YouTuber Lilly Singh speaks onstage during YouTube Brandcast presented by Google on May 5, 2016 in New York City
Comic influence: Lilly Singh on stage in New York in May © Taylor Hill/FilmMagic

At a YouTube event last month, Lilly Singh, a 27-year old comedian who has risen to fame through her online videos, quipped that she had great hair, adding: “By the way, shout out to Pantene.”

Ms Singh — who is a brand ambassador for Coca-Cola — was making a joke at an event designed to showcase YouTube’s talent in the hope of luring advertisers’ dollars.

Her joke illustrates the role social media influencers have taken on for brands, as companies look to promote products through the support of internet personalities, many of whom have millions of followers.

So-called influencer marketing has grown in popularity as companies try to reach the masses, in the face of the decline in television viewing, by harnessing a rise in social media consumption. It has become a lucrative business. Aimee Song, whose Instagram page draws 3.6m followers, was reported last month to be paid $500,000 by Laura Mercier, a beauty brand, to be its “digital influencer”.

Barbara Soltysinska, founder of indaHash, a business which aims to broker deals between brands and influencers, says the technique’s appeal has grown as people have become less sensitive to traditional advertising. “We are back to the time that people were recommending to others what to do and what to use . . . they don’t want to be surrounded by so many ads.”

More than 80 per cent of respondents to a 2013 Nielsen survey said they trusted endorsements from people they know, compared with about 60 per cent for television ads and less than 50 per cent for ads on social networks. “This generation doesn’t dislike brands,” said Erin McPherson, former chief content officer of Maker Studios, the digital video network, at a conference last year. “What they don’t like is advertising.”

Yet insufficient transparency over the endorsement of influencers is threatening the credibility of this new marketing channel among consumers. In the US, the Federal Trade Commission updated its guidance last December in response to the rising popularity of influencer advertising. Influencers must make “clear and conspicuous” disclosures in their posts if they are paid for talking about a product, the FTC says. The watchdog cracked down on this recently by rebuking Lord & Taylor, the retailer, for paying influencers to post promotional photos on Instagram without disclosing it.

In the UK, the Advertising Standards Authority, too, says brands must disclose paid content under consumer protection laws. In 2014, the body banned a series of YouTube videos for not making it clear that they were advertising for Oreo cookies.

While brands are still working out the kinks in rules surrounding the use of influencers, some concede measuring success in the field can be difficult.

“It’s tricky to figure out the potential reach of something I’m doing with an influencer,” says Noah Mallin, social practice lead at MEC, a media buying company owned by WPP. “Just because somebody is following the influencer, doesn’t mean they’re going to see the post they make.”

Sometimes brands will place special code into online content for influencers to post, so that any purchases by followers can be traced, says Mr Mallin. Ms Soltysinska argues that a campaign’s success can be judged on the metric of “engagement rate”, which is the percentage of people who liked, shared, clicked or commented on a post.

Pay has become contentious, as the rise in the relevance of influencers has prompted them to demand more money for content.

As the debate over the value and presentation of advertising-backed content continues, there has been a shift towards using smaller and medium-sized influencers, and away from some brands’ initial focus on endorsements by celebrities or big stars. “It’s much better to have a hundred influencers with 1,000 followers each, than one influencer with 100,000 followers,” says Ms Soltysinska. “Together they are much bigger than the biggest stars and often they’re more credible.”

Influencers who are not generally famous can sometimes be more effective because they often appeal to a specific niche, says Mr Mallin. “Car enthusiasts, people who like to cook at home . . . all those niches can be served really well by influencers who might be in the 20,000 follower range.”

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