Defining Online Paid Content

By Caroline Nichols and Kay Spencer

SUMMARY

The paid social media space encompasses all content distributed through digital platforms where compensation, in any form - made both in-platform and offline, influences message creation, amplification, or distribution. The online paid content space lacks sufficient transparency and regulation, particularly for political and electoral content. Current regulations are modeled after traditional advertising frameworks but fall short in addressing digital realities. 

Scale of the Problem

• Studies show only 30-35% of paid political influencer content is properly disclosed

• Political influencer content generates 50-70% higher engagement than non-political content

• The US influencer market was valued at $16-18 billion in 2023. The UK influencer market was valued at £1.3-1.5 billion in 2022-2023. 

Critical Implications

1. Hidden influence and microtargeting without proper disclosure

2. Electoral information manipulation

3. Potential sanctions evasion

4. Significant untaxed revenue

Proposed Definition of Online Paid Content

"The paid social media space encompasses all content distributed through digital platforms where compensation, in any form, influences message creation, amplification, or distribution."

Short-Term Opportunities

• Conduct feasibility studies on enforcing broader definitions of paid content

• Facilitate influencer community roundtables to establish transparency norms

• Implement simple voluntary disclosure markers on platforms

Long-Term Solutions

1. Establish an inclusive, regularly updated definition of paid content adopted by countries where major influencers reside, based on their tax records

2. Develop API access and tools offering real-time data on paid content, including payer geolocation data. 

3. Mandate quarterly paid content transparency reports alongside earnings reports.

THE ISSUE 

In follow up to one of the recommendations made in a recent Integrity Institute blog, Boosted Content and Electoral Risk in Moldova, the authors offer an inclusive definition of “paid content” as well as recommendations for a wide range of stakeholders to develop an incentive structure for greater compliance and transparency. These recommendations are based on a combined 10 year’s experience working in trust and safety, platform regulations and election integrity.

Regulation of the paid space online is largely fashioned after broader advertising regulation which, while a good starting point, is insufficient given the scope and breadth of political / electoral influence online. It is an analog solution to a digital problem.

DEFINING PAID CONTENT

The paid social media space encompasses all content distributed through digital platforms where compensation, in any form - made both in-platform and offline, influences message creation, amplification, or distribution. 

This includes:

(1) Influencer content: Material created by individuals who leverage their audience / followers to promote products, services, ideas, candidates, or causes in exchange for monetary payment, gifts, access, opportunities, or other valuable consideration. This is complexified by material combining paid promotion with personal opinions. 

In doing so, they help shape consumer opinions, purchasing decisions, political viewpoints, and civic engagement. Their influence extends beyond commercial markets to include public discourse, voter behavior, and policy advocacy, making them significant players in both economic and political spheres.

If influencers are paid for content, to say or promote a perspective, they are then often obligated to self-disclose through the regulation of their national country i.e. where their business is located. This includes disclosure requirements, truth in advertising requirements, industry-specific requirements (such as responsible consumption messaging as it relates to alcohol or responsible behavior in gambling). There are also specific national rules around the targeting of children, see legislation around advertising tobacco use to minors. 

If the content is political in nature there are three sets of regulations that may apply, again on a national level which is also to say, with wide variation. 

• Campaign finance disclosure requirements. (Campaign expenditure regulations are specific to each election management body.) 

• "Paid for by" attributions on political content

• Compliance with election silence periods in some countries

(2) Boosted/promoted content: Organic posts that receive artificially enhanced distribution / views through platform-specific paid promotion tools or algorithms, regardless of who funds the amplification.

Unlike traditional ads, boosted content typically originates as a standard post on a social media platform and is later "boosted" to appear more prominently in users' feeds, reaching a wider or more targeted audience. Users submit their payment credentials initially. The final fee charged to users is based on content views. Boosted posts look similar to an ad in a user’s feed. However, if a platform has an Ads Library, boosted content is frequently excluded, as it is organic content. If a platform has an API, boosted content is not labeled.

(3) Traditional Advertising: Material that appears in user feeds or timelines as a result of direct payment to a platform’s ad-buying interface. Advertisements are explicitly paid by individuals or businesses marketing a product or an idea. Paid advertisements can be for goods and services and also for political campaigns - typically governed by the hosting platform. 

These are commonly denoted in feed with platform-specific disclosure tools, such as Instagram's "Paid partnership with [Brand]" tag, Facebook's "Paid" or "Sponsored" labels, TikTok's "Sponsored" label, and YouTube's "Contains paid promotion" tag or "Includes paid promotion" message.

