How will the government guidelines for social media influencers impact the ecosystem?

In a major development, the government is going to roll out guidelines for social media influencers - making it mandatory for them to declare that they are endorsing a product, as per sources.

The Central Consumer Protection Authority (CCPA), under the Department of Consumer Affairs, has completed consultation with all key stakeholders on the matter, and the guidelines are expected to come out in the next 10 days. Reports have quoted Nidhi Khare, Chairperson of CCPA, saying that the penalties for violations could range from Rs 10 – Rs 50 lakh for influencers.

Earlier the ASCI guidelines had resulted in a major shift in the influencer marketing space and brands had to resort to changed practices to ensure compliance. Therefore, brands had also become vigilant about promotional disclaimers and tags, so experts don’t see any major changes happening after the government’s guidelines are announced.

Manisha Kapoor

Manisha Kapoor, CEO & Secretary General, ASCI said the Consumer Protection Act 2019, already places responsibility of honest advertising on endorsers, among others. Hence this move is consistent with the provisions of the Act. As per her, these guidelines, once introduced, will go a long way in spreading awareness among consumers about the social media posts that are transactional in nature.

“The Department of Consumer Affairs (DoCA)has been communicating with ASCI in order to understand the current provisions and global guidelines around influencer marketing. We anticipate the guidelines to be on similar global principles, Kapoor added.

Ambika Sharma

The rules will now only place unnecessary roadblocks and scepticism in the minds of endorsers, as per Ambika Sharma, Founder and MD, Pulp Strategy. According to her, a simple and mandatory disclosure specifying the paid content and their personal experience with its usage could solve the problem.  

However, as per her, the guidelines may scare smaller influencers and in turn deter the growth of the influencer marketing industry for a while, but it will be beneficial in the long run. In the long run, this will lead to more responsible behaviour in the digital marketing ecosystem, Sharma stated.

In 2021, GroupM’s INCA report pegged influencer marketing business at Rs 900 crores in India and predicted that it is set to touch Rs 2,200 crores by 2025.

Ramya Ramachandran

The growth and size of the influencer marketing industry has caught the government’s attention. Ramya Ramachandran, Founder and CEO of Whoppl, believes the influencer marketing industry is a very interesting space and with the increase in e-commerce and virtual shopping, these regulations will help to make it more transparent for the consumers.

Earlier in June, CCPA had notified ‘Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022’ to curb misleading advertisements and protect the consumers, who may be exploited or affected by such advertisements. 

Rachit Juneja

Rachit Juneja, Co-Founder and Chief Executive Officer at Sheeko, said, “ASCI has been already sending notices to brands, seeing a lot of collaborations, there won’t be much of coverage under the new guidelines, already 95% of the brands are doing this without partnership tags. Hence, the impact will be only seen on the sensitive category brands like alcohol, cigarettes and mother products ads, in which communication can go misleading sometimes.”

The fashion and beauty product industry will not see much of an impact due to the guidelines, as per him.

Sharma of Pulp Strategy, however, also pointed out that some clauses and conditions laid for expert endorsements in the new guidelines can put unnecessary litigation burden on influencers. This may lead to the micro-influencers becoming over-cautious as they usually don't have the resources for taking legal help in case of litigation.

Raminder Singh

While on the other hand, Raminder Singh - Founder and CEO of Celebfie - feels it is a positive move by the Ministry of Consumer Affairs in favour of the protection of consumer interest and consumer rights.

Deepak Sakhuja

“This step by the government will standardise the disclosures giving a formal framework to this sector,” said Deepak Sakhuja, Co-founder of Ripple Links. “Moreover, the new guidelines will lend recognition and respect to the influencer marketing ecosystem and will also make the workings of the industry transparent, benefitting all stakeholders in the entire value chain.”

Last year in May, ASCI released guidelines for influencers. The guidelines said that all advertisements published by social media influencers or their representatives, on such influencers’ accounts must carry a disclosure label that clearly identifies it as an advertisement. The disclosure must be made in a manner that is well understood by an average consumer. Along with a few other guidelines, ASCI advised influencers to review and satisfy themselves that the advertiser is in a position to substantiate the claims made in the advertisement.