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Home / Business / Influencers on the Web tell you what to buy, advertisers wonder who is listening

Influencers on the Web tell you what to buy, advertisers wonder who is listening



Ipsy, an online cosmetic brand, was a pioneer when it came to paying social media star's huge fees for promoting the eyeshadow and lip gloss in Instagram posts and YouTube videos.

Now the mark is leading again, this time by retreating.

Companies will make billions of dollars this year to the electronic personalities, known as influencers, who throw their products on social media. But without any way of measuring sales or verifying how many people are even seeing the ads, the questions are asking the companies that paved the way for the impacting economy – mostly early adopters like Ispy – if it's worth it.

What started as friends and family sharing their favorite products has become a lucrative advertising industry for celebrities, influencers and meme creators. Such paid endorsements, known as sponsored content, correspond to the electronic TV space in 30 seconds. Big name stars can order $ 1

00,000 or more for a single YouTube video or Instagram photo.

Influencer Inflation

Despite signs that influencers are holding less turns, companies are paying them more money.

Price per Instagram post for influencers, by number of followers, 2019

Estimating global brand use for influencers

Mid-level (50,000-500,000)

Macro (500,000-1 million)

Celebrity (Millions)

Estimate of global brand spend for influencers

Price per Instagram post for influencers, by number of followers, 2019

Mid-level (50,000-500,000)

Macro (500,000-1 million )

Celebrity (Millions)

Estimating global brand spend for influencers

Price per Instagram post for influencers, by number of followers, 2019

Mid Level (50,000-500,000)

Macro ( 500,000–1 million) [19659021] Celebrity (several million)

Estimation of global brand spending on influencers

Price per Instagram post for influencers, by number of followers, 2019

Mid-tier (50,000– 500,000)

Macro (500,000–1 million n)

Celebrity (Multiple Millions) [19659027] But a flood of deception is now sweeping the influencer market. Influencers have strained relationships with advertisers by inflating the number of followers, sometimes buying fake by the thousands. They have also damaged their credibility with real-life followers by promoting products they do not use.

"All of these paid posts make you question whether influencers are real or just doing it for money," said JaLynn Evans, a 19-year-old student at Virginia Commonwealth University.

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Are your purchases influenced by social media influencers? Join the conversation below.

Loss of trust undermines the power of influencers, as follows

Marcelo Camberos,

Ipsys CEO. “Have they peaked? I don't know, ”he said. These days, the company is recruiting its own customers to post products – for free.

It is difficult to track the effectiveness of influencer advertising. After one measure, the influence decreases. The engagement rate, which measures the number of "likes" a post generates as a percentage of a person's followers, is down this year, compared to the same period last year, according to InfluencerDB, which creates tools to help brands manage influencer campaigns. [19659033] Shrinking Influence

The engagement figures for Instagram influencers * are dropping.

"Consumers can see if someone honestly cares about a product or if they are just trying to push it," he said

Anders Ankarlid,

CEO of online retailer A Good Company. "The bubble starts to burst."

Advertisers cannot ignore social media. Instagram alone has more than 1 billion monthly users. Mediakix, an influencer marketing agency, estimates that companies will spend between $ 4.1 and 8.2 billion globally in 2019 on influencers. That's up from $ 500 million in 2015, but still a fraction of the $ 624.2 billion companies will spend globally this year on advertising, according to an estimate from media buyer Zenith.

Walmart Inc.

this year began to post influencers on its website to promote products such as Sofia Jeans by Sofia Vergara and a home collection by blogger Liz Marie. Last year,

Unilever

The PLS warned that fraud undermines the power of influencers. Still, in June, its investment arm agreed to buy a stake in a software company that helps brands oversee influencer campaigns.

Despite questions of declining influence, the money paid continues to impact – about 50% a year since 2017, according to Mediakix, which helps match brands with influencers. Prices per Instagram post range from $ 200 for an influencer with as few as 10,000 followers to more than $ 500,000 for celebrities with millions of followers, according to Mediakix.

Brand ambassadors for the cosmetic company Ipsy online.


Photo:

IPSY

A lawsuit this month suggested that the sum paid the biggest celebrity influencers. The singer

Ariana Grande

sued Forever 21 Inc. for allegedly stealing the equality after she rejected an approval agreement with the clothing retailer.

Ms. Grande, which has 165 million Instagram followers, accused the company of hiring a similar model for its Instagram posts and website. The model wore a hairstyle and clothes like what the pop star wore in her "7 Rings" music video, which has more than half a billion YouTube views.

"The market value for another single Grande Grande Instagram post is well within the six figures," states the lawsuit, which seeks at least $ 10 million in damages. Forever 21 in a statement disputed the charges.

Akash Mehta, an influencer with 293,000 Instagram followers, was recently offered five times his $ 2,000 prize for a single post. He has been paid for by such well-known brands as Volvic water and Swiss watchmaker Ulysse Nardin SA. The big deal, he said, "was a turning point for me. It made me realize that influencer marketing has gone wrong. "

Mr. Mehta said he accepted the payment, but he didn't think he could deliver five times the value of what he usually charges.

Some established brands also see problems.

Kellogg Co.

, who paid the endurance athlete and Special K fan

Sophie Radcliffe

To post about her love of the breakfast mix, saying that standing out from the crowd, has been tough. "Consumers are concerned about how influencers work," she said

Joseph Harper,

Kellogg's e-commerce marketing manager for Western Europe.

Some companies are considering the shift and are rethinking how they use influencers. Banana Republic, which has used as high-profile influencers as

Olivia Palermo,

a socialite with 6.2 million Instagram followers, is also tapping its own customers.

The Gap Inc.

The famous clothing chain has shoppers from real life in their favorite Banana Republic attire on Instagram, in exchange for $ 150 gift card.

Cassie Fisher,

21, was a recruit who said she had picked up influencers unrelated to the products they were marketing. What sets her apart from influencer fonias is that she already bought most of her clothes in Banana Republic when the brand reached out to her, she said.

"My friends and I are sick of being sold all the time," said Ms. Fisher, a University of South Florida student with 1,342 Instagram followers. "As you browse through your Instagram feed, it's one sponsored post after another."

Mr. Mehta, the influencer, also worked as digital media manager for Christian Dior SE and Estée Lauder Cos. Supervised their influencer marketing programs. He said companies don't always know what they're buying.

"When you pay for a blackboard, you know just how many people want to see it," said Mr. Mehta, 25. "With Instagram, you have no idea. Followers can be bought."

A Good Company , the online retailer, worked with 4,000 influencers to promote eco-friendly writing and other office supplies, paying them cash or gift cards for their social media posts.

A recent Instagram post by Akash Mehta, an influencer with 293,000 followers, look up Museum Hotel in Turkey


Photo:

Akash Mehta

The company, which did not receive the expected sales increase, sent an anonymous survey to their influencers, asking if they had ever paid for followers, likes or comments. Almost two-thirds of those asked said yes, said CEO Ankarlid.

HypeAuditor, an analytics company, researched 1.84 million Instagram accounts and found more than half used scams to inflate the number of followers.

Some influencers had large numbers of followers who were not real people, meaning that accounts had been purchased or were inactive, according to

Anna Komok,

HypeAuditor's Marketing Manager. The clues include a large number of followers outside the influencer's homeland.

The scams cost little. Companies known as click farm hire people to inflate internet traffic. They sell 1,000 fake YouTube followers for as little as $ 49

Facebook

the same number of followers cost $ 34, and on Instagram they cost $ 16, according to Masarah Paquet-Clouston, a researcher at cybersecurity firm GoSecure, who partnered with others to seek prices.

Facebook and Instagram, owned by Facebook Inc., have guidelines against such deception, a company spokesman said. YouTube did not respond to a request for comment.

Impact of fraud will cost advertisers $ 1.3 billion this year, estimated

Roberto Cavazos,

a statistics professor at the University of Baltimore.

Television, radio, magazine and newspaper advertising are based on standardized, revised third-party measures, including those from

Nielsen Holdings

PLC.

Some influencers mislead followers by failing to disclose when they are paid to post about products or services, as stipulated in the Federal Trade Commission guidelines.

Tom Le Bree

said when he co-founded Beautomy online retailer 2018, "We thought influencers would be a silver bullet and bring all the traffic we needed."

An Instagram post by Cassie Fisher, showing her Banana Republic pants.


Photo:

Cassie Fisher

Beautonomy worked with influencers with around 100,000 followers on Instagram and other social media. Influencers created their own Beautonomy palettes from Beautonomy and promoted in-post products. Beautonomy, which is owned by a beauty company

Coty Inc.,

agreed to give influencers a percentage of sales. But they did not generate enough sales to justify the program.

Instead, the company turned to buying ads on Facebook and elsewhere, LeBree said.

Advertising executive

James Cole

said he worked on dozens of social media campaigns with influencers without any measurable return. He stopped trying.

Instead, he founded Mr. Cole H Hub, which functions more like a traditional advertising agency. It connects photographers, videographers and other content creators with brands, including

Yelp Inc.

Instead of paying influencers, brands get content from H Hub and publish it themselves.

"When Instagram started, it was a place you looked at photos posted by your friends or others you trusted," he said. “Brands destroyed it by injecting their own messages. Consumers wake up to the fact that just because an influencer is posting about a product doesn't mean they actually like it. "

Jewelry Buyer

Alexis Bittar

has moved away from influencers. The company now prefers to create its own social media content. Recent posts include photos of the Alexis Bittar-branded Volkswagen bus that the company showcases at such events as Art Basel in Miami and the Coachella Music Festival in California.

"We scaled back to pay for jobs," she said

Matteo Del Vecchio,

CEO of Alexis Bittar's parent company, Deconic, owned by Brooks Brothers. "It's hard to quantify how it can be put up for sale."

Even with high price offers, some influencers have different thoughts.

Amber Atherton

caught the attention of advertisers after starring in the British reality TV show "Made in Chelsea." Then she experienced the dilemma of influencers. "Brands offered to pay me $ 5,000 for a single post," she said, "even though they weren't relevant to my followers." She rejected products she would not use, she said.

Ms. Atherton later founded Zyper, a software company that has helped Banana Republic and other companies find customers to refer to as influencers.

When Ipsy got its start in 2011, the strategy of using influencers instead of traditional advertising was unconventional. Founder adds ~ POS = HEADCOMP

Michelle Phan

was also an influencer, provided makeup tips on YouTube. In 2017, she had 10 million followers. That year she left Ipsy and stopped posting on YouTube.

"Who I was on camera and who I was in real life began to feel like strangers," Phan said, in a YouTube video to explain her exit.

Write to Suzanne Kapner at Suzanne.Kapner@wsj.com and Sharon Terlep at sharon.terlep@wsj.com

Copyright © 2019 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8


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