Government Guidelines For Social Media Influencers: Up to Rs 50 Lakh Fine for Failing Rules

Kinnary Nensee Kinnary Nensee
Dec 1, 2022 5 min read
Government Guidelines For Social Media Influencers: Up to Rs 50 Lakh Fine for Failing Rules

They are cool, young, smart, working-from-home individuals who have money, fame, success, and notoriety. They are the new-age professionals called social media influencers. These social media influencers are students who are either still studying or have left their education or have studied to become an influencer. They are a different breed from the traditional influencers who were either social activists, intellectuals, politicians, or change-makers in society.

As per Meta (formerly Facebook), they have seen a year-on-year rise of 35% in the number of social media influencers in India as of September 2021. One of the fastest growing industries globally, the influencer marketing industry in India has valued at INR 900 crores and is expected to grow at a CAGR of 25% to reach INR 2200 crores by 2025.

Reasons for the rising Popularity of Social Media Marketing
The Growth of Influencer Marketing in India
How do Influencers Help
Governing the Influencer Marketing Sector
What are the Influencers saying about Guidelines

Reasons for the Rising Popularity of Social Media Marketing

1. Targeted Audience

This is one of the biggest advantages for brands as they can choose influencers based on real-time data. Brands can access the age group that the influencer is targeting, their interests, gender, etc. Celebrity marketing on television targets a wide section of the audience without understanding its relevancy.

2. Cost Effectiveness

This is the bottom line for any business. As an industry, influencer marketing is in a nascent stage and the competition between influencers affects the cost of collaborations. Brands are able to collaborate with many influencers with the same budget and reach a more relevant audience. The value for money in this case is higher.

3. Ease of Platform

Instagram, YouTube, or Tiktok as platforms are free of cost. Brands can advertise their products either with a single photo or a video that reaches audiences without it weighing heavily on the company’s pockets.

4. Trust

Influencers have already built a loyal audience that trusts them. Brands depend on this trust that is automatically transferred to them on the influencer's advice. Influencers are protective of their audience and are wary of promoting products that are questionably in quality.

The Growth of Influencer Marketing in India

Social Media Influencers Demographics

It was in the year 2014 when the concept of Branded Content came into existence around the world. In India, 2016 was the year when social media influencers gained prominence as brands began considering influencer marketing as a strategy. Niche marketing and content-driven marketing were formulated and utilized. Brand success suddenly depended heavily on a combination of the authenticity of the product and the credibility of the influencer.

The sharp growth of influencer marketing and brand collaborations on apps like Instagram and YouTube was seen in the year 2019. Since then, it has steadily grown as brands have shown a growing preference for collaborating with influencers on the internet rather than proceeding with celebrities for television advertisements.

By 2021, Influencer marketing on social media has taken over 73% of the market share leaving only 27% for celebrities. Additionally, the behemoth has grown from traditional sectors like food and beverage, personal care, fashion, and technology to now include sectors like BFSI and fintech too.

How do Influencers Help

Influencers affect all the levels of the funnel metrics including lead generation and conversion. They drive user engagement by using social media tools like sharing links to product pages, using influencer-specific discount codes, and posting reviews of true use. Brands can trace the influencer by their efforts to generate leads or encourage sales.

Even within the BFSI sector brands are collaborating with influencers as people are increasingly relying on them to understand personal finance, discover new BFSI services as well as make important financial decisions.

Over the years, brands have come to heavily rely on value addition through influencer marketing which is much higher than other marketing gimmicks. As per the India Influencer Marketing Report of 2021, 80% of the brands that have collaborated with influencers are of the opinion that the return on investment from influencer marketing is better than other marketing channels.

Governing the Influencer Marketing Sector

Rules for social media influencers, up to $62,000 fine for failing to disclose financial ties

With the sector growing leaps and bounds, there are genuine concerns regarding dubious market practices in absence of any governing body for Social Media Influencer Based Marketing. In July 2021, the Advertising Standards Council of India (ASCI) had begun monitoring digital and social media platforms in an effort to reign in violations of its Influencer Advertising Guidelines.

By May 2022, ASCI along with the Department of Consumer Affairs held a virtual meeting with the stakeholders including e-commerce entities, to discuss the magnitude of fake reviews on their platforms.

As early as last week, the central government has decided to introduce a new set of guidelines for social media influencers in an effort to regulate the sector by introducing transparency of collaborations. The new guidelines are likely to be rolled out within the next two weeks. Among other regulations, the government will make it mandatory for social media influencers and creators to disclose their collaborations for paid reviews and paid promotions. The guidelines would also penalize the creators and influencers up to INR 50 lakhs for non-disclosure of financial ties with brands.

What are the Influencers saying about Guidelines?

The central government’s move to introduce these guidelines has met with unanimous consent from several content creators and influencers. They feel that these guidelines will encourage transparency in sponsorships as well as induce responsibility in large platform product promotions and curb scams. This move will also bring more clarity to users while recognizing social media influencers as legitimate professionals.

Conclusion

Influencer marketing in India will grow and continue to evolve as more and more brands are utilizing this platform for brand awareness and customer acquisition. With India’s vibrant startup ecosystem and bigger established brands looking to expand their customer base, influencer marketing is set up for a bright future as it continues to innovate and upgrade itself.

FAQs

Can we regulate influencer marketing?

The government is set to introduce rules to regulate social media influencers, including penalizing them by as much as β‚Ή50 lakh for failing to disclose financial ties with brands, Central Consumer Protection Authority (CCPA) chief commissioner Nidhi Khare said.

What makes a good social media influencer?

The best influencers engage with their audience, take time to answer questions, stay active on their respective platforms and publish content consistently.

What kind of content do influencers post?

Nowadays, video is perhaps the most popular kind of content they post.

What content is not allowed on Instagram?

Instagram is not a place to support or praise terrorism, organized crime, or hate groups. Offering sexual services, buying or selling firearms, alcohol, and tobacco products between private individuals, and buying or selling non-medical or pharmaceutical drugs are also not allowed.

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