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Why the 2020 presidential election could improve the wild west rep of influencer marketing

According to a leading economist, influencer marketing is likely to never be free of fraudulent activity until a seismic event forces the industry to standardize its practices. Enter: the 2020 US presidential election.

Professor Roberto Cavazos estimates the economic cost of influencer fraud to be $1.3bn.

In the Economic Cost of Bad Actors on the Internet study, which was commissioned by ad verification company Cheq and published in July, the economist found marketers were essentially paying a “tax” of around 15% on their influencer activity through direct and indirect losses, such as fake followers, inflated results, dodgy attribution and an erosion of trust through unlabeled ads and poor quality marketing.

The University of Baltimore professor predicts global influencer marketing spend will rise to $10bn in 2020. However, his research suggests there will still be “a lot of hitches to come” down the road – despite the public calls from brands to stamp out bad practice in the arena.

“It's a very new industry, and not enough is known as a whole about [how it operates],” he told The Drum. “A quick and comprehensive study of how the industry works – who engages with who – is in order, and I think that will open the door to some sort of standardized template of how business should be done.

“It’s a matter of time before that happens.”

Cavazos is unsure whether brands, agencies or influencers will lead the charge to standardization with regards to contracts, payment, measurement, attribution and general best practice.

However, he is also unsure whether an industry-wide move towards a standard will come about organically.

“Looking at other industries, [I’ve learned that] sometimes people will [change] on their own validation, but sometimes it's an external event that compels it,” he said.

“I think Fyre Festival was a public wakeup call. And I think the political campaigns of 2020 are going to bring a lot more attention to influencer marketing.”

Eyes on the #ads

After the online political wins of Donald Trump in the US and the Leave campaign in the UK, the world’s media and watchdogs will be monitoring digital campaigning closer than ever as the next big vote draws nearer.

Cavazos predicts candidates will simultaneously ramp up spend on influencer marketing, drawing attention to the transactional nature of such content more than ever before.

“There’s going to be all sorts of attention on the sector,” he said. “It’s going to be changing quite a bit and how it will look in the next two or three years warrants all of us to follow very closely.”

Much like Facebook’s Cambridge Analytica scandal resulted in a public call for legislative intervention in social media privacy, Cavazos imagines the public’s eye on political influencer marketing will result in similar calls for a third-party arbitrator to patrol fake accounts and undeclared advertising spend.

This interest has already begun to lift as Democratic candidates begin to rally and Donald Trump readies his reelection campaign. Both sides are experimenting with tactics connected to the ambiguous notion of influencer campaigning.

Features have been published on Elizabeth Warren’s readiness to take selfies with her supporters in the hopes they will organically spread her message on social media, while the University of Southern California recently revealed Twitter bots spreading political messaging have grown “more sophisticated” since the 2016 presidential election.

However, Cavazos does not believe government legislature is the answer to halting immoral and fraudulent influencer activity within and without the political domain.

Platforms and martech will develop much faster than laws can, he argued, while the global nature of influencer marketing means no one government can legislate on content created by multinational conglomerates that appears in feeds around the world.

Jeff Semones, head of social media and managing partner at MediaCom, agrees. At the Influencer Fraudnomics Summit in New York, the marketer said it would be unwise to wait until US lawmakers sit up and take notice of the industry's influencer problems, electoral implications notwithstanding.

“I’m shocked at the lack of inaction [in the industry] – we need to protect consumers and advertisers now,” he said. “For legislative minds, this is so foreign to them. They can’t even wrap their heads around it; we can barely keep up and it’s our job.

“I hope that will change in the future.”

A grassroots movement for standards

Still, regulation of influencer marketing continues to develop under governmental umbrellas such as the US’s Federal Trade Commission and the UK’s Advertising Standards Authority. The latter recently published research reinforcing the importance of labeling paid-for posts, and warned it will “police” brands and influencers who fail to do so.

But while the industry waits for a more programmatic, enforceable way to monitor fraudulent and misleading content, a growing population of marketers are laying down the contractual roots of a standard best practice, in order to protect the reputation of influencer marketing and those who produce it.

Susan Brooks, the founder of consultancy Forefront, is pushing back against “middleman” influencer management companies, for instance, because of the layer of opacity they add to contracts between influencer and brand.

“[Signing directly] means a brand knows that the influencer is aware of what they're getting paid and what their obligations are,” she said. “But if you have a third party sign an agreement on their behalf they can pay them whatever they want and ask them for whatever they want.”

Meanwhile, Fenwick & West partner Vejay Lalla, is advocating for standardized contract guidelines to protect all parties from fraudulent or incompetent actors. He imagines a spinoff of the widely adopted IAB media buying terms that address content creation and influencer marketing directly.

Thus far, the IAB has published a guide to ‘Influencer Marketing for Publishers’ but has not created contract templates. The 4As said it has “yet to address the issue”. The ANA did not respond to The Drum’s request for comment at the time of publication.

“I think there should be a push to create some kind of standardized templates that are hopefully done by collective industry groups together,” said Lalla. “I think it would be great to have a standard set of terms that show the industry is serious about transparency and verification.”

Featured by The Drum

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