Why the Influencer Industry Needs Guardrails

Why the Influencer Industry Needs Guardrails

Over the past 20 years the social media influencer industry has grown from nothing into a pervasive global force that has completely rearranged the way information and culture are conceived, produced, marketed, and shared. Commercial sectors such as fashion, beauty, and travel led the way, but nonprofits, government services, and political campaigns are increasingly joining in, hoping to harness the seemingly more authentic medium of influencer marketing.

For the most part, influencer marketing has worked: At the end of 2023 the global industry was worth some $21 billion, according to Influencer Marketing Hub. Surveys conducted by the Keller Advisory Group and Adobe reported that 27 million Americans and 300 million people globally consider themselves content creators. And according to HubSpot, roughly 88% of marketers that had already tried influencer marketing planned to increase or maintain their spend. It is difficult to imagine an organization or a consumer today who is exempt from contending with the realities of a world shaped by influencers. Surveys from Nielsen, Reuters, and others illustrate this striking reality: People trust influencers; social media users get news from influencers more often than from journalists; people believe that brands are better positioned than governments to solve social problems; and becoming an influencer is a top career aspiration for many young people.

Winning at Influencer Marketing:
Series reprint

But the industry has several major problems. It is an established global force that sometimes behaves like a ramshackle start-up, with little professional cohesion and inconsistent consequences for unfair play. My research over the past decade has revealed a number of internal contradictions. The influencer industry is a space for both entrepreneurship and exploitation, connection and harassment, truth and falsehood, self-expression and harm, encountering new ideas and finding comfort in familiar biases. Today the industry stands at an existential turning point. Those working within it—brands, marketers, influencers, and social media companies—have a responsibility to shape a future that prioritizes, incentivizes, and protects buyers, sellers, and influencers. We must all ensure that unethical behavior is punished; expectations, pay, and desired outcomes are standardized; and creators are given the same rights and protections as other professional marketers.

In this article I discuss how the influencer industry became an unregulated market and how we can begin to provide guardrails to prevent influencer and brand misuse.

How Did We Get Here?

The influencer industry was born of a particular historical moment, amid a perfect storm of factors in the 2000s. Software such as WordPress and Blogger made self-publishing accessible to anyone in the world with a computer. Facebook, YouTube, Tumblr, Twitter (now X), and others normalized the phenomenon of “regular” people creating content for the internet. First-generation social media companies introduced themselves as more authentic and democratic than the establishment—a shrewd move in an era of waning public trust in mass media and government—and promised connection and empowerment. That strategy continues to guide them today.

The 2008 financial crisis and the ensuing Great Recession propelled the industry’s growth. Within one year tens of millions of workers lost their jobs. Unemployed and underemployed people flocked to blogging and social media to try to showcase their expertise, to network, and to let people know they were still there. That’s what made the seeming authenticity of early creators so potent. They were, for the most part, people “just like us”—struggling amid economic and professional precarity, toying with new technology, trying to connect with others—at a time when people were seeking alternatives to the faceless institutions that had let them down. And an entire generation coming of age at the time watched, learned, and reoriented their relationship to work.

Advertising and marketing professionals, who also felt the pressure of economic turmoil, began to monetize the relationships between early influencers and their followers—audiences that were far more targeted than those of larger media companies. And, crucially, influencers weren’t governed by journalistic standards. Paying for coverage with cash or free products was suddenly something brands could do. Sponsored content was born.

Landon Nordeman/Trunk Archive

Marketers launched countless ventures in this new medium, aimed at making the process of identifying, selecting, and pricing influencers more efficient. Throughout the 2010s I followed along as this cottage industry rapidly expanded. RewardStyle, dedicated in the early days to making blogs and Instagram shoppable, became a leader in affiliate marketing and now generates more than $4 billion in annual sales for its brand partners. Digital Brand Architects pioneered the influencer-management model and has arranged industry-changing deals for creators such as the blogger and fashion designer Aimee Song and the organization experts behind the Home Edit. Meanwhile, Fohr, Dash Hudson, IZEA Worldwide, and other agencies have created a range of tools and processes to increase the volume and precision of influencer campaigns.

Solving the Industry’s Problems

While the industry has developed into a sophisticated, albeit chaotic, space, it has done so largely outside the confines of regulatory or professional oversight. Its lack of boundaries opens the door for multidirectional exploitation. Marketers, brands, influencers, and platform companies all have opportunities to exploit one another to varying degrees of harm. Platforms are at the helm, able to control what types of content are prioritized, with no mandate for transparency. Brands can pay unpredictably and unfairly. Marketers can obscure metrics, discriminate against creators, or allow unsavory actors into dealmaking spaces, as happens in election seasons when super PACs and activist groups hire influencers through commercial marketplaces. Creators can misrepresent themselves, their expertise, and their business dealings.

Few systems are in place to guard against bad-faith actors’ taking advantage of the industry’s mechanisms. Safeguarding the industry is critically important because of what it sells: the very idea of “realness.” Allowing our understanding of authenticity to be warped and misused, and personal narratives to become vectors for lies and misdirection, will have serious consequences.

The three primary challenges facing the influencer industry all revolve around the lack of guardrails and regulation in what is still a nascent marketplace. What happens when influencers lie? Who gets in trouble when companies take advantage of influencers who endorse their products? And how can we make the industry sustainable and productive for everyone involved?

Next I will discuss each of the industry’s central challenges and provide an overview of what we must do to modernize the influencer industry as a whole, with protections for both consumers and workers at the center.

Don’t: Let bad behavior go unpunished.

Do: Build a team of trustworthy professionals.

Under Federal Trade Commission guidelines, influencers who are paid promoters are expected to provide “clear and conspicuous” disclosure of any and all relationships involving an exchange of goods, whether cash or free products. The FTC’s Disclosures 101 details what this should look like in practice. Yet the consequences for running afoul of such rules are wildly uneven both within the United States and around the world.

The Securities and Exchange Commission fined Kim Kardashian $1.26 million in 2022 after she failed to disclose her paid relationship with EthereumMax, a crypto company she promoted in an Instagram post. The SEC also banned her from promoting cryptocurrency for three years. Because she is one of the highest-profile celebrities in the world, Kardashian was an easy “get” for regulators. But far too much sponsored content and far too many influencers exist for government agencies to effectively oversee them all.

Similar stories have played out repeatedly over the past decade. Federal agencies have gone after Lindsay Lohan, DJ Khaled, and Naomi Campbell—sometimes more than once—for failing to properly disclose the commercial relationships behind their social media posts. More recently the FTC has signaled an expansion of its approach, issuing warning letters to the trade associations American Beverage and the Canadian Sugar Institute along with a dozen high-profile nutrition influencers. Meanwhile, millions of other influencers’ posts escape review.

It thus falls to brands and marketing agencies that work with influencers to ensure their authenticity, which can require significant technological, legal, and managerial resources. Getting it wrong can be damaging. Beyond regulatory issues, working with influencers who fail to disclose their relationships puts brand equity at risk. Plenty of brands have earned a reputation for being all marketing and no substance when it became clear that they prioritized a quick sale over integrity of the product or the message. (A number of wellness products, such as diet teas and supplements, come to mind.)

Many tools and agencies are available to help brands find, vet, price, and hire influencers. Most of them make compelling promises to simplify and streamline the process. But research has shown that in the quest for efficiency, marketing platforms may blunt nuance, fail to surface relevant creators, or unfairly disadvantage others. The marketer should ask critical questions during the sales process. How do these agencies rank qualitative areas such as authenticity and credibility? Why might an influencer be red-flagged or banned from the marketplace or agency? Is internal oversight of partnerships facilitated on the platform or through the agency, and if so, how is it conducted?

Marketers must also consider the impact of the social team, whether in-house or with an agency, on the entire influencer process. The industry has been around long enough to give rise to a wealth of professionals with a decade or more of experience. And a strong point of view—a critical understanding of the industry and a stance on how to help it evolve—can compensate for a lack of formal training among younger workers. When building a team, look for a thoughtful perspective as well as experience.

Nycole Hampton, the senior director of content and marketing at GoodRx, has identified an issue in influencer marketing: the tendency to hire people who love influencers but may not actually understand the industry. “They think it’s this sexy job, this easy job, because they’re already on social media,” she says. “But this is a really important function that should not live in a silo.”

Indeed, in-house influencer-marketing teams sometimes experience condescension from colleagues who dismiss influencer work as superficial or transactional. But internal teams have the potential to be a brand’s best tool, because they understand the brand and relevant stakeholders best. Influencer strategy can and should be connected to companywide strategy and given the forethought and scaffolding that any organizational effort needs to be successful. As the influencer industry becomes larger, more expensive, more visible, and more socially consequential, you must plan for the long term and educate your teams accordingly.

Don’t: Be vague about your intentions or the influencer’s credibility.

Do: Create a clear, mutual set of expectations.

In 2023, amid allegations that the Chinese ultrafast fashion company Shein used forced labor in dangerous working environments, the company paid U.S.-based influencers to tour its facilities. The resulting content was excoriated in the press as corporate propaganda. One influencer, who had no journalistic background or training but called herself “an investigative journalist,” praised the working conditions and posted multiple videos glamorizing the brand. Sharp audiences knew her behavior was out of line with the norms and expectations of professional journalism. But brand-influencer relationships like this demonstrate the lack of clarity about what exactly an influencer’s job is.

Writer, community leader, court jester, content machine, storyteller, technical editor: these are just a few of the terms that influencers and brand executives have used to describe the influencer’s role to me. Depending on their background and topic niche, influencers may perform many overlapping jobs. But that doesn’t mean the role eludes definition.

History shows that earlier media industries such as newspapers, broadcasting, and advertising also faced existential questions during their development—and the way leaders answered those questions had a long-range impact on the future of democracy, culture production, and self-expression. People working in the influencer industry must now confront a central question: What is our purpose? Is it entertainment, advertising, reporting, activism, personal connection, or something else?

The consequences of this uncertainty are manifest in the lack of shared expectations around how to select, price, cast, and use influencers—or who even counts as an influencer. Roughly 13 million people in the United States call social media content creation their full-time job—about the same number as are in the manufacturing sector. Yet professional cohesion is scant around what the work looks like or is worth.

An excellent example of the disconnect between brands, influencers, and consumers was brought to light in late 2023, when Italian regulators announced a fraud investigation into the influencer Chiara Ferragni. Ferragni, who has almost 30 million followers on Instagram, had endorsed a Christmas cake in 2022 made by the Italian food company Balocco. According to Ferragni’s and Balocco’s posts, proceeds from the cakes, which cost three times as much as a normal Balocco cake, would go to a children’s hospital. But after the campaign, for which Ferragni earned more than €1 million, no such donation was made, according to Italy’s antitrust authority. In December 2023 the authority fined her €1 million and Balocco €420,000 for misleading consumers.

Governments have begun to build an equitable industry through regulation. The United Kingdom and France, for example, have introduced transparency laws designed to protect influencers, brands, and consumers alike. In 2023 France passed what it hailed as the most comprehensive influencer regulation in the world, requiring influencers to have a written contract for every payment or gift of a certain value. They must clearly state in the post if it is sponsored. Some things, such as tobacco and betting, are banned from any promotion at all. France also has rules requiring transparency around drop shipping (whereby a business accepts orders without keeping inventory on hand), a popular income stream for influencers. In 2021 France enacted legislation aimed at protecting child influencers the way child actors and models are protected. It regulates the number of hours that children under age 16 may work in a week, requires that their earnings be protected in a bank account until age 16, and enshrines their “right to be forgotten”—meaning that platforms must honor their requests for content to be taken down.

The UK was one of the first countries to apply advertising laws to influencers. Since 2008 it has been illegal in that country for brands and influencers to post paid content without a disclaimer. And in 2022 the UK’s Competition and Markets Authority published guidelines relating to ads and paid promotions by influencers. According to one guideline, social media platforms must give users tools to label commercial content.

But government agencies and watchdog groups can do only so much. The influencer industry is a global force, and the stakes for influencers vary according to local, national, and regional laws and cultures. Ultimately, social media content creation will become a “regular” job—another role in our ever-expanding global media landscape. Bringing stability to both expectations and payment infrastructures is necessary for long-term sustainability. Contracts should always include clear compensation terms and schedules, along with the assumption of compliance with applicable laws and regulations. More broadly, the industry needs formal gatherings and internal communications to share best practices, set standards for dealmaking and disclosure, and hear about participants’ pain points. (More on this in a moment.)

Don’t: Chase clicks.

Do: Selectively commission work that aligns with your values.

The influencer industry doesn’t work if platforms and brands do not incentivize quality content. Creators bear the brunt of the industry’s pervasive uncertainty: They must spend a significant amount of time navigating changing content norms, new platforms and tools, uneven contracts, high expectations for audience engagement, and the blowback that can come with being a public figure with few professional protections. Many leaders on both the brand and influencer sides want transactional relationships to go by the wayside, and for good reason. Longer-term professional relationships that focus on a genuine alignment of values and goals rather than virality and content quantity tend to be more gratifying for everyone involved.

Landon Nordeman/Trunk Archive

At the same time, platforms and some brands pressure more people to think of themselves as creators, with diminishing returns. In such a crowded market, millions of self-identified creators make less than $2,000 a year, according to the Keller Advisory survey. The same survey found that one-third of all creators, and nearly half of full-timers, report burnout from the demands of creating content. Most would like the nature of their brand collaborations to change.

Brian Lindo, a food and lifestyle content creator with 379,000 Instagram followers at this writing, points to his work with PepsiCo and its Dig In campaign as an example of mutually beneficial influencer-brand collaboration. Dig In shines a spotlight on Black-owned restaurants that historically may not have gotten much press. “This campaign is a door to help tell a story,” Lindo says. “[PepsiCo] gave me this platform to say, hey, go do some research on your own, leverage your following, crowdsource, and figure out if there are restaurants that need highlighting.”

Tiffaine Stephens, the PepsiCo senior marketing manager for Dig In, explains, “You have to be out there and have your feet on the street to understand what’s happening. Only work with people who have built credibility and knowledge and have insight about problems and how they can use their voices.”

If the Dig In campaign goes viral, great. But the goal of the initiative is to tell honest, compelling stories that align PepsiCo with positive community outreach. Providing influencers with campaign briefs and goals is still a necessary part of the process, but brands should look for influencers they can trust to tell a story in their own honest way, backed up by expertise and community connections. A large following or a viral TikTok does not an influencer make. Get to know the person behind the account as you would any other work colleague. Influencers can become a core part of your social strategy, used across the organization.

If precarity and a lack of boundaries cause much of the industry’s woes, professionalizing the industry is the answer. People working in it are optimistic about what lies ahead. Let’s translate that optimism into a clear, prosocial vision of the future, with defined roles and expectations for everyone involved internally, and a better public understanding of the industry. Its fate lies in the community and solidarity among those working within it.

We can learn from other cultural industries. Influencers, marketers, and agencies should draft and implement a professional code of ethics like the one maintained by the Society of Professional Journalists. They should form a robust trade organization like, for example, the Council of Fashion Designers of America, to educate the public, award quality and innovative work, and provide support for early-career workers. We saw in the summer of 2023 how the unions SAG-AFTRA and the Writers Guild negotiated and codified industrywide standards for pay and working conditions in Hollywood. The differences between influencers and Hollywood workers blur more as time passes, from the basic setup of their work—on a project basis, sometimes as individual contributors and sometimes as part of a team, typically in collaboration with large corporations that control the methods of distribution—to the role they occupy in the hearts and minds of their fans. Influencers might take a cue from the success of Hollywood unions, either by starting their own or by joining SAG-AFTRA.

Whether through unionization or some other form of professionalization, pay equity, platform transparency and accountability, and protection of influencers’ rights should remain front and center.