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Don’t have the budget for a celebrity Instagrammer? No worries, you can now work with ‘micro influencers’ instead

If a company isn't prepared to stump up the six-figure sum it might need to pay for a celebrity endorsement on Instagram, no matter: businesses can now work with a growing community of "micro influencers," people who have 10,000 to 100,000 followers on social media and the power to reach niche audiences.

These are people likely to have a day job, but who use their social media following as a side project, getting paid by brands to promote products or services to followers. And now, companies don't even need to have direct contact with those less-followed: platforms such as Hashoff, Indahash and Neoreach broker deals with companies and link them to micro influencers, who then create posts on Instagram or other networks incorporating the brand.

But research by Hashoff sent to CNBC this week suggests that brands' relationships with mid-tier stars are in their infancy: only 14 percent of influencers have been working with brands for more than two years, in an online survey it did in March 2017 with 300 people signed up to its platform in the U.S.

Labeling paid posts

And new ways of communicating mean new rules, with regulators having to work fast to keep up. Last week, the Federal Trade Commission revealed that it had sent out letters to around 90 celebrities, athletes and marketers for not labeling paid-for posts correctly.

Correct labels might include #spon or #ad, or making it clear that a post is written in conjunction with a company, as in the caption from Zach Lipson above.

But rather than the big names, it is this new raft of mid-tier social media posters who might need educating, according to Thomas Crampton, Ogilvy's global managing director of social.

"Whenever there is a shift in communication on social media, there are people who are not going to understand [the rules]. The other area that is extremely important to focus on is [the] people who are coming of age in social media and don't necessarily know what the rules are," he told CNBC by phone.

Labeling paid-for Instagram posts correctly actually works better for consumers, says Joanna Pawluk, chief growth officer at Indahash. The influencer platform launched at the start of 2016 and is now in almost 60 countries, counting Nestle, McDonald's and Danone among its clients.

"When you say 'out loud' that this is a branded [or] sponsored post, you don't really get any backlash from the audience. It's just a matter of being truthful and honest with people that you are talking to in your regular life as well as in your social media life," Pawluk told CNBC by phone.

Indahash works with mid-tier 'influencers' who create branded posts on Instagram
Indahash
Indahash works with mid-tier 'influencers' who create branded posts on Instagram

Instagrammers signed up to Indahash have to include #ad or #spon in paid-for content, and these are approved by the platform before being posted.

Getting endorsements right

The trick with influencer partnerships is to get the tone of voice right, whatever the content. If a social media star is paid to say something that jars with their personality, it won't come across in an authentic way.

"It's a really interesting point about what is authentic now," Andrew Hirsch, chief executive of content agency John Brown Media told CNBC via phone. "I think if we are creating content for brands and we have a celebrity or an influencer who we pay to write that column or blog, if we have done our job properly and got the right celebrity or influencer, it's only enhancing the [brand] positioning."

Ross Brown, VP of brand strategy and content at entertainment agency PMK.BNC, agrees that tone is crucial.

"The emphasis will continue to be placed on influencers positioning themselves as excellent creators of content, rather than as great sign posters of where the paycheck is coming from. If the messaging is lazy, or the influencer an inauthentic choice for the brand, then consumers may start to care," he told CNBC by email.

A social media show-down

Businesses are now extremely wary of what they put out into the public, at the same time as having more ways than ever to do so, according to Jeffrey Greenbaum, managing partner at law firm Frankfurt Kurnit.

"When you make a mistake today in advertising, because of the reach of social media and the speed with which information gets communicated, social media makes small mistakes [into] big mistakes," he told CNBC by phone.

Added to this, consumers scrolling through their Instagram feeds don't really scrutinize what influencers are posting, but brands need to be aware of the rules, he said.

Kizil Kaya Photos | Getty

"U.S. regulators like the FTC do not believe that consumers approach social media in a particularly sophisticated way or that they necessarily understand what it is that they are seeing.

"So although I think there are people who believe that consumers understand that when celebrities mention brands there is some kind of financial connection, then that's certainly not the position the FTC or regulators are taking right now. A lot of it depends on the context," Greenbaum said.

And with the rules on sponsored posts varying all over the world, there is a need for clarity, said Brown at PMK.BNC.

"What's needed is regulation across the entire industry on every level, not just the labeling of posts. Almost every brand now uses celebrity influence at some level. Social media is global, but enforcing rules across continents will require more than a stern letter from the FTC."

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