Originally published on ION.
The number of sponsored Instagram posts that included the hashtag #ad rose 48 percent to more than 3 million in 2019. A stat that indicates influencer culture is here to stay. However, the industry has an influencer fraud problem that it needs to address if it’s going to keep reaping ROI from social platforms. A recent study from Cheq found that influencer fraud will cost marketers $1.3 billion in online ad spending in 2019.
Below we’re breaking down key statistics surrounding influencer fraud according to social media platform, the indirect implications of the matter and why data transparency is critical to curbing the effects.
Consumers have generally placed a great amount of trust in influencers, and as a result, marketers have put their trust in influencers. That trust comes because, for now, influencer marketing is showing results. Data shows that nearly half of people make a purchase online after seeing an influencer promote it on Instagram, YouTube or Twitter, and about three-quarters of people trust social media to help them make a decision on buying a product or service.
As sponsored posts and ad spend on Instagram stories surge, so too does a brand’s confidence in an influencer’s ability to reach a certain audience or boost follower count. Still, 63 percent of marketers and brands admitted to having personal experience with influencer fraud in past campaigns.
Experts note that the root of the influencer fraud problem is a lack of data transparency. In his research, Roberto Cavazos, PhD., professor and economist at the University of Baltimore, who with Cheq conducted the study, “The Economic Cost of Bad Actors on the Internet: Fake Influencer Marketing in 2019,” notes that the need to demonstrate influencers’ reach to a large audience is so compelling that some business have been created for the sole purpose of selling followers. Cavazos cites a study from Paquet-Coulson that showed these “click farm” clients pay about $49 for every 1,000 YouTube subscribers, $34 for the same number on Facebook, $16 for Instagram and $15 for Twitter. Cavazos believes that influencer fraud isn’t necessarily a platform issue. “It’s a contracting and transparency issue—basically in many instances, marketers do not know what they are buying and there are few incentives for sellers to be fully transparent. It’s not the platform, it’s the mode of transactions (buying services of influencers that is the problem),” he tells us.
Much of the suspicious activity in influencer marketing is performed via automation in the form of bots, pods, falsified sponsored posts and fake accounts. Bots mimic community management tasks such as commenting and following/unfollowing people, potentially making up to half of the engagement levels on sponsored content fake. Pods allow influencers to exchange engagement on each other’s posts. There are also instances of influencers promoting fake sponsored posts on behalf of brands that they’re actually not working with.
Fake accounts have also taken the influencer world by storm. In the first quarter of 2018 alone, there were over 583 million fake Facebook accounts, according to the platform’s first “Community Standards Enforcement Report.” Similarly, in December 2017, Twitter identified and suspended 6.4 million suspicious accounts every week. Many Instagram accounts have audiences comprising 20 percent bots.
There are ways that marketers can mitigate fraud and gain more transparency when working with influencers.
“Marketers are worried about fraud on any platform, but there is more fraud awareness on Instagram because it has the most upside for influencers to inorganically grow their numbers. With more budget projected in 2020 towards influencer marketing, marketers should use a trusted, third-party source for a more detailed view into an influencer’s performance, that’s in addition to relying on influencer self-reporting on marketing platforms,” says Erick Schwab, co-founder and co-CEO of Sylo. The third-party verification platform was created to ensure that influencers aren’t “grading their own homework.”
Half of marketers cited that the ability to spot fake followers was a primary challenge of influencer marketing, and brands still get duped. One study found that influencers enlisted by Ritz Carlton comprised 78 percent fake followers and 39 percent for L’Occitane. Micro-influencers, who have between 50,000 and 100,000, often have nearly 20 percent fake followers, according to a Points North Group study.
In May, the Influencer Marketing Council (IMC) released “Fraud Best Practices and Guidelines,” marking the first major initiative to define influencer marketing industry standards on a platform-by-platform basis. Best practices include checking bot-induced spikes in follower count, follower to engagement ratio and confirming that the origin of an influencer’s engagement matches their audience’s location.
On the importance of third-party verification, Schwab notes, “it delivers a trusted partner to verify audience authenticity, health and performance through ongoing independent observation and assessment of an influencer’s platform interactions, demographics and growth to predict campaign performance. During campaigns, it provides sophisticated detection for invalid, purchased performance for more accurate measurement.”
Despite the prevalence of influencer fraud, 67 percent of brands plan to increase their influencer marketing budgets in the next 12 months. And that’s because marketers see few immediate options with the same ROI.
“While there is significant influencer fraud, influencer marketing is powerful and useful. In addition, there are limited alternatives right now and the foreseeable future. For example, brand created content is an approach that is plausible, but it’s costly to create and not fully tested for effectiveness—is it just TV in a different platform,” Cavazos notes.
That gap has left marketers aware of the problem but more likely to work to improve the business and measurement of influencer marketing rather than abandon it.
If the issue is left unchecked, influencer fraud is predicted to cost the global economy $1.5 billion by 2020. This doesn’t account for the indirect costs associated with the problem, such as decreased brand trust. For relationships between influencer and customer to be symbiotic, brands must look for the aforementioned signs and demand data transparency from potential collaborators.