Online celebrities, bloggers and vloggers have millions of followers across social media platforms like Instagram, Facebook, and Twitter. These influencers give companies significant leveraging power when it comes to reaching a brand's target demographic.

The rise of the "insta-famous" marketer is raising serious questions about their ethics and practice, particularly issues of authenticity and transparency. Many of these stars do not reveal if they have been paid to promote fashion or beauty products, or even services like plastic surgery. And that has caught the attention of authorities in the UK and US to examine them more closely. 

According to a study by Mediakix, an influencer marketing agency, 93 percent of sponsored posts made by the top followed celebrities on Instagram are not disclosed. The fashion industry is one of the biggest sponsors of social media advertising. But many beauty tutorial creators, for example, neglect to mention that they are being paid to promote products.

Big brands such as tobacco companies also use social media influencers to promote their products. Consumer watchdogs in the US and in the UK say they have started looking more closely at social media marketing practices.

One of the reasons is because influencer marketing has become extremely popular for targeting Generation Z, a demographic roughly between the ages of 11 to 18. According to Rupa Shah, from Hashtag Ad Consulting, social media stars who don't come clean about being paid to promote certain brands could find
themselves in court along with their sponsors.

"Influencer marketing has previously been described as the 'wild west' where the average person couldn't tell if a post had been sponsored or paid for in some way. But now, with investigations from the Federal Trade Commission (FTC), the Advertising Standards Authority (ASA), and the Content Marketing Association (CMA), influencers are much more aware of what they should be doing and brands are also more aware of how they need to ensure that posts are clearly disclosed."

The importance of disclosing this information greatly affects generation Z. "We are consuming much more social media content that we ever have before, so the market for influencer marketing is growing exponentially and we're immersed in it."

"Traditionally, we've always been able to tell the difference between advertising on TV and editorial content. There has been a clear distinction between the two. Whereas with social media marketing, sometimes it's very difficult for a consumer to be able to tell what is paid for and what isn't, and it's important for consumers to know this because it will make a difference to their decision as to whether they believe that influencer cares about that product."

"It'll also make a difference to whether they actually want to purchase that product. Being very clear to whether something is an advert and when it isn't is important for consumers throughout the world."

The social media influencer space around the world is "growing exponentially" points out Shah. "Some forecasters are estimating it'll be a $20bn industry by 2020."

While some companies still do not use influencer marketing to promote their products or brands, others can allocate "up to 40 percent or more [of their budgets]. Certainly, some products I've seen are sold by influencer marketing only. You will only ever see it marketed on Instagram or Twitter or IGTV, for example. So it depends on the brand ... but most will allocate a budget to influencer marketing."

Source: Al Jazeera