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Influencer Fraud Is a Billion-Dollar Problem

A new study says influencer fraud is on the rise, and that 50 percent of engagement on sponsored content is probably fake.
Instagram likes | Source: Shutterstock
By
  • Chavie Lieber
BoF PROFESSIONAL

NEW YORK, United States — In 2017, Chloe Morello, one of Australia's most popular beauty influencers, took to YouTube to complain about influencer fraud. She called out unnamed social media stars who had bought their followings and were being showered with free trips, merchandise and cash from brands.

Suffice to say, the problem has not been solved since her video went viral two years ago.

Influencer fraud — whether it’s buying followers or hiring “click farms” to like or comment on posts — will cost advertisers $1.3 billion this year, according to a study by the cybersecurity company Cheq and the University of Baltimore. That figure is projected to grow to $1.5 billion next year.

It’s an intractable problem that has swelled along with the wider influencer economy, despite the best efforts of social media platforms, brands and cybersecurity experts.

Marketers this year will spend $8.5 billion on influencers, according to Mediakix, which forecasts that spending to hit $10 billion next year. Stories about influencers who buy followers and automate their online presence in order to inflate their social media numbers cause scepticism amongst consumers who look to influencers for shopping suggestions. It also erodes the confidence of brands that believe they are getting what they’ve paid for.

“There are significant further indirect costs — notably erosion of trust and potential brand impact,” said Roberto Cavazos, a University of Baltimore professor and economist who was commissioned by Cheq to write the report.

Cavazos categorises embellished social media numbers as fraud because paychecks in the influencer industry are usually contingent on their follower count. Celebrities with tens of millions of (legitimate) followers, like Kim Kardashian, can command $300,000 a post, while top fashion influencers like Chiara Ferragni can reportedly make $12,000 per post.

On average, influencers who buy likes spend $49 for 1000 followers on Youtube and $34 for 1000 followers on Facebook. The rate is even lower on Instagram, though, with influencers being able to pay as low as $16 for 1000 followers.

Although Instagram has claimed it purged many fake accounts from the platform, and continues to do so, the industry for buying fake followers is thriving; there are even vending machines in Russia that sell Instagram likes.

“Since announcing our work to reduce inauthentic engagement last November, we've seen promising results. This report does not reflect what we know to be true about our progress," Facebook said in a statement Wednesday. "Nobody likes receiving spammy follows, likes and comments, and we're developing technology to remove this activity from Instagram.”

In one survey analysed by Cavazos, 25 percent of followers of 10,000 influencers were fake. Another survey that questioned 800 marketing agencies and brands found that two-thirds of them had worked with influencers with fake followers. With stats like these, Cavazos believes 50 percent of engagement levels on sponsored content is fake.

There are significant further indirect costs — notably erosion of trust and potential brand impact

And although there are signs of fake social media numbers, like bot-looking profiles and a disproportionate number of followers to engagement rates, brands and advertisers are still falling prey to influencers who buy their following. One study conducted by influencer marketing measurement firm Points North Group last year found that 78 percent of the followers of influencers hired by Ritz Carlton were fake, while 39 percent of followers of influencers working with L’Occitane were fake.

The tactic of buying followers isn't just common — it's also incredibly easy. Earlier this year, a travel photographer named Trey Ratcliff wrote the book "Under the Influence - How to Fake Your Way into Getting Rich on Instagram," which chronicled his adventures on Instagram's black market. In his book, Ratcliff revealed how he spent about $30 for a few rounds of 30,000 followers for a fake account he created. After buying over 100,000 followers, he was shocked to learn how simple it was for him to find partnerships. Marketing agencies were eager to connect him, without questioning where his followers came from.

Aside from buying engagement, Cavazos noted that some influencers post fake sponsored content “to dupe brands into believing they have a proven track record – and in order to get hired for a future engagement.”

Last year, The Atlantic reported that the tactic was common among up-and-coming influencers who wanted to nab brand endorsements.

"You say it in a way that people could interpret it as you having an established relationship with that brand," one influencer told The Atlantic. "The hope is that it's perceived in a way that looks like there's a reason you're in a different city and state, not just enjoying a weekend vacation."

Cavazos also highlighted Instagram pods — groups of influencers who team up to like and comment on each other’s content in order to boost the engagement rate and game the Instagram algorithm so that it becomes more visible to followers. These like-for-like transactions, Cavazos wrote, are “clearly not what brands have in mind when creating and paying for campaigns.”

The issue of influencer fraud is nothing new, though it's been difficult to gauge the full scope of the problem.

"It is definitely frustrating to see people given the same opportunities as me, going to the same events, overseas holidays, hundreds and hundreds of free product and even being paid by brands,” Morello said in 2017. "I have a real following, but some of these people have a fake following and at the end of the day, the brand is investing their money to sell product and these people don’t have a real following."

Brands are cracking down. Unilever Chief Marketing Officer Keith Weed said last year the company would stop working with influencers that it had discovered had bought followers, in order to “increase transparency and help eradicate bad practices throughout the whole ecosystem.”

But as Cavazos noted, the issue hasn't changed and influencer fraud will likely continue to grow as the market becomes more complicated with the rise of micro-influencers and nano-influencers, who brands hire by the dozen to promote products to niche audiences.

Editor's Note: This article was updated at 1:30pm GMT on 24 July, 2019, to include comment from Facebook. 

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