Are Your Influencer Agency’s Corrupt Practices Costing You?

Influencer marketing in China isn’t cheap, and prices are constantly rising, but is it really as expensive as you think? Or is your influencer marketing agency secretly inflating prices to increase their profit margin? Do you really understand how your agency goes about selecting influencers? Are they actually choosing an influencer because he or she produces high-quality content, or because the influencer agreed to pay the agency employee a kickback in exchange for brand work?

These are all important questions that brands should be asking themselves. While we may consider them corrupt by Western standards, these types of practices are common among many of China’s top influencer agencies.

From kickbacks, to inflated prices, to fake views, some agencies are doing anything they can to cut corners and boost earnings. 

Kickbacks

Industry insider Elijah Whaley has revealed that workers at many of China’s top influencer agencies regularly ask influencers for kickbacks of up to 35 percent of the influencer’s fee (which the worker personally pockets) in exchange for work from top brands, including numerous major luxury brands.

Whaley’s girlfriend, Maggie, is one of China’s top beauty bloggers. While she focuses on creating content and growing her audience, he manages the business side of things. In a recent interview, he shared that agencies frequently ask them for kickbacks, and all too often, they comply.

While this practice frustrates them, they feel that they have no choice, seeing as these agencies are oftentimes the gatekeepers to top brands. If they refuse to pay the kickbacks, the agency employee will give the job to another influencer that will pay, even if they’re less suited for the job.

He went on to share that influencers don’t want to lose the opportunity to work with top brands, but they also don’t want to lose money, so they will add the kickback fee into their project fee. This means that, in many cases, brands are unknowingly paying for the agency employee’s kickback on top of the agency and influencer fees.

Inflating Influencer Prices

Western brands are often left to the mercy of the agency when it comes to setting prices for influencer campaigns. In China, influencer fees are far from standardized and are in a constant state of flux as new types of content and platforms emerge. Furthermore, there is little transparency and few places where brands can publicly access information revealing average costs.

Costs are also consistently on the rise as a growing number of marketers in China are realizing that influencers are one of the most effective ways to reach millennial consumers.

Agencies are taking advantage of this situation, obtaining price quotes from influencers then bumping them up to extend their profit margins.

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Only Source Influencers From Top Rankings Charts

While you may have hired the agency for their supposed expertise, Elijah also revealed that many of these agencies don’t have an in-depth knowledge of influencers and merely source them from industry rankings lists.

He explained that, before Maggie got on these lists, he couldn’t get agencies to give them the time of day, yet as soon as they got on, agency personnel began popping out to the woodwork offering them jobs (if they provided a kickback, that is).

At first glance, this practice may seem reasonable. Agencies pull influencers from these ranking lists because they want to provide only the best influencers to their clients.

But let’s not be naïve. The majority of these top rankings lists lack credibility. Influencers can easily buy their way on by purchasing fake fans and engagement, which we know is a common practice in China, or by having an inside connection at the company creating the list. Furthermore, many agencies aren’t actually vetting the influencers to find out if their following and engagement is fake or not.

The fact that agencies rely on these lists also means that many brands, especially luxury brands, end up re-using the same ‘top’ influencers over and over again. This creates a problem because, if an influencer is constantly collaborating with brands, their audience is eventually going to become numb to their messaging. For luxury brands, there’s also the potential trouble of retaining a sense of product exclusivity if the KOLs they’re working with are over-exposed.

Agencies Buy Fake Views in Order to Ensure KPIs Are Met

While an influencer may have never purchased fake engagement, it is quite possible that an agency has done this on their behalf without them knowing.

One influencer who preferred to remain anonymous shared his experience. “Companies want a live stream. The agency will find any KOL to do the live stream and they will pay for tons of fake views to make it look good.” He went on, “To be honest, I’ve done plenty of live streams for brands and I’m not a live streamer.”

In a podcast interview last year, fashion and lifestyle vlogger Adrianna Wang expressed that many agencies don’t sincerely care about generating real results, they just care about making the client happy and will do whatever it takes to make the campaign appear successful so that the client will keep working with them.

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Because of This, Many Influencers Prefer to Work Directly With Brands When Possible

“I have experience with these practices first hand. Through the hundreds of projects I’ve done over my six years in China I’ve gotten to learn some of the tricks agencies and agents use,” shared popular F&B influencer Antoine Bunel.

For this reason, he strongly prefers to work with brands directly whenever possible and he feels that agencies are going to have a tougher time getting away with these practices in the future. “In a digital age where resources are increasingly available online, it may get harder for them. Clients might be able to find and negotiate with KOLs directly more easily. To stay relevant, agencies have to provide value with campaign strategy and execution, proving they have a creative lead and mastery of distribution.”

But many of them aren’t doing this. He explained that all too often, the first thing agencies ask him is, “What’s your price?”

“Their approach to a marketing strategy can often be summed up as offering the client a number of KOL posts for a fee. But a truly great marketing strategy has to include multiple platforms with an integrated approach. I’m not just a Douyin KOL costing X RMB per post. I’m a creative digital media strategist with the capacity to envision and execute multi-format campaigns across a variety of Chinese media platforms. I’d rather work directly with the brand and be my own agency.”

Categories

Influencers, Marketing & Branding