The advertising industry has long known the power of “celebrity” marketing, where you use a famous face for your brand to sell your products.
Social media has given rise to a new version of this—influencer marketing, where people who are “Insta-famous” endorse products and experiences.
One of the main issues with influencer marketing that has been brought up numerous times? A normal person should be able to tell that an “influencer” was paid to market something.
That’s not always the case. One of the most recent scandals is the catastrophe that was Fyre Festival, where influencers were brought on board to promote the event. Most failed to even mark their posts about the event as “sponsored” in their hashtags.
When the event went south, with it came more awareness about how such influencers should be held accountable for the products they endorse, particularly if their followers are not made aware that the influencer is being paid to recommend something.
A lawsuit compares the Fyre Festival influencers to door-to-door sales fraud for “using deceptive high-pressure tactics [that] could be personally liable for fraud”.
This whole controversy dragged Instagram down with it too.
One of the main calls for action? Influencers shouldn’t be able to hide if a post is sponsored—ads should obviously be marked as ads.
So Instagram came up with a solution.
The Branded Content Tool will tell you if the post is sponsored before you even look at the picture. Instagram has been trialling it since February, but they haven’t confirmed when it will fully be available for use.
The tool will also help advertisers and business/brand/influencer pages keep track of how their particular ad is doing.
Once rolled out, Instagram will also be looking into dealing with influencers who continue to make sponsored posts without using the Branded Content Tool. “After this feedback period we will unveil a policy that will include enforcement,” said the team.
And Now, The Alternatives
Despite controversy, influencer marketing is still very powerful in its own right, and advertisers are still looking to leverage off it.
One Malaysian startup called ModeFair is a social e-commerce platform that thinks it’s found a way to make it work.
“We decided to design and build an e-commerce platform that connects brands with social influencers to sell curated items online. We are creating value to online shoppers, brands, as well as social influencers, and we believe the mode of running this business is fair to all parties.”
If you search for the influencer’s name or handle on ModeFair, you can see which Instagram posts are bought-for based on their ‘shop’. ModeFair groups items mainly by influencer endorsement.
There’s also the Gallery tab that brings all the posts from influencers together.
They Don’t Like Calling What They Do “Sponsored Content”
In the words of CEO Siew Wai, “I would like to point out that ModeFair is quite different from other talent agencies in the market because we don’t encourage sponsored content.”
“Let me put things into perspective here. At ModeFair, the social influencers choose the products they like (using our exclusive Influencer App), instead of being asked by brands to do it. Furthermore, we don’t implement complex rules or hard-selling requirements to market the product.”
This could be a solution to the problem of “authenticity” when it comes to influencer marketing.
Followers engage better with products that they think the influencers genuinely like, even if the influencer is paid to showcase them.
“If you search #modefair in Instagram, you will be able to see the social posts from our influencers where most of them post what’s best for their Instagram feed.”
“Perhaps you may notice certain influencers asking their fans to purchase items from their online stores but this is entirely up to them because they may want their fans to enjoy the services or products that they are currently using,” said Siew Wai.
Siew Wai doesn’t think that they’re competing with or replacing influencer talent agencies like Gushcloud or Nuffnang.
It’s merely a different approach for influencers and brands who might want to make decisions to feature things on their social media that doesn’t require them to sit through long contract negotiations.
Here are the advantages they bring to the market:
- Small-time brands that can’t afford to pay can still afford to send items to influencers with minimal commissions, if they wanted.
- Influencers who might not be signed to any talent agency may have a chance of getting endorsements.
- There is no obligation for influencers to take up any campaigns. Only if they want to.
- It lets both parties try out a different brand-influencer model.
As for figuring out which influencers to bring on board their site, ModeFair apparently employs an algorithm that they’d rather not disclose.
But the general gist is to combine engagement, divided by the total number of followers to figure out who ‘bought’ their following or has too low engagement to bother with.
As for brands, it’s apparently all about putting up products that influencers would actually like to endorse.
And followers who care about influencers’ tastes can easily find products in a curated marketplace and buy them then and there.
Making Money On ModeFair
ModeFair mainly makes money by charging the brands.
- On their exclusive app: ModeFair charges the brands if influencers ask to sample their products (before recommending it). ModeFair charges a Campaign Management Fee, and brands are all told these charges from the get-go
- On the e-commerce platform: revenue comes from the product margins that have been agreed by the brand prior to listing. Brands choose to accept the purchase or decline, while ModeFair deals with the e-commerce stuff like collecting the package from merchants, deliveries, etc.
Bringing Us Back To The Topic Of Influencer Marketing
I personally appreciate the transparency of a platform like ModeFair that completely opens up about which influencers are paid to endorse which products.
It’s also understandable that ModeFair wants to keep things simple on their site for now, with as minimal oversight as they can allow. But the fact that some brands can give commissions to influencers per purchase still brings things a little closer to the issues brought up by standard influencer marketing, such as the “door-to-door fraud” cited earlier.
Although they don’t consider themselves as pushers of sponsored content, it’s not really a line that’s clearly drawn.
Whether or not the influencers are choosing their own campaigns, they still are getting sponsored (be it through monetary rewards or through products being sent to them).
Having a #modefair hashtag doesn’t explicitly tell their followers on social media very much about whether the post has been paid for or not.
Through a quick search of #modefair on Instagram, none of the influencers marked their posts as #ad, #spon or #sponsored.
Using the #spon or #sponsored hashtag is a debated bare minimum for paid posts, and even these often get buried in the sea of hashtags that the influencers tend to use.
Even ModeFair said that they can’t exactly force their influencers to follow new laws or protocol about their #spon posts on their own social media accounts.
It’s not really an issue that’s platform-specific though. We currently have no clear guidelines in place for influencer marketing in Malaysia.
Even in USA, The Federal Trade Commission (a government body that regulates advertising) struggles to enforce the rules it set in place when it comes to social media paid posts.
But to avoid our own local version of the next Fyre Festival, having important conversations about influencer transparency here is a logical next step as the industry continues to mature.
Feature Image Credit: ModeFair