The Pressing Need for Regulations in Influencer Marketing in India

Influencer marketing has gained immense popularity and has become one of the most preferred social media advertising formats in recent times. Social media giants such as Facebook, Instagram, and YouTube have become valuable treasure troves for businesses to advertise their products and services as well as create strong brand awareness. The Indian influencer marketing industry, which is projected to reach $336 million (INR 28 billion) by the end of 2026, is expected to clock massive growth – a CAGR of 22% over the next 5 years. The transition from relying solely on celebrity-based endorsements to utilizing influencers for a more homogenous reach, has been a major driving force behind such exponential growth. A Global Digital Insights report reveals the average daily time spent by Indian users on using social media stood at 2 hours and 50 minutes as of Jan ‘23. Influencer generated customized content has proven to capture and hold the attention span of a larger base of audience, driving positive outcomes for companies across multiple industry verticals including travel, fashion, beauty, music, food, sports equipment, gaming, fitness, etc.

However, there are certain downsides which require immediate attention. As the industry evolved, so has the need for robust regulations. Today’s online world is rife with disinformation. And given the expanse and reach of influencers among social media users, a strong regulatory framework becomes even more imperative. In the absence of a dedicated regulatory body, the ASCI, and the Central Consumer Protection Authority (CCPA) under the Department of Consumer Affairs (DoCA) administer the regulatory responsibility jointly. These bodies have collectively released a fresh set of ‘disclosure guidelines’ in Jan ‘23 to rein in unfair trade practices and misleading promotions on social media. These new regulations supersede the previous guidelines for influencer marketing issued by ASCI in 2021, which said influencers must clearly label branded and sponsored posts, failing which both parties will be held accountable. However, the new guidelines require creators to clearly disclose the sponsored content not just in the description, but in the language of the content as well. This further ensures that consumers are duly informed about when they’re being presented with marketing content, enabling them to make well-informed decisions. The guidelines specify durations for the disclosures as:

Video Format

• For videos up to 15 seconds, the disclosure label must stay for a minimum of 3 seconds
• For videos between 15 seconds to 2 minutes, the disclosure label should stay for 1/3^rd the length of the video
• For videos over 2 minutes, the disclosure label must stay for the entire duration of the section in which the promoted brand or its features, benefits, etc. are mentioned

Audio Media and Livestreaming

• The disclosure label should be announced at the beginning and the end of the broadcast

Data released in Jan ‘23 by Advertising Standards Council of India (ASCI) shows that of the ads reviewed by the council, influencer violations comprise nearly 30% of ads. To monitor violations closely, the ASCI has tied-up with a French technology provider Reech – Influence Cloud Platform, which uses AI and ML algorithms to detect disclosure breaches on commercial posts. Moreover, it uses pattern searching ‘Regex’ (Regular Expression) to produce more accurate results. On the other hand, ASCI has also opted for an educational approach to influencer advertising by launching the “ASCI. Social platform”, a one-stop destination for all queries, potential do’s & don’ts, and other relevant information relating to the guidelines. The agency also fosters to create an interactive community of influencers, advertisers, consumers, and other talent management agencies. Most of the respondent agencies in the Nov ’22 INCA Influencer Marketing Report have pledged to be ASCI compliant when running influencer campaigns. ASCI also launched an ‘Endorser Due Diligence’ service to help endorsers avoid making misleading claims in advertisements.

In Apr ‘23, the DoCA proposed the establishment of a self-regulatory body for influencer marketing firms, along with the introduction of a program to acknowledge creators and influencers. Furthermore, the department also suggested the development of a model draft agreement between influencers and brands and urged platforms to incorporate guidelines for misleading ads within their community guidelines. As social media continues to experience rapid growth and influencers remain crowned as the new-age marketing tool, it will become increasingly complex to clearly distinguish between regular and authentic content as opposed to sponsored content.

The increasing need to safeguard consumers from deceptive advertising practices has fuelled a surge in regulations surrounding influencer marketing. As a result, several brands have had to reconsider their branding strategies to ensure they are operating with complete transparency and in a compliant manner. Failure to comply with the new ASCI guidelines will make brands as well as influencers liable for a fine of up to $12,000 (INR 1 million) – a sum which can reach up to $61,600 (INR 5 million) in case of repeat offences. The authority can also ban a particular endorser (of a misleading advertisement) from making any endorsement for a period of 1 to 3 years.

Tightening of disclosure obligations in India is expected to have a profound effect, compelling brands as well as influencers to become compliant and take on increased responsibility for their audience collectively. And as with all other regulations, the catch lies in the enforcement. In the longer term, strict enforcement of such regulations is likely to bring about a favourable impact on the industry and foster greater transparency in terms of influencer generated content.

Author: Deepanshu Arora

Assistant Consultant, Strategy Consulting

Image by Gerd Altmann from Pixabay