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The Department of Consumer Affairs last week made it mandatory for social media influencers to disclose all the material benefits received by them, including gifts, discounts and awards. Failing to do so will attract strict legal action. The influencer may even be banned from endorsements for up to three years.
According to the new guidelines named "Endorsement Know Hows - for celebrities, influencers and virtual media influencers (Avatar or computer generated character) on social media platforms", the Central Consumer Protection Authority (CCPA) can also impose a penalty of up to Rs 10 lakh on manufacturers and endorsers. The penalty may even go up to Rs 50 lakh for subsequent offences.
What is an "influencer"?
An influencer is an individual who has substantial control over the behaviour of others. They have a sizable following, and their audience tends to be influenced by their choices, opinions, and decisions.
When they have a large following on social media and their circle of influence lies on the platform they use, these are called social media influencers. In a marketing context, they work with companies and brands to promote products and services.
How do companies use them for marketing?
Unlike direct advertising, here, brands leverage the audience of the influencers to drive awareness about their products and ultimately improve sales.
The influencers are paid to promote the brand, believing that their recommendation will prompt the audience to buy the products. This process of endorsing or promoting particular products by these influencers is known as influencer marketing.
Companies ranging from e-commerce to online gaming are now paying huge sums of money for influencer marketing.
While launching the guidelines last week, the consumer affairs secretary Rohit Kumar Singh said that the size of the influencer market in India is Rs 1,275 crore. It is expected to reach Rs 2,800 crore by 2025 with an annual growth rate of 19-20 per cent.
Globally, the market is expected to top $24 billion by 2025.
Types of influencers
There are several types of influencers, but they are grouped into four categories based on the number of followers.
These have less than 10,000 followers. Generally, these influencers are experts in niche areas. Even though their following is low, they have proactive and very active communication with their audience.
They have a following of 10,000 to 100,000 people. They are also typically niche experts and have reasonable communication with their audience.
These influencers have a following of 100,000 to 1 million. These are approached by brands from all fields as they do not generally have a niche audience. Moreover, they tend to have a more rapid impact on product sales.
They have a following of over 1 million. Apart from online influence, these influencers also have a substantial offline presence. Brands also use them for offline promotions and events.
Apart from all these, there are several categories of influencers based on their niches, like finfluencers (offering financial advice), gamers, travellers, musicians, food critics and fashion bloggers, among others.
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First Published: Mon, January 23 2023. 13:22 IST