The Wall Street Journal - 21.10.2019

A12| Monday, October 21, 2019 ** THE WALL STREET JOURNAL.

A lawsuit this month hinted at the sums paid the biggest celebrity influencers. The singer Ariana Grande sued Forever 21 Inc. for allegedly stealing her likeness after she rejected an endorsement deal with the clothing retailer. Ms. Grande, who has 165 million Instagram followers, accused the company of hiring a look-alike model for its In- stagram posts. “The market value for even a single Insta- gram post by Ms. Grande is well into the six figures,” the lawsuit said. Forever 21 dis- puted the allegations. Akash Mehta, an influencer with 293,000 Instagram followers, was recently offered five times his $2,000 asking price for a single post. He has been paid by such brands as Volvic water and Swiss watch- maker Ulysse Nardin SA. The big offer, he said, “made me realize that influencer marketing has gone wrong.” Mr. Mehta said he sac- cepted the payment, but wasn’t sure he could deliver five times the value. Some established brands also see trouble. Kellogg Co., which paid the endurance ath- lete and Special K fan Sophie Radcliffe to post about her love of the cereal, said stand- ing out from the crowd is tough. “Consumers are wising up to how influencers work,” said Joseph Harper, Kellogg’s e-commerce marketing manager for Western Europe. Sensing the shift, some companies are rethinking how they use influencers. Banana Republic, which has used such high-profile influencers as Ol- ivia Palermo, a socialite with 6.2 million Instagram followers, is also tapping its own customers. The Gap Inc.- owned clothing chain has real- life shoppers pose in their fa- vorite Banana Republic outfits on Instagram, in exchange for $150 gift cards. Cassie Fisher, 21, was one recruit who said she had soured on influencers with no connection to the products they promote. What sets her apart from influencer phonies is that she was already buying most of her clothes at Banana Republic when the brand reached out to her, she said. “My friends and I are sick

Brexit Has

Old-School

Roots: Eton

FROM PAGE ONE

One flag, two sides

A peek at the influencer economy.

dustry of celebrity endorsers,
influencers and meme cre-
ators. Such paid endorse-
ments, known as sponsored
content, are the online equiva-
lent of a 30-second TV spot.
Big-name stars can command
$100,000 or more for a single
YouTube video or Instagram
photo.
But a whiff of deceit now
taints the influencer market-
place. Influencers have
strained ties with advertisers
by inflating the number of
their followers, sometimes
buying fake ones by the thou-
sands. They also have dam-
aged their credibility with
real-life followers by promot-
ing products they don’t use.
“All these paid posts make
you question whether influ-
encers are genuine or just do-
ing it for the money,” said Ja-
Lynn Evans, a 19-year-old
student at Virginia Common-
wealth University.
The loss of trust under-
mines the power of influenc-
ers, said Marcelo Camberos,
Ipsy’s chief executive. “Have
they peaked? I don’t know,”
he said. These days, the firm
is recruiting its own custom-
ers to post products—for free.
Accurately tracking the ef-
fectiveness of influencer ad-
vertising is difficult. By one
measure, their influence is
waning. Engagement rates,
which measure the number of
“likes” a post generates as a
percent of a person’s follow-
ers, are down this year, com-
pared with the same period
last year, according to Influ-
encerDB, which helps brands
manage influencer campaigns.
“Consumers can see if
someone honestly cares about
a product or whether they are
just trying to push it,” said
Anders Ankarlid, chief execu-
tive of online stationery re-
tailer A Good Company. “The
bubble is starting to burst.”
Advertisers can’t ignore so-
cial media. Instagram alone
has more than 1 billion
monthly users. Mediakix, an
influencer marketing agency,
estimates companies will
spend between $4.1 billion
and $8.2 billion globally in
2019 on influencers. That is
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 by media buying
agency Zenith.
Walmart Inc. this year be-
gan adding influencer posts to
its website to promote prod-
ucts such as Sofia Jeans by
Sofia Vergara. Last year, Uni-
lever PLC warned that fraud
undercut the power of influ-
encers. Yet in June, its invest-
ment arm agreed to buy a
stake in a software company
that helps brands oversee in-
fluencer campaigns.
Despite questions about de-
clining influence, the money
paid Influencers keeps climb-
ing—roughly 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 celeb-
rities with millions of follow-
ers, according to Mediakix.