They may also be self-identified through a hashtag disclosure, such a #ad, #sponsored, #paid. Verbal/written statements are also commonly used, 

• "Thank you to [Brand] for sponsoring this post"

• "This video is sponsored by [Brand]"

• "Ad: I've partnered with [Brand]"

• "This content features gifted products from [Brand]"

Visual cues may include shopping tags directly on products, affiliate links in bio or description, swipe-up links (in Stories features), product placement with clear brand visibility. The DSA requires VLOPs operating in the EU and the European Economic Area to have an Ads Library.

While progress has been made since 2020, there are significant gaps in disclosures, particularly around political/electoral content. A 2023 study by Democracy Reporting International  suggested that as little as 30-35% of paid political influencer content is properly disclosed across major platforms, leaving a disclosure gap of approximately 65-70%.

Several factors contribute to this wider gap in political content:

1. Regulatory ambiguity - There are fewer established frameworks specifically for political influencer content compared to commercial advertising

2. Relationship complexity - Many influencers receive indirect benefits (access, exclusive content, future opportunities) rather than direct payments, creating confusion about what requires disclosure

3. Personal/paid content blurring - When influencers genuinely support a candidate but also receive compensation, disclosure practices become inconsistent

4. Cross-border campaigns - International political influence operations often deliberately avoid transparency requirements

5. Short campaign timeframes - The compressed nature of some electoral cycles leads to rushed content production with less oversight, especially in smaller markets

The actual gap is likely larger than documented, as methodology limitations make identifying undisclosed political content particularly challenging for researchers. These estimates primarily capture more obvious cases rather than sophisticated undisclosed arrangements. 

This underscores the need for a clear, inclusive definition of ‘paid content’ to set regulators, platforms and promoters of paid content up for success.  

This also underscores the need for a cross-platform transparency tool to get real-time data transparency on paid content. 

WHY IS THIS A PROBLEM

The lack of transparency in boosted and influencer content has four critical implications: 

1. User influence and microtargeting without disclosure 

2. Electoral information manipulation and interference 

3. Risk of sanctions evasion 

4. Untaxed revenue 

The period of 2016-2020 marks the most transformative growth period of the influencer space. The past five years represent more of a maturation and specialization phase. We've seen refinement, diversification, and institutionalization of practices that were established during that earlier revolutionary period, and thus an opportune time to solidify improved regulation. 

Recent studies and their findings on the scope of influencer non-disclosure: 

• A 2021 study by the UK's Advertising Standards Authority found that only about 35% of influencer posts were clearly labeled as ads when they should have been.

• The FTC  has repeatedly issued warning letters  to hundreds of influencers and brands for inadequate disclosures, suggesting widespread non-compliance.

• Scoop Market.US suggests that the regulatory requirements are known and still not complied with. Despite 63% of influencers reporting awareness of FTC guidelines, a mere 11% properly disclose their sponsored content in accordance with these regulations.

• A 2024 study by the European Commission found that 80% of influencers failed to disclose paid promotions, despite 97% sharing commercial content. Additionally, 38% did not utilize platform disclosure tools, and 40% failed to ensure continuous visibility of disclosures throughout their posts

• A 2024 study by TechGlobal Institute on How Social Media Influencers are Scaling Surrogate Political Campaigns in Global Majority Elections which found that “influencer-led political content results in 50-70 percent higher engagement rates than nonpolitical content in Global Majority countries.”

Some tax authorities have begun targeted enforcement efforts:

• The UK's HMRC launched a specific initiative targeting influencer tax compliance

• The US IRS has increased scrutiny of self-employed digital creators including specific guidance on reporting income from content creation (1099-K) 

• Several European countries have implemented digital service taxes that capture some platform revenue

The US influencer marketing industry was valued at approximately $16-18 billion in 2023, representing a significant potential tax base across federal, state, and local taxes.

Industry estimates suggest the UK influencer market was valued at approximately £1.3-1.5 billion in 2022-2023.

In both instances, if there is a disclosure gap of even 50% (less than estimated), there are hundreds of millions dollars/GBP in lost tax revenue. 

There are opportunities to improve how political advertising is defined which could in-turn create opportunities for greater transparency. For instance, a major take-away from the year of elections is that paid influencers who are able to microtarget smaller, niche constituencies played a larger role and are positioned for more impact in the years ahead. While there is not as much transparency as many would like on political advertising, there is little to no transparency on the flow of funds to influencers. It’s an opportune moment to get creative. 

SHORT TERM OPPORTUNITIES

Action is needed  from social media companies, regulators and influencers alike. 

1. Enforced policy compliance by social media companies requiring paid content labels / disclosures. This is the fastest way to create influencer compliance.

