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The creator economy in India has witnessed exponential growth, becoming a key driver for brands, particularly in the beauty, fashion, health, and lifestyle industries. Social media influencers have emerged as major players with the power to drive and influence consumer behaviour.

According to a report by the Advertising Standards Council of India (ASCI), 70% of Indians are more likely to purchase a product endorsed by an influencer, which shows the power these creators entail. The relationship between influencers and their audiences hinges on trust, and ethical practices are critical to maintaining it.

Considering this, the role of an influencer marketing agency is crucial, as it goes beyond simply connecting creators with brands. It involves ensuring collaborations are built on a foundation of transparency and responsibility, with a strong emphasis on maintaining ethical practices throughout the partnership.

However, when a content creator is collaborating with a brand, we need to understand it’s not just the influencer’s sole responsibility to keep a check. Influencers and brands have their responsibilities to the communities they operate in.

Navigating sponsored content indeed requires balancing authenticity with commercial obligations to maintain trust in the audience while delivering value to brand partners. Even brands are increasingly seeking collaborations with creators who authentically use their products, invest time in understanding them thoroughly, and work closely to craft genuine, organic stories that resonate with their audience.

Today, influencers hold considerable power to shape trends, drive consumer behaviour, and expand brand visibility across Instagram, YouTube, and TikTok. With this power comes the responsibility to manage sponsored content ethically.

While sponsored collaborations are a major source of income, influencers often face the challenge of balancing their personal authenticity with their obligations to brands.

Authentic endorsements—where influencers genuinely use and believe in the products they promote—help maintain trust even when financial incentives are involved.

It is crucial to facilitate partnerships that enhance the credibility of the brand and the influencer rather than diluting their voice. Also, we need to accept that over-commercialisation risks alienating followers, which can damage credibility.

Unlike traditional celebrities, influencers are often seen as more relatable, offering honest opinions and personal stories that resonate with their audience. This relatability is a key reason why brands are increasingly inclined to engage with micro-influencers, who tend to have smaller but highly engaged followings. 

Micro-creators are closely connected to their audience and can build more personal, genuine relationships, making their recommendations more impactful and trusted by their communities.

However, as the industry becomes more commercialised, scepticism among followers grows. Audiences are smart and quick to spot overly promotional content or misrepresentations, which can rapidly erode the trust influencers have spent years building.

Here, talent management agencies can step in and encourage influencers to prioritise trust over short-term financial gains. Promoting products the influencer hasn’t personally used or making exaggerated claims can harm the influencer’s reputation and the brand’s image.

Identifying the growing power of influencers, governments and regulatory bodies are introducing stricter guidelines to ensure transparency in paid endorsements. New mandates are introduced asking to give clear disclosure of sponsored content through hashtags or a clear mention of “paid content”. In India, ASCI has introduced similar regulations to protect consumers from misleading endorsements.

The Ministry of Information and Broadcasting also introduced a new feature that allows advertisers and advertising agencies across print, broadcast, and digital media to self-declare their content.

The Supreme Court emphasised that influencers and celebrity endorsers must act responsibly when promoting any product, ensuring compliance with the Misleading Ads guidelines and taking accountability for their endorsements.

For creators, as the competition keeps rising, making a stand over regulatory challenges will require them to adapt to the new rules, ensuring compliance while maintaining creativity and authenticity in their content.

Regulatory challenges can impact creators by imposing stricter guidelines on how they promote products and engage with their audiences. These regulations may require clearer disclosures on sponsored content, limiting the freedom to create spontaneous or casual content. Non-compliance can lead to fines, legal issues, and loss of credibility.

Additionally, creators may need to spend more time understanding and adapting to the evolving rules, which can affect the speed and flexibility of their content production. It can also shape the kind of brands they work with, as creators and brands must ensure mutual compliance with the law.

The importance of ethical practices cannot be overstated. Navigating sponsored content without compromising authenticity, maintaining consumer trust, and complying with evolving regulations are crucial for the long-term success of influencers, brands, and agencies alike. 

Influencers who adhere to ethical standards will thrive in the long run, while those who chase quick profits at the expense of authenticity risk losing the trust that makes them influential. By maintaining these standards, creators can build sustainable, long-lasting relationships that benefit not only them but also the wider digital ecosystem.

Mansi Gupta is the Chief Business Officer of OpraahFx.