How important is it for influencers to share that they are being compensated (financially, or with product) with their followers and audience? Instagram is watching influencers to ensure they are being transparent with their audiences. Brands using influencers for marketing and advertising continue to be a popular tactics to boost brand awareness, extend messaging and drive purchases.

According to a recent report by Instagram, they asked influencers to include a “Paid Partnership” label on posts they are being compensated to share. Instagram explained: “As more and more partnerships form on Instagram, it’s important to ensure the community is able to easily recognize when someone they follow is paid to post content.”

Furthermore, according to a recent study by Mediakix, “93% of sponsored posts aren’t clearly disclosed.”  Therefore, this means their posts are not labelled clearly enough for users to understand that they are looking at paid-for content.

To combat this, Instagram is trying to solve this challenge by changing how influencer posts are tagged. Influencers have been asked to include the new tag and to clearly disclose their relationships to brands.

Full Disclosure Needed

What is behind this new push for influencer disclosure? The Federal Trade Commission in the U.S. sent out more than 90 letters to influencers on Instagram in April “reminding” them to “clearly and conspicuously disclose their relationships to brands.”

As a result, influencers’ failure to use the tag and to disclose the ad in the post’s copy could generate problems with the FTC. Consequently, the federal agency could take action against influencers or brands if they repeatedly violate their guidelines; such actions could include fines of tens of thousands of dollars per day.

Most noteworthy, it will be interesting to watch how Instagram enforces the new tagging guidelines. We at Fifth Story believe it’s important to be transparent with consumers and think that the trust that accompanies full disclosure strengthens the relationship between the influencer and the brand(s) they are working with.