2. Feasibility studies to better understand how to take existing mechanisms to enforce regulation and explore how they could be leveraged to enforce a wider definition of ‘paid content,’ combined with estimates of current revenue loss due to non-disclosure/regulatory enforcement gaps.

3. A study/roundtable for influencer leaders to share their experience with radically transparent disclosures to further professionalize the field and create momentum/social norms around greater transparency from within the community.

NORTH STAR

1. A clear, inclusive definition of paid content that is revisited every 5 years as the paid content space will continue to evolve.
   
   This definition is ideally adapted by the governments of Australia, Brazil, EU, Indian, Indonesia, UK, and US, the five countries that produce the most social media influencers. 

2. API access and a tool that offers real-time data on paid content, to include payer geolocation data.
   
   Users should be empowered to understand the origin of paid content and how it came to be in their feeds. In order to do this, platforms must mandate location verification of advertisers, content creators, influencers, and users paying to boost content. 
   
   Important location verification methods like government issued IDs, IP address authentications, and banking address information are a few ways to confirm an advertiser/person's location. While bad actors will often find work-arounds such a measure could give civil society, governments, and journalists significantly greater insight into the flow of advertising funds across influential platforms. 

3. Quarterly paid content transparency reports to accompany earnings reports.
   
   Transparency in this context means making publicly accessible details on the source, content, and targets of paid content. An easy way to implement this would be to include boosted and influencer sponsored content into existing paid content transparency reports,  as the intent of the report is related to integrity and transparency.
   
   This includes releasing datasets to enable external validation of platform claims about their systems, detailing processes for platform changes during significant events (e.g., election periods), and clearly outlining the requirements or verification steps necessary to achieve broad audience reach, including boosted content and paid advertising.

CONCLUSION: SCOPE OF THE PROBLEM + IMPLICATIONS

The challenge of this space is that, without disclosures and a means of connecting tax-based financial disclosures with social media activity there is no way to know the scope of the problem. A 2024 study by TechGlobal Institute on How Social Media Influencers are Scaling Surrogate Political Campaigns in Global Majority Elections, uncovered the findings listed below. Our suggestions to meet this moment are included alongside.

1. REPORT FINDING: In Global Majority countries, political content delivered by influencers generates 50-70% higher user engagement compared to their non-political posts, demonstrating the exceptional effectiveness of influencer-based political messaging.
   
   SUGGESTION: A key area for further research is to better understand if influencers, particularly those sharing political content, would be less likely to if their partnerships or sponsorships were fully disclosed. 
   
   Given that the business model of social media companies is based around the monetization of attention, if greater or comprehensive disclosures results in less influencer content, they may be less willing to contribute to transparency efforts unless mandated by regulators to do so. 
   

2. REPORT FINDING: The regulatory landscape for political influencer content remains ambiguous, with significant gaps in both platform policies and national election laws regarding transparency requirements. This creates opportunities for political campaigns to circumvent traditional campaign regulations. The distinction between paid partnerships and genuine ideological support often remains unclear to audiences, effectively creating an unregulated space for surrogate political campaigns and increased vulnerability to information environment manipulation tactics.
   
   SUGGESTION: At present the gap of understanding the impact of paid content risks paralysing progress on any front. Defining paid content and working through mechanisms to improve both enforcement and transparency will go a long way to support the evolution of regulations. Measured progress over perfection is the way to move forward in circumstances where there is and will always be a dynamic edge created by the combination of technological innovation and motivated bad actors. 
   

3. REPORT FINDING: The current system provides few incentives for influencers to disclose political payment relationships. When paid political content is made to appear as personal opinion, it becomes particularly deceptive to voters, especially given that influencers have built their personal brands on claims of authenticity and transparency with their audiences. This is true even when the influencer is being paid to promote their own personal opinions.
   
   SUGGESTION: Given the diminished appetite of tech companies for greater regulation, explore opportunities for influencers to influence other influencers with radical transparency. As “influencing” becomes more professionalized, that community will need to define for themselves a set of norms and best practices - codified or not. Encouraging the field to adopt the norm of being radically transparent about their sponsorship not only strengthens trust with their followers, but also sends a signal to social media platforms and bad actors that they are a group that will not be used to manipulate or distort the information environment.

The online space will continue to be creatively manipulated by agenda-driven actors. While we applaud efforts by social media companies to play a more productive and transparent role in democracies, attempts to use their platforms to manipulate public discourse will be persistent and, to some degree, beyond their control. There is an opportunity for Regulators to influence social media companies to improve electoral safeguards by insistenting on greater transparency.