Influencer influx: Is it a genuine opinion on a product, or is it an ad?

Many people online are unaware when they are being sold on products, not viewing native content.

Many people online are unaware when they are being sold on products, not viewing native content. Photo: Instagram

Is this a legitimate news story, a real person giving their genuine opinion on a service or product, or is it an advertisement?

It’s a question people are increasingly asking, as the lines between independent content and advertising become increasingly blurry.

More and more, brands are using influencers as an intentional way to promote products to their masses of online fans.

Some may say it doesn’t matter and that it is just an extension of traditional advertising that has been ubiquitous for a long time.

But others say advertisements were clearly that, and now it is too hard to tell what is paid for and what is organic.

Dr Natalya Saldanha, a lecturer in Marketing at Victoria University’s Business School, said the global influencer market is set to grow, including in Australia.

“The influencer market will be valued at approximately $24 billion by the end of the year,” she said.

“From an Australian perspective, we should reach about $522 million just this year. It’s very financially significant at the moment.”

The New Daily examined one of Australia’s biggest influencers, Lily Lay Mac, and found she had failed to apply the advertising tag to any of the last 10 posts that promoted products for businesses like Louis Vuitton and Qatar Airways.

Influencers are failing to tag their posts as paid advertising, blurring the lines between opinion and product placement. Photo: Instagram

Declaring ads

Saldanha said even posts promoting their own products should still be marked as advertisements.

“Regardless of it being your own product, there should be some sort of indication that it is sponsored promotion,” she said.

“You don’t want to, most importantly, be perceived as deceptive.”

Influencers, ranging from Australians with small followings to the Kardashians, have been on the receiving end of fines for not declaring paid product placement and marketing in recent times.

Dr Brent Coker, a digital marketing specialist at the University of Melbourne, said that while celebrity endorsements of products have always existed, the difference with social media is the speed at which information can spread.

“We were doing this 50 years ago on television with sports stars, but the platform is different now,” he said.

“They are being paid to promote those products and they need to disclose that.”

According to the Australian Influencer Marketing Council’s 2023 report on Social Media, Australia represents the fifth-largest social media advertising market globally.

Saldanha said 58 per cent of consumers aged between 16 and 64 are turning to social media for information about brands and products.

“Fashion, beauty and gaming at the moment are the most popular niches of influence marketing,” she said.

“People are consuming content and it’s really first and foremost through Instagram and TikTok.”

Savvy consumers

When the Australian Competition and Consumer Commission (ACCC) launched a probe into influencers posting misleading information about products last year, it found that 81 per cent of publicly submitted complaints had “raised concern”.

The most common issue, the ACCC found, was a failure to disclose brand sponsorships and paid partnerships.

Despite this, Coker said most consumers are “way more savvy than we give them credit for”.

“They can smell BS and in fact, it’s almost working the opposite way,” he said.

“If there’s an influencer who is endorsing a product, but there isn’t that official endorsement like hashtag ad or sponsored or using the platform’s tools to toggle the paid switch on, then that creates suspicion with consumers.”

He said modern shoppers often search online for reviews before making big purchases, regardless of whether their favourite celebrities have endorsed it or not.

“The effectiveness comes from when consumers trust what each other are saying about products more than what the brand is saying about the product,” Coker said.

“That is true, even if they know another consumer has been paid to say something nice.”

Topics: Advertising
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