive review of over 100 million tweets, a mere 2 million were marked as sponsored. Identifying non-disclosed sponsored content proved challenging as it often appears identical to organic posts crafted without financial backing. The researchers turned to linguistic nuances and employed advanced text-based classification technology for analysis. By treating disclosed sponsored posts as a baseline and presuming influencers might use similar language in both disclosed and undisclosed posts, they utilized sophisticated machine learning models to distinguish between the two. A noteworthy finding from this research was the high rate of non-disclosure. An impressive 95% of posts identified by the classifier as sponsored did not bear the necessary disclosure hashtags. Although there were minor discrepancies based on the brand and time, these were negligible. The data spanning from 2014 to today showed only a slight decline in non-disclosure rates, from 98% to 94%. Even the most compliant brands only reduced rates from 90% to slightly under 80%. This minimal progress is surprising given the Federal Trade Commission’s ongoing attempts to clarify disclosure guidelines since 2015.