People used to rely on print ads and magazine editors to get product recommendations. However, with the advent of social media, consumers instead started putting their faith in ordinary people who reviewed the same products online. These ordinary people lent an authenticity to appraisals which allowed them to sway purchasing, particularly in the beauty industry. Some of the more powerful ‘influencers’ amassed millions of followers and went on to create makeup brands of their own.

Here’s how it works: a company pays an influencer to positively review or use their products in a social media post. Complicating things, companies have also started paying influencers to say negative things about competitor brands[i]. While FTC endorsement rules[ii] assert that the influencer is required to disclose the paid content as sponsored, this is mostly ignored which is unethical and misleads trusting viewers.

Paid sponsorships and promotion aren’t a problem, they’re standard in the advertising industry: think Michael Jordan and Nike, Oprah and Weight Watchers, Jennifer Garner and Capital One, Shaq and IcyHot. But paid sponsorships become a massive problem when it’s unclear what is sponsored and what isn’t. When you watch TV and a commercial comes on, you know you are being advertised to. When a 14-year-old is watching a makeup tutorial with sponsored products they probably have no idea they are being advertised to – and there’s no way to really know for sure.

One top beauty influencer claims to have been offered $185,000 for a single post[iii] and most of their viewers are 24 and under, many under 18[iv]. Not only are they paid to use the company’s product in the video, they also receive a portion of the profit from orders placed through links and discount codes. These links are a sly way of disclosing brands they have partnerships with, effectively disguising sponsorship while appearing well-intentioned for providing discounts. Sly, yet legal[v].

Keep in mind, all of this is going on while most of their young viewers believe the influencers are just as authentic and trustworthy as reviewers with only 20 subscribers and no product partnerships. Their false portrayal of authenticity is and misleading. Influencer-based undercover advertising is bad for the advancement of the industry as well. Small brands putting out innovative products but can’t afford to pay influencers thousands of dollars to promote them are unable to break into the market. This hurdle is bad for consumers in turn, because they might not be getting the best and most cutting-edge products available.

Advertising has the power to positively impact people by making them aware of brands and products and helping them make connections with those brands and products to improve their lives. This should be done honestly, i.e., transparently, especially when young people are the audience. As is so often the case, technological development often eclipses behavioral norms and governmental rule-making. Influencer marketing is an area that the FCC and Congress still need to establish rules for. In the meantime, we can keep this topic alive on the very medium that seduces some brand marketers to go to the “dark side”. By shining more and more light on influencer marketing abuse, we can use the power of social media to reduce the level of darkness.

[i] “Emmy Award winning makeup artist Kevin James Bennett, for instance, revealed on Instagram that he was given an interesting rate from the management company for “a top-level beauty influencer.” For “$75K to $85K,” the influencer would provide ‘a dedicated negative review of a competitor’s product (price determined by length of video).’”  http://www.thefashionlaw.com/home/is-paying-influencers-to-post-fake-reviews-legal

[ii] https://www.ftc.gov/news-events/media-resources/truth-advertising/advertisement-endorsements

[iii] https://www.entrepreneur.com/slideshow/310654

[iv] “Pixability’s research found that 50% of beauty-content viewers on YouTube are females between the ages of 13 and 24.” https://www.refinery29.com/en-us/2016/04/107876/makeup-tutorials-youtube-beauty-advice

[v] https://www.consumer.ftc.gov/blog/2017/04/post-sponsored