ContinuedfromPageOne

who called the Brexit referen-
dum. The current prime minis-
ter, Boris Johnson, is one of
four “old boys” in the govern-
ment looking to push a Brexit
deal through Parliament. Law-
makers deferred a vote on the
deal, forcing Mr. Johnson to
ask the European Union for
yet another extension. A vote
in Parliament could come as
early as Monday.
Etonians, like Britain, are
split over whether Brexit is a
good idea.
Three Etonian members of
Parliament were thrown out of
Mr. Johnson’s Conservative
Party for rebelling over the is-
sue. One former Etonian is a
leader in the campaign to call
a second Brexit referendum.
British PR executive James

ContinuedfromPageOne

Wall was at a recent business meeting in Washington, D.C., when the conversation turned to Brexit and somebody outed him as an OE. “Don’t worry, I am not a huge fan of Boris,” Mr. Wall recalled saying. The boarding school west of London, which serves as a secondary school for teenage boys, has a special place in the British psyche for producing heroes and villains. Fictional spy James Bond was an old Etonian. Peter Pan’s Cap- tain Hook was an “old boy”. Twenty British Prime Min- isters were educated at the elite school since the 18th cen- tury. Twenty of the current MPs went there, according to the think tank Sutton Trust. “Can the (government) in- vestigate how this country is being held to ransom by a number of dangerous former pupils of a school called Eton Col- lege?” George Foulkes, or Lord Foulkes of Cumnock, asked dur- ing a recent debate in the House of Lords, the upper chamber of Parliament. Among the members of the Lords, 8% are Eton grads.

A representative for the school declined to comment. Eton has always served as a lightning rod for criticism of privilege and class in the U.K. Brexit has only increased the Eton bashing. Defenders of independent schools say it’s natural for parents to want the best edu- cation for their children. Brit- ain as a whole benefits from having kids educated in world- class schools that take a bur- den off the taxpayer, they say. Detractors say private schools give some an unfair advan- tage, entrenching privilege. Eton costs as much as $55, per year. When former miner Ronnie Campbell arrived in Parlia- ment in 1987 as an MP for the opposition Labor Party, he was shocked at the number of Eto- nians. He was educated at a state school in one of the most impoverished regions. Brexit revealed how domi- nant Etonians are in politics, because so many of them have had a role in the high-profile political debate. The school’s traditions live

on in British politics. Mr. Johnson once joshed that the only way Mr. Cameron could get revenge for failing to be selected to “Pop,” or Eton’s elite cadre of prefects who get to wear special waistcoats, was to become prime minister. (Mr. Johnson made it to Pop.) Most Old Etonians wanted to remain in the bloc, believes former pupil Hugo Dixon, dep- uty chair of a campaign to call a second Brexit referendum. Mr. Dixon is also godfather to one of Mr. Johnson’s children. A former Eton headmaster, Tony Little, told a recent liter- ary festival that old boys like Mr. Johnson, Mr. Cameron and Jacob Rees-Mogg, a govern-

ment minister who has pushed for Brexit, were giving the school a bad name, according to reports of the event. Mr. Little could not be reached for comment. What a “gutless and dis- loyal” remark, said William Sitwell, a food critic who at- tended Eton with Mr. Rees- Mogg. Mr. Sitwell voted to remain in the European Union, but says Eton should be proud of its graduates. Richard Braine, the old Etonian leader of the U.K. Independence Party, says part of the problem is that people look as typical of Eton the likes of Mr. Rees-Mogg, famed for his plummy tones and dou- ble-breasted suits. “He’s not the norm, he was regarded as highly abnormal even at the school,” he said, remembering Mr. Rees-Mogg as “anachronistic” even at age 13. “Just because you were at school with someone you didn’t know, doesn’t mean you agree with them,” Mr. Rees- Mogg said. It’s all leading to some awk-

ward social encounters. Harry Eyres sometimes bumps into fellow OE Mr. Cameron at social events. “In a social context, to tell him, ‘you made a terrible mis- take and have ruined the country for generations’ is tempting,” said Mr. Eyres, who is a published poet and writer. “But I am not the sort of person that would say that,” he said. “I would write it.” In a country where social class can lead to snap judge- ments, many Etonians are well practiced at hiding their old school ties. For a long time, when asked about his educa- tion, Mr. Eyres said he would “mutter vaguely” that he went to a school near Slough, the nondescript town which Eton borders. For some Etonians, now is particularly a time to lay low because of the school’s associ- ation with the highly conten- tious Brexit. “How do you know I am from Eton?” said one Conser- vative lawmaker, who talked on condition of anonymity. “You aren’t supposed to know that.”

followers by failing to disclose when they are paid to post about products or services, as stipulated by Federal Trade Commission guidelines. Tom Le Bree said when he co-founded online retailer Beautonomy in 2018, “We thought influencers would be a silver bullet and bring all the traffic we needed.” Beautonomy worked with influencers with about 100,000 followers on Insta- gram and other social media. The influencers created their own Beautonomy makeup pal- ettes and promoted products in posts. Beautonomy, which is co-owned by beauty company Coty Inc., agreed to give the influencers a percentage of sales. But they didn’t gen- erate enough sales to justify it. The company instead turned to buying ads on Face- book and elsewhere, Mr. LeB- ree said. Advertising executive James Cole said he worked on dozens of social media campaigns with influencers with- out any measurable return. He quit trying. Instead, Mr. Cole founded H Hub, which operates more like a traditional ad agency. It con- nects photographers, videog- raphers and other content cre- ators with brands, including Yelp Inc. Rather than paying influencers, brands acquire content from H Hub and post it themselves. “When Instagram started, it was a place you looked at images posted by your friends or other people you trusted,” he said. “Brands ruined it by injecting their own messages. just because an influencer posts about a product doesn’t mean they actually like it.” Jewelry retailer Alexis Bit- tar has moved away from influencers. The company now prefers creating its own social media content. Recent posts include photos of the 1968 Alexis Bittar-branded Volks- wagen bus the company shows off at such events as Art Basel in Miami and the Coachella music festival in California. “We scaled back paying for posts,” said Matteo Del Vec- chio, chief executive of Alexis Bittar’s parent company, De- conic, which is owned by Brooks Brothers. “It’s difficult to quantify how that trans- lates into sales.” Even with high-price offers, some influencers are having second thoughts. Amber Atherton caught the attention of advertisers after she starred in the British real- ity TV show “Made in Chel- sea.” Then she experienced the influencer’s dilemma. “Brands were offering to pay me $5,000 for a single post,” she said, “even though they weren’t relevant to my followers.” She turned down products she wouldn’t use. Ms. Atherton later founded Zyper, a software company that has helped Banana Re- public and other companies find customers as influencers. When Ipsy started in 2011, its strategy of using influencers instead of traditional advertising was unconventional. Founder Michelle Phan was an influencer, giving makeup ad- vice on YouTube. By 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,” Ms. Phan said, in a YouTube video to explain her exit.

Advertisers

Souring on

Influencers

FROM LEFT: AKASH MEHTA; CASSIE FISHER

of being sold things all the time,” said Ms. Fisher, a Uni- versity of South Florida student with 1,342 Instagram followers. “When you scroll through your Instagram feed, it’s one sponsored post after another.” Mr. Mehta, the influencer, also worked as a digital media manager for Christian Dior SE

and Estée Lauder Cos. over- seeing their influencer-marketing programs. He said companies don’t always know what they are buying. “When you pay for a bill- board, you know roughly how many people will see it,” said Mr. Mehta, 25. “With Insta- gram you have no idea. Fol- lowers can be bought.”

A Good Company, the online retailer, worked with 4,000 influencers to promote its eco-friendly stationery and other office supplies. It paid them cash or gift cards for their social-media posts. The company, which didn’t get its expected sales boost, sent an anonymous survey to their influencers, asking if they had ever paid for followers, likes or comments. Nearly two-thirds of respondents said yes, Mr. Ankarlid, said. HypeAuditor, an analytics firm, investigated 1.84 million Instagram accounts and found more than half used fraud to inflate follower tallies. Some influencers had large numbers of followers who weren’t real people, meaning the accounts had been bought or were inactive, according to Anna Komok, HypeAuditor’s marketing manager. Clues include large numbers of followers outside the influencer’s home country. The scams cost little. En- terprises known as click farms employ people to inflate on-

line traffic. They sell 1,000 bo- gus YouTube followers for as little as $49. On Facebook, the same number costs $34, and on Instagram they cost $16, according to Masarah Paquet- Clouston, a researcher at cy- bersecurity firm GoSecure, who collaborated with others to seek prices. Facebook and Instagram, which is owned by Facebook Inc., have policies against such deceptions, a spokesper- son said; Instagram has an initiative to remove phony likes, follows and comments from accounts that use third- party apps to boost popular- ity. YouTube also prohibits such deceptions. Influencer deception will cost advertisers $1.3 billion this year, estimated Roberto Cavazos, a statistics professor at the University of Baltimore. TV, radio, magazine and newspaper advertising are based on standardized, au- dited third-party measures, including those from Nielsen Holdings PLC. Some influencers mislead

Nano (less than 10,000)

Micro (10,000–50,000)

Mid-tier (50,000–500,000)

Macro (500,000–1 million)

Mega (1 million and up)

Celebrity (Several million)

Up to $500†

$200–$4,

$2,000–$10,

$5,000–$25,

$10,000–$150,

$20,000–$500,

Travel 4.5%

3.2%

3.5%

3.6%

3.2%

3.7%

Food

Fashion

Lifestyle

Beauty

Sport & fitness

–3.5 pct. pts.

–3.

–1.

(^20182019) CHANGE

$

0

2

4

6

8

billion

2015 ’16 ’17 ’18 ’19 ’

Low estimate

High estimate

8.0%

6.7%

5.3%

5.4%

4.9%

5.2%

Shrinking Influence While Instagram influencer engagement rates* are declining...

...companies are paying them more.

*average percentage of followers who like a post †Nano influencers are paid in gift cards or free products Sources: InfluencerDB (engagement rates); Mediakix (spending, prices)

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

Estimate of global brand spending on influencers

Alossoftrustis undermining the billion-dollar influencer economy.