New influencer guidelines: a mixed bag for business?

After announcing that it will look into the social media influencer environment in India more closely, the Department of Consumer Affairs has finally delivered a fresh set of guidelines. It put out an extensive list of to-dos for influencer brand integrations in 'Endorsement know-hows - for celebrities, influencers and virtual media influencers (avatar or computer generated character) on social media platforms' on January 20. The guide is released in alignment with the guidelines set by the Consumer Protection Act of 2019.

There are multiple guidelines that influencers have to adhere to, while putting out branded content on their platforms. The most significant one is to make the distinction between authentic and branded content clearer to the audience.

It is now mandatory for social media influencers to disclose all 'material' interests such as gifts, hotel accommodation, equity, discounts and awards when endorsing any products, services, or scheme. If they fail to do so, then strict legal action, including a ban on endorsements, can be taken against them.

"The disclosures should be in simple and clear language. They should be of a duration that is hard to miss, must be run with endorsements, including live streams, and should be platform agnostic," the new rules say. 

If one doesn’t stick to the guidelines, then they may attract fines to the tune of tens of lakhs. "If the endorser violates the guidelines again, a fine of up to Rs 50 lakh may be imposed, in addition to a fine of Rs 10 lakh," Nidhi Khare, additional secretary, Department of Consumer Affairs, informed.

One can’t deny the sharp growth that influencer marketing has witnessed recently. Rohit Kumar Singh, secretary, Consumer Affairs, noted that the size of the social influencer market in India in 2022 was about Rs 1,275 crore. It is likely to rise to Rs 2,800 crore, with a CAGR of about 19-20%, by 2025.

However, there have also been certain pitfalls. Manisha Kapoor, CEO and secretary general, Advertising Standards Council of India (ASCI), recently shared that influencer violations comprise almost 30% of ads taken up by her organisation. Hence, this legal backing for disclosure requirements is a welcome step.

The industry’s response to the new guidelines has been mixed.

Jag Chima, co-founder, IPLIX Media, says that the move is bound to have a positive impact on the industry in the long run, as there will be a lot of transparency, in terms of the content that the influencers create for brands.

Vivek Yadav, co-founder, Cosmofeed, an Internet marketplace platform, mentions that these guidelines were necessary as over the past 18-24 months, many real money gaming platforms as well as other businesses where money is at stake, have come up. Many influencers have promoted them in the past, without understanding the exact nature of such businesses.

"Influencers, with large followings, are definitely going to adhere to these guidelines. However, it will be difficult to gauge the content being put out by smaller influencers, simply because of the numbers. Hence, the efficacy of the move is still questionable. But it is still a step in the right direction, as larger influencers are unlikely to flout the norms."

While acknowledging that the move was necessary, Swati Nathani, co-founder and CBO, Team Pumpkin, a digital agency, opines, “We use influencer marketing as a ‘middle of the funnel’ activity, which drives not only branding, but also sales for our brands.”

“The new move obviously puts a restriction on the ‘organic’ perception of influencer content. It’s not going to be liked by a lot of marketers, because declaring the arrangement with the brand, damages the purpose of choosing influencers over performance marketing."

She adds that influencers weren’t necessarily owning up to the endorsements made by them, despite the ASCI guidelines in place.

Ramya Ramachandran, founder and CEO, Whoppl, shares that now that the content creators have to make their integrations more specific, certain brand collaboration formats may see a decline.

"For smaller barter deals, where the product is sent to influencers and they promote it on the basis of their affinity to the product, it may become more difficult to be comfortable with that arrangement and put out content."

Ramachandran points out that a lot of influencers already put out multiple brand-integrated content every day. For sponsored posts, viewership is less. Since smaller integrations within larger pieces of comment would also now come under the same ambit, the viewership may decline for those content pieces. 

"It does, however, create room for more viral branded content. It has been observed that branded content has gone viral as well, so we may see more such content."

Yadav of Cosmofeed and IPLIX Media’s Chima highlight more opportunities that the new guidelines will bring forth for the Indian influencer ecosystem. Yadav believes that the move could lead creators to build on other revenue streams outside of brand collaborations. He says that subscription models, merchandising, among other things, may come forth strongly now.

Chima says that this opens up an opportunity for influencer management agencies to grow. "Influencers need to be guided by agencies and management companies, who can better grasp the protocols that are in place. Now, agencies that have a good infrastructure in place will be in demand."