The Department of Consumer Affairs is expected to introduce its guidelines on social media influencers, making it mandatory for them to declare the exact nature of their association with the products they endorse, by the end of the month. Industry watchers are optimistic that the guidelines will not only help regulate the industry but will also enable consumers make more informed purchase decisions.
As per the proposed guidelines, if social media influencers endorse any brand against a fee, they will have to declare their association with that brand. Otherwise it will be deemed misleading advertising, Rohit Kumar Singh, secretary, Department of Consumer Affairs, told FE. Markets such as the US have such guidelines for social media influencers already in place, so why not, he pointed out.
The new provisions will include a penalty of 10 lakh for first-time offenders, which could extend to20-50 lakh for repeat offenders, said some reports.
According to GroupM INCA’s India Influencer Marketing Report, the industry is expected to grow at a compound annual growth rate (CAGR) of 25% till 2025 to reach a size of `2,200 crore. Yashi Bisani, associate director of brand marketing, Treebo Hotels (the hotel chain works with both paid and barter collaborations with influencers), opines that when the proposed guidelines come into force, there might be a marginal drop in brands spending on the influencer marketing. But given the potential of the market, brands will scout for more creative ways of advertising their products while keeping the audiences engaged.
Last year, the Advertising Standards Council of India (ASCI) issued similar guidelines and made it obligatory for all digital influencers to distinctly label promotional content they post, and do proper due diligence about products or services they associate with online.
While ASCI guidelines in the past had helped restrain fake brands and reviews to an extent, the government’s decision will now give the whole process a stamp of legitimacy, says Aayush Tiwari, VP, talent management and music business, Monk Entertainment.
The new framework will also ring-fence the credibility of the brand and the interest of the content creator. “The upcoming guidelines can help consumers to make a more informed purchase decision. The practice of misleading customers prevalent in the virtual world will stop,” says Ramya Ramachandran, CEO and founder, Whoppl.
However, at times, brands encourage honest testimonials from influencers by sending them products to try/use, or test. With the guidelines in place, she adds, the influencer in question will have to use disclaimers that could end up undermining a genuine review. There is also no clarity on where or how to run the disclaimers.
Ambika Sharma, founder and MD, Pulp Strategy, notes that the clauses seeking honesty of statements and due diligence, and conditions laid for expert endorsements, will put unnecessary litigation burden on influencers. Micro-influencers, especially, may become over cautious as they don’t have the resources for potential litigation. This can hinder the growth of the digital advertising industry in the short term.
Some influencers have also raised concerns. Neel Salekar, digital content creator (with over 1.3 million followers across all social media platforms), fears that with such declarations on the screen, audiences might get distracted and be unable to enjoy the content. If the brand-content integration is not smooth, user engagement for the post might dip, he avers.
And that’s a space that will be interesting to watch — to make a piece of communication so engaging that it grabs attention — says Madan Gowri, a YouTuber with over 8 million subscribers.
It’s important to note here that influencers and social media personalities who receive free items from companies are liable to pay taxes — TDS at the rate of 10%. The guidelines issued by the income tax department came into force on July 1, 2022 this year. That apart, the consumer affairs ministry is also in the last stages of finalisation of a framework to check fake reviews on e-commerce platforms.
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