The Effects of Influencer Advertising Disclosure Regulations: Evidence from Instagram

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Abstract

We collect data from fifty top Instagram influencers in Germany and Spain from 2014 to 2019. Germany experienced changes in disclosure regulation for social media sponsorship during the sample period. Using a difference-in-difference approach, we study the impact of the the rules on the content of posts and the nature of interaction of followers with the posts. On the content side, we measure whether posts include suggested disclosure terms and show variable but substantial adoption of disclosure. We use an approach based on a fixed list of words associated with sponsorship (i.e. links, mentions of brands, use of words like "sale") as well as natural language processing to assess the likelihood that a post is sponsored. We show that sponsored content use may have increased after changes in disclosure and that followers may have been negatively affected. On the other hand, there is evidence that consumers' reaction to sponsored posts, measured by likes, may be quite different under stricter disclosure rules, suggesting that the rules could have a substantial impact on information transmission.

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Ershov, D., & Mitchell, M. (2020). The Effects of Influencer Advertising Disclosure Regulations: Evidence from Instagram. In EC 2020 - Proceedings of the 21st ACM Conference on Economics and Computation (pp. 73–74). Association for Computing Machinery. https://doi.org/10.1145/3391403.3399477

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