58 Business TheEconomistApril2nd 2022
respectively, for a decade. Stars and brands
alike are tightlipped about how much
money changes hands, but the figures are
believed to be in the millions of dollars.
One report put the amount spent by lvmh
on the entire Miss Dior campaign at “under
$100m” in the past year.
Such starled campaigns can feel aloof
to teenagers and 20somethings who prize
authenticity over timeless glamour. And
influencers, with their girl or boynext
door charm, offer this in spades—for a
fraction of the fee of a bigname star. The
best ones are able to repackage a brand’s
message in a way that is harmonious with
their voice, their followers’ tastes and their
platform of choice (Instagram is best for
allstars with over 2m followers and Tik
Tok for niche “microinfluencers” with up
to 100,000 followers and “nanoinfluenc
ers” with fewer than 10,000).
Influencers are particularly adept at
navigating socialmedia platforms’ con
stantly evolving algorithms and features.
For example, when Instagram’s algorithm
seemed to begin favouring short videos
(“reels”) over still images, so did many in
fluencers. As socialmedia apps introduce
shopping features, influencers are com
bining entertainment and direct sales
manship. Such “social commerce” is huge
in China, where it was invented. In October
2021 Li Jiaqi, better known as Lipstick King,
notched up nearly 250m views during a 12
hour streaming session in which he ped
dled everything from lotions to earphones
ahead of Singles’ Day, that country’s annu
al shopping extravaganza. He and Viya, a
fellow influencer, flogged $3bnworth of
goods in a day, half as much again as
changes hands daily on Amazon.
Many influencers manage their pro
duction in ways that traditional ambassa
dors never could. They are video editors,
scriptwriters, lighting specialists, direc
tors and the main talent wrapped into one.
Jackie Aina, whose beauty tips attract over
7m followers across several platforms, ex
plains the importance of highquality
equipment that can show texture, accuratecolour grading—“Not to mention the light
ing.” Ms Aina’s 30second lifestyle TikToks
can take hours each to make.
This production value, combined with
access to the influencers’ audiences, trans
lates into value for the brands. Gauging
how much value, precisely, is an inexact
science. Launchmetrics, an analytics firm,
tries to capture it by tracing a campaign’s
visibility across print and online plat
forms. The resulting “media impact value”
(miv) reflects how much a brand would
need to spend to gain a given degree of ex
posure—itself indicative of the expected
return from a marketing drive. On this
measure, which brands use to see how they
stack up against rivals, the threeday wed
ding of Chiara Ferragni, an Italian with
27m Instagram followers, a fondness for
pink and a Harvard Business School case
study, generated a total of $36m in mivfor
brands including Dior, Prada, Lancôme
and Alberta Ferretti, which made the
bridesmaids’ gowns. That compares with
$25m for the more conventional—and al
most certainly pricier—video campaign
for Louis Vuitton’s autumn/winter 2021
collection for which the fashion house en
listed bts, a hit South Korean pop group.
As well as new opportunities, influenc
ers present new risks, especially for brands
whose luxury identities rely on price disci
pline and exclusivity. Influencerled live
streamed shopping events in China by
Louis Vuitton and Gucci were ridiculed for
cheapening their brand. And fulltime in
fluencers’ large teams can run up quite a
tab. Adam Knight, cofounder of tongGlo
bal, a marketing agency with offices in
London and Shanghai, notes how Lipstick
King’s livestreaming success has fuelled
demand for his services among brands—
but also his own kingly demands. Mr Li’s
fees, commissions and exclusive perks
only pay for themselves if the event is a
smash hit. Otherwise, Mr Knight says, the
client’s profit “just completely erodes”.
There are more indirect costs to consid
er, too. A host of younger and more unpre
dictable brand ambassadors is harder forbrandstocontrolthanoneortwosuper
starsonexclusivecontractswithgoodbe
haviourclauses.Thoughinfluencers’shor
tercontractsmakethemeasiertoreplace
shouldtheystepoutofline,untowardan
ticscanbecostly.Beforethelatestclamp
down Chinese authorities had already
forced20,000influenceraccountsto be
takendownlