The Effects of Advertising Disclosure Regulations on Social Media: Evidence From Instagram

Daniel Ershov and Matthew Mitchell

RAND Journal of Economics, 2025, vol. 56, issue 1, 74-90

Abstract: We study the effects of advertising disclosure regulations in social media markets. Using data from a large sample of Instagram influencers in Germany and Spain and a difference‐in‐differences approach, we empirically evaluate the effects of German strengthening of disclosure regulations on post content and follower engagement. We measure whether posts include suggested disclosure terms and use text‐based approaches (keywords, machine learning) to assess whether a post is sponsored. We show substantial adoption of disclosure but also a 12% increase in sponsored content and an increase in the share of undisclosed‐sponsored content consumers are exposed to. We also find reductions in engagement, suggesting that followers were likely negatively affected.

Date: 2025
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https://doi.org/10.1111/1756-2171.12493

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Persistent link: https://EconPapers.repec.org/RePEc:bla:randje:v:56:y:2025:i:1:p:74-90

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