By Stephanie Kwok, Senior Account Director
When was the last time you saw a sponsored social media post? Probably not that long ago, right? We’re used to seeing influencers sharing #spon and #ad posts for all kinds of things – including posts that can sometimes feel unrelated to their ‘personal brand.’ This is something I’ve noticed a lot when it comes to financial advice or, as many in the industry are calling it, ‘finfluencing.’
The rise of the finfluencer is in full force, even among lifestyle influencers, who have been mixing up their usual lifestyle content to talk finance and all things money-saving. From Love Island contestants flaunting Revolut and N26 cards on Instagram, rappers vouching for CashApp, and even Paris Hilton backing Klarna.
Working with influencers isn’t all that new to fintechs. What is relatively new though, is influencers flouting cryptocurrencies and the trading and investing of certain coins. The consequences of these partnerships can be detrimental if not executed with the consumer’s interests front of mind.
The SEC’s recent lawsuit against Kim Kardashian is a good case in point. Last year, Kimmy K found herself in scalding hot water with the Securities and Exchange Commission. Kim had undisclosed payments for promoting EthereumMax on her Instagram account. The lawsuit ended in Kim having to pay $1.26m in fines and Gary Gensler getting in front of the camera to warn other celebrities and brands that these endorsements will not be tolerated.
When it comes to regulation in this volatile space, unfortunately it still lags behind technological change – particularly with emerging technologies such as digital assets. This is alarming given the young audience on social media channels and the burgeoning influence social platforms have on our daily lives.
There’s some good news on the horizon. Just before Christmas, the UK Treasury finalised plans to regulate the crypto industry, including restrictions on the advertising of crypto products. The EU also announced its Markets in Crypto Assets regulation (MiCA), which will create a set of rules for crypto assets and related activities and services. It’s looking like MiCa won’t be fully in action until 2024, but at least it’s happening.
And it’s very much needed, because investments in high growth fintech areas like crypto assets and NFTs aren’t currently protected by the FCA. In the meantime, the Advertising Standards Agency (ASA) has some guidelines on their website about how influencers should label their paid posts and highlight the risks associated with investment, but it’s important to note these are ‘guidelines’ not regulations. So, there’s still the risk of people being misled if they’re not followed.
I think the way forward’s clear here for communications pros. While regulators begin to introduce new measures, brands should avoid trivialising crypto (à la Papa John’s). This means holding back on the hyperbole when talking about their product or service and its benefits. And instead, focusing on building messaging that’s totally transparent around risk.
Brands shouldn’t always rely on the biggest influencers when it comes to collaboration. Just because they have a big following, it doesn’t mean they’ll yield get the best results. It’s more about choosing influencers that people find relatable, credible and relevant to the product.
Finally – and this may sound a little obvious – make sure the influencer’s totally comfortable talking about crypto and finance. I’ve seen influencers claiming personal ignorance across their social content while discussing, and, arguably, promoting fintech and crypto. I’ve also seen TikToks in recent months caveat #notfinancialadvice alongside a video expressing how life-changing their decision to invest in an NFT was. It might just be me, but this feels a little like financial advice, despite what the hashtag claims.
While I’m all for including disclaimers, I think they need to be explicitly mentioned and that people should be encouraged to do their own research, too. It’d be foolish not to, given recent crypto-related fiascos like the FTX collapse and Terra-Luna crash which have created a lot of distrust for the industry.
Being present on social media and using influencer marketing makes sense for fintech and crypto companies. They can help revolutionise their relationships with customers and can humanise an industry that’s traditionally considered cold and perhaps even a little clinical.
In the absence of concise fintech and crypto regulations, businesses in this space should ensure their content – particularly on social media – separates financial fact from fiction with transparent and concise content that follows best practice.
And remember: while getting the biggest trending influencer on board may feel like a great idea to grab the attention of a wider, different audience, brands need to be careful navigating this space. More important than a big celebrity presence is complete transparency around what people are actually signing up to – especially when money’s involved. Maybe I’ll write a follow up blog when we receive more clarity on the advertising of crypto assets, depending on the engagement levels of this one…