The Shifting Economics of Influencer Sponsorship Disclosures

Authors

• Uri Y. Hacohen, Tel-Aviv University Faculty of Law

Abstract

Conventional wisdom holds that disclosing influencer sponsorship diminishes advertising's effectiveness by triggering consumer skepticism. Responding to this perceived transparency gap, regulators have adopted mandatory disclosure regimes to address a perceived market failure: the divergence between private commercial incentives and the public interest in transparency. This Article challenges that assumption. Drawing on a large-scale social media experiment (N=600), it demonstrates that disclosures not only increase consumers' recognition of advertising but also improve their attitudes toward both influencers and brands, while significantly boosting their willingness to share promotional content. These empirical results are further supported by a comprehensive synthesis of the emerging theoretical and empirical literature. The findings reveal a fundamental shift in the economics of influencer marketing: from reputational costs to reputational gains. As disclosures evolve from markers of deception to signals of legitimacy and prestige, the rationale for current regulatory approaches must be recalibrated. This Article contends that policymakers should pivot away from disclosure enforcement and instead focus on imposing substantive liability for false or misleading endorsements.

Disciplines

Antitrust and Trade Regulation | Communications Law | Consumer Protection Law | Law | Science and Technology Law

Recommended Citation

Uri Y. Hacohen, The Shifting Economics of Influencer Sponsorship Disclosures, 44 Cardozo Arts & Ent. L.J. 1 (2026).
Available at: https://larc.cardozo.yu.edu/cardozoaelj/vol44/iss1/3