Among the shocking revelations coming out in the wake of the disastrous events of Fyre Festival is that while the organizers didn’t have a plan for getting people off the island hosting the festival they were able to pay Kendall Jenner a quarter million dollars for a single Instagram post to promote it. At least one of the lawsuits filed against the bros who created the event specifically calls out the use of influencers in the marketing of it and alleges they did not comply with FTC guidelines regarding disclosure as well as basic misrepresentation of their involvement and the event in general.

If you were to spy on any given marketing planning session in the last two or three years ago you would have good odds on hearing someone at least spitball the idea of running an influencer program. It’s been on the tip of everyone’s tongues for a long while now and it’s only been getting bigger for a few reasons:

Creatives Do What Brands Can’t…Or Won’t

Platforms like Instagram, Vine, Snapchat and others caught on because they allowed for a level of creativity coupled with the distribution that hadn’t been available before, at least not in terms of video. Those who were talented in video production immediately gravitated to these apps and started showing off their skills. That caught the attention of brands and advertisers who immediately saw that what these “amateurs” were doing was on a level they couldn’t afford in-house and, were they to produce it, it would come off as fake. Or it would cost so much the ROI just wouldn’t be there. So asking Influencer X to create a video for a product was the best option, saving money and offloading creative.

Engagement Dominates

In the last few years almost every social network has switched from a straight firehose feed of chronological updates to a news feed that’s determined by an algorithm, with engagement being a big factor in that process. So if there’s a chance to partner with someone who has 3 million fans and sees a 15% average engagement rate on their updates it makes sense. Their updates are more likely to break through the algorithm than those on a brand channel that has 50,000 followers and sees engagement around 3% in a good month. This is “playing to the algorithm” in its purest form.

Finding Influencers Is Easier Than Ever

Back when Tom Biro and I were running an influencer program in 2007 for our client Nikon (examples here, here, here and here) we not only tapped into our own network of friends but also spent countless hours searching Google, Technorati (when it was a blog search engine) to find people who would be a good fit for the campaign. And it paid off. Now, there are countless agencies and technology companies that facilitate connections between brands and influencers, making participation in a campaign an easy, sometimes totally automated process.

But All This Creates Opportunities for Problems

Sure, it’s all easier and more formalized, but just like the world of programmatic advertising has caused problems for advertisers who suddenly find themselves financially supporting white supremacist blogs, adding more tech to the situation has created its own series of problems. A recent study showed only 11% of marketers who work with influencers know the FTC guidelines requiring disclosure of paid promotions, guidelines that were developed because of bad actors back in the mid-2000s who didn’t want the message colored, in the minds of the audience, by the knowledge money or goods had changed hands. When Biro and I were creating that Nikon program, years before the FTC or anyone else formalized best practices, disclosure was a requirement of participation.

Now, the kerfluffle around the use of influencers for a high-profile disaster like Fyre Festival could call the whole practice into question. If the cost of entry into executing this tactic is seen as too high, brands will exit the area and move on to something else that’s more cost-effective and doesn’t carry with it the potential for a very public flame out. There’s at least a chance that, in a year’s time, we’re looking back at this as the first exodus from advertisers from the influencer space.

Unfortunately, that’s going to take good people down with it. If money starts leaving this space – as it’s already doing as advertisers flee YouTube because of concerns over objectionable content, leaving vast swaths of people who have built followings and livelihoods based on their ad income there – we’ll see the whole industry collapse. Those former “influencers” will be back out looking for other jobs, the people at specialty shops will need to update their resumes and more. Not only that, but it could result in less usage of the platforms these people have been distributing their content on. That’s why you see YouTube and others hedging their bets with bigger moves involving “professional” content created by known celebrities and actors.

Influencer marketing, when you get down to it, only works if all three parties in the process trust the other two. The advertiser has to trust the influencer, the audience has to trust the influencer, the influencer has to trust the audience and the brand has to trust the audience. If any of those or other cards are removed the whole structure collapses. While there are plentiful examples of brands and influencers getting slapped on the wrist for not following the rules, if a lawsuit starts to expose the soft underbelly of this practice, it could come crashing down around the entire marketing industry.