In an increasingly digital country like China, the Wanghong (网红) economy — a digital economy based on influencer marketing in social media — has proved to be a very lucrative business for KOLs and influencers. Considering the country has over 750 million internet users, and the youngest generation of luxury consumers is pushing for a fully digital retail landscape, it’s not surprising that brands are moving further away from traditional channels. Meeting consumers at every touchpoint rather than investing in only in-store experiences has become the focus for major luxury players today, but this lightning-fast digitalization trend has brought about some new challenges and risks.
According to AdMaster, 70 percent of brands will continue to increase their digital marketing budget in 2019. Moreover, 71 percent of marketers will boost spending on social media marketing, and 67 percent will direct their budget toward KOL promotion. Developing strategic partnerships with influencers remains a top priority for marketers, but this dependency on KOLs and influencers has become an ever more expensive and riskier proposition for brands. These risks are even higher in China, a country where KOLs are one of the most effective and powerful sales tools for companies breaking into the market.
In China, influencer marketing is costing brands millions of dollars, and as stated by Thomas Graziani in WalktheChat, “China’s influencer ecosystem is much more involved with brand promotions.” Therefore, this high engagement doesn’t come cheap. WalktheChat reports that an influencer for “a typical WeChat campaign will cost between RMB 0.5 and RMB 1.5 per view,” while Duoyin is even more expensive.
It’s become evident that user-generated content increases sales, but that doesn’t mean influencer marketing doesn’t have vulnerabilities. In a world where everyone wants to stay relevant, and a simple Instagram post or YouTube video can bring a four-figure payoff, it’s tempting to try and con the system by buying “likes” and fake followers to increase engagement. This has become a common practice, and luxury brands are slowly bleeding their marketing budgets out because of it.
Why are influencers buying fake followers?
As mentioned, having a big social media following can become a lucrative business. In simple terms, by engaging with their followers, influencers are becoming entrepreneurs who transform their personas into profitable businesses. According to Cheq report, a micro-influencer with 10,000 followers can garner up to $250 for a sponsored post, while big names with over 1 million followers can make as much as $250,000 per post.
According to WalktheChat and Jing Daily, influencers manage large staffs in China, which facilitates recurrent collaborations with brands. Jing Daily also points out that the Chinese influencer Gogoboi charges as much as $50,000 per post and runs up to 15 different brand partnerships every month. China has many major, legitimate influencers like Gogoboi, but there are also social media users and nano-influencers with followings that are too small or too niche for luxury brands’ purposes. Desperate for partnerships with luxury conglomerates, some of these individuals misrepresent the size of their followings, thereby exaggerating the power of their bases. By partnering with these influencers, brands can damage their reputations, raise their marketing costs, and even lose potential revenue. On the other hand, the influencers, meanwhile, will temporarily boost their ad revenue, but they have little chance of building a long-term, successful business this way.
How can luxury companies operating in China combat fake followers?
Suppressing the fake follower phenomenon and combating digital cheats is getting increasingly difficult, and the practice requires a good working relationship between the Chinese government, social media companies, and private businesses. Luckily, the Chinese government and Weibo launched initiatives to crack down on the problem, although there’s still more work to be done.
First, social media platforms should aim for total transparency. They need to strive for integrity, ethics, and sincerity, and this implies offering brands legitimate data on user followings and engagement numbers. In the West, Facebook, Instagram, and Twitter frequently liquidate suspicious accounts and block users who engage in shady activities. Beyond that, Instagram has implemented the “like” ban, which is now expanding to new regions of the world. According to Adam Mosseri, Head of Instagram, the Facebook-owned social media platform wants “people to worry a little bit less about how many likes they’re getting on Instagram and spend a bit more time connecting with the people that they care about.”
Following a decade of scandals and tragedies (melamine-tainted milk, contaminated strawberries, and fake eggs), Chinese consumers have grown to distrust traditional advertising, so brands find it increasingly difficult to build trust and long-standing relationships with these consumers. But by featuring the name of an influencer or a peer-to-peer marketing campaign in China, international brands believed they had worked out an effective strategy for reaching those potential buyers. Unfortunately, the reality is far more complicated than it seems.
For instance, China’s short video app Douyin is now “on fire,” reaching over 100 million users in only its first year. Additionally, 60 percent of its users are female and 70 percent are living in Tier 1 and Tier 2 cities. This is more or less the dream demographic for luxury brands. But the problem with the app is that many of the Douyin’s influencers engage in fraudulent practices by growing their base through bot accounts.
Jing Daily’s Ruonan Zheng says that “fake followers are a fundamental part of Chinese social media platforms.” Nevertheless, it’s worth mentioning that such fraudulent customs will ultimately undermine consumer confidence. Furthermore, a documentary by China’s state owned-CCTV showed that the problem goes beyond scamming brands into risky partnerships with inflated user volumes. CCTV raises serious concerns about the exploitation of workers, as the trend is fueled by employees who get less than the minimum wage for spending hours liking and commenting on social media posts.
A good policy would be for domestic and international brands operating in China to follow Unilever’s example and only partner with influencers who don’t buy followers or work with “click farms.” Keith Weed, the former Unilever Chief Marketing Officer, said that Unilever will seek partnerships with influencers who strive to “increase transparency and help eradicate bad practices throughout the whole ecosystem.” And Daniel Avital, Chief Strategy Officer at CHEQ, a company that specializes in, among other things, cutting-edge AI and cybersecurity, believes brands should perform their own audit procedures by vetting KOLs before partnering with them.
The easiest way to analyze an influencer’s engagement is by checking their long-term performance. Brands should consider influencers with a natural growth curve, while “shooting stars” and KOLs who record sudden spikes in engagement should be disregarded.
Instead of fighting against social media bots, some luxury houses will bring that technology into their marketing plans. Virtual influencers and online testimonials already exist, and this trend will likely transform the marketing landscape for the benefit of the companies that use them. Rather than dealing with KOLs embroiled in PR scandals and bad behavior, brands will get smoothly functioning digital influencers who act properly, look impeccable, and engage peacefully with their audience.
Shudu Gram is “the world’s first digital supermodel,” and she has a fan base of 179K followers on Instagram and partnerships with brands like Ellesse and Balmain. Lil Miquela is a digital avatar and influencer with 1.6 Mil Instagram followers, who recently played the part of an entertainment journalist and interviewed the Colombian singer J Balvin. She even kissed real-life supermodel Bella Hadid in an advertising campaign for Calvin Klein. Meanwhile, the digital avatar Claire Farron, a.k.a. Lightning from the Final Fantasy video game series, was just named Louis Vuitton’s latest brand ambassador.
But regardless of how real an influencer is, brands would be smart to research them thoroughly, so they can make sure they’re getting the type of engagement they’re paying for.