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How Sustainable is the Culture of Instagram Influencers?

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The likes of Instagram have created a new breed of marketers that have flipped traditional advertising strategies. Rather than selling directly to target demographics brands focus instead on catching the attention of key individuals. Companies have realised that one photo on an Instagram account with over 100,000 followers is reaching more people directly than any traditional ad campaign can. There are 400 million active users on Instagram and it has a younger user base than any of the other major networks including Facebook and Twitter. This younger audience is highly aspirational and are obsessed with following and portraying certain lifestyles. Therefore, images are the most powerful channel to reach and engage with them.

So brands face a challenge of finding marketing approaches that don’t annoy or encroach on users and many have taken to Instagram to use native advertising techniques. They engage with celebrities and influencers and negotiate deals where the influencer will use the brand’s product, post pictures and link to their website etc in exchange for money. Some influencers are earning six figures salaries from commercial endorsement deals and for many companies it has been the most successful way to associate their brand with consumers sense of self.

However, the Federal Trade Commission (FTC) recently released new guidelines for native advertising which might hinder the success of these campaigns. This is a guide for businesses in an effort to clarify when native advertising may cross the line and become deceptive to consumers. The responsibility of ensuring that native ads are identifiable as advertising falls to the advertisers.

The first company to be caught out by the new regulations was US fashion brand Lord & Taylor. They had paid 50 influencers to post photos of themselves wearing one of its dresses, but failed to disclose that it had provided the dresses for free and paid each influencer thousands of dollars, hence misleading consumers. This is the first case of its kind – and in this instance Lord & Taylor avoided being fined. The dress campaign was hugely effective reaching 11.4 million users over the two days and receiving 328,000 brand engagements. The dress sold out completely which shows just how powerful native advertising can be.

The way ads work on Instagram is changing again and it’s set to become an even bigger hotbed for advertising. It has been estimated that their ad revenue will reach more than $2 billion worldwide by 2017. However, the question remains that if influencers have to disclose they were paid by endorsers will consumers continue to engage or will they see right through it?

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