Will self-declaration mandate have any impact on influencer marketing?

New Delhi: In June 2024, the Indian government introduced a new regulation – the self-declaration mandate (SDC). This mandate requires advertisers and advertising agencies to submit a declaration before publishing any advertisements. While intended to promote transparency and curb misleading advertising, the SDC currently has limitations when it comes to influencer marketing.

Spotlight on the limitations

The SDC primarily targets traditional advertising formats like print, television, and digital media through established channels. The overall focus on advertising transparency due to the SDC might indirectly encourage influencers and brands to be more mindful of ASCI guidelines and ensure proper disclosures in their collaborations. 

But influencer marketing, often operating on social media platforms outside the purview of traditional advertising agencies, might fall outside the immediate scope of the SDC.

Kushal Sanghvi, Business Mentor, HRD Network, said, “It's a long-term good proposition, and in terms of the social media and influencer marketing space, the need of the hour is to try and have some sort of an industry, sort of a repertoire of places that people can dive into.” 

He shed light on the struggles of small-scale brands in investing in influencer marketing as he noted that a lot of pricing being done in the social media space is a supply and demand eventuality. 

He said, “A large brand will be happy to spend 5 lakhs on someone putting a Twitter post. And a small brand would be thinking 10 times about even spending 20,000 rupees on a deal as well.”

He concluded that the transparency bequeathed upon by the SDc would allow for more structure, better tapping of consumer insights and optimised investments for effective performance analysis.

India's influencer marketing industry is booming, with brands increasingly tapping social media stars to reach consumers. With the responsibility of ensuring ethical practices and protect consumers from misleading advertising, the Advertising Standards Council of India (ASCI), established influencer marketing guidelines in 2021. However, as the industry evolves, some argue that these guidelines contain loopholes that this mandate is not well-thought or comprehensive enough.

Hitarth Dadia, CEO and Partner, Nofilter, said, “Our industry is only about six to seven years old, which is relatively young. While seven years might seem long, it’s still a fledgling industry, lacking standardisation. Brands paying creators to simply produce ads isn’t the best use of the creator’s credibility or creativity.”

Even if the SDC is eventually expanded to encompass influencer marketing, additional paperwork and compliance requirements could create an administrative burden for both influencers and brands. This could potentially stifle creativity and hinder collaborations within the industry. 

Rohan Shah, co-founder of Realatte Digital Marketing Agency, spotlighted the need for agencies to develop tools and guidelines to facilitate adherence to regulations such that it can foster innovation in compliance solutions, making it easier for influencers to meet disclosure standards without compromising their creative processes.

With a focus on measures to regulate the influencer marketing space beyond the SDC mandate, Dadia believed that involving creators in marketing and advertising discussions can significantly shape campaign structures and enhance conversions. He termed this collaborative approach as a forward-thinking strategy for the industry.

The SDC's implementation could also pave the way for future collaboration between the Ministry of Information and Broadcasting (enforcing the SDC) and ASCI (responsible for influencer marketing guidelines). This collaboration could lead to a more comprehensive framework encompassing all aspects of advertising transparency.

Chaaya Baradhwaaj, Founder, BC Web Wise, said, “Creating specific regulations for influencer partnerships and branded content can ensure clarity and compliance within the SDC framework, encouraging clear and transparent disclosure of sponsored content.”

The rise of influencer marketing and the need for regulation

India's digital landscape is vast, with millions following social media personalities with niche expertise or relatable lifestyles. Influencer marketing leverages the trust and social clout of individuals online to promote products or services. 

While the ASCI guidelines represent a positive step toward transparency, some industry experts point out potential loopholes.  One key concern is the lack of a clear definition for ‘material connection.’

Ambiguity around this term can lead to confusion, with influencers unsure whether seemingly minor benefits like gifted products require disclosure. 

Another potential loophole lies in the focus on disclosure format over intent. The guidelines emphasise the “how” of disclosure – placement of text or spoken statements. A cleverly worded disclosure might not effectively communicate the true nature of a sponsored relationship. 

The current focus on established influencers might not address the rise of micro-influencers –individuals with smaller but highly engaged audiences. 

Without specific guidance for micro-influencers, inconsistencies in disclosure practices could emerge.