Dr Sommer Kapitan a Senior lecturer in marketing at Auckland University of Technology talks about the influencer marketing industry and how does it compare to the US, UK markets
Social media is blurring the boundaries between ads and content, reports James Titcomb
Last May, Naomi Campbell posted an Instagram photo that did not look out of place among the rest of the hundreds of other images on the supermodel's account.
The picture, of three suitcases stacked together in ahotel room, was typical of what is on the photo-sharing app, where travel, beauty, food and fitness reign, and it garnered thousands of likes.
Globe-Trotter, the luxury suitcase maker in question, was tagged in the post, but there was no evidence that it was anything but a genuine endorsement.
If it had been paid for, Campbell would presumably have charged a hefty fee, given her millions of followers.
The event did, however, capture the attention of the American consumer regulator, the Federal Trade Commission.
It was unclear whether this post by Naomi Campbell was paid for or not. Photo / Instagram
Last September, the FTC wrote to 21 of the most high-profile social media users, including Campbell herself, asking whether social media posts promoting products had been paid for without disclosure.
Campbell replied saying she had no financial ties to Globe-Trotter, but the incident underlined an uncomfortable truth about the world of social media advertising: the divide between the genuine and the paid-for is often invisible to the average consumer.
"Influencer marketing" - in which high-profile social media users are paid to promote a brand or product - is one of the fastest growing parts of the advertising industry today.
From an industry that did not exist five years ago, spending on it is forecast to hit US$10b by 2020.
Facebook, Instagram and Twitter already design their service to make adverts look as similar as possible to posts from typical users.
But influencer marketing takes this a step forward: advertisers go directly to high-profile users.
For a fee, users will post a video, image or blog post promoting a product.
"The most effective form of advertising is word of mouth; but [influencers] are one step down, they're like a recommendation from a friend," says Matt Donegan of the agency Social Circle.
The image did not look out of place among the hundreds of others on Naomi Campbell's social media. Photo / AP
While these influencers may be those who are already famous, they are just as likely to be people who found their fame on social media itself.
Donegan estimates there are some 250,000 commercially relevant influencers in the West, some of whom can earn up to £200,000 at a time.
At the other end of the spectrum, influencers can be ordinary social media users, many of whom are simply fans of the product they are rewarded for promoting.
Amber Atherton, a former star of the reality show Made in Chelsea turned technology entrepreneur, runs Zyper, a company that tracks down such "brand fans" and encourages them to promote a business.
These individuals often only have a few hundred social media followers, but can be rewarded with perks such as free merchandise for posts promoting a brand, with the company taking a cut.
"People trust their peers more than any other form of marketing," Atherton says.
But the rise of social media influencers is increasingly attracting the attention of regulators, who worry that consumers are struggling to tell what is an advert and what is not.
The Advertising Standards Authority, the UK industry regulator, demands that social media and YouTube adverts are clearly disclosed, but without strict guidelines about how.
In 2015, the ASA ruled that an Instagram post featuring the TV star Millie Mackintosh about the drinks brand J2O breached advertising rules for not immediately revealing itself as an advert.
An investigation from the House of Lords communication committee into digital advertising earlier this month said: "The rise of online advertising has blurred the distinction between advertising and content."
A spokesman for the ASA said labelling sponsored posts with the hashtag #ad was a clear way to disclose a financial relationship, but said there was not a one-size-fits-all approach.
The regulator has now launched a consultation into the matter and expects to report later this year.
Donegan says there is a double standard, with authorities devoting more attention to influencers than more established forms of product placement: "What happens when James Bond and Heineken do product placement? There isn't #ad in the middle of that."
Atherton adds that the young social media users who these adverts typically target understand the rules of the game.
"Generation Z and millennials, they're pretty savvy," she says.
A separate challenge may loom for the industry.
By going directly to influencers, advertisers are bypassing ad-funded social networks such as Instagram and Snapchat, with whom they might have otherwise spent their money.
If the rise of the influencers continues, they may ruffle more than just regulators' feathers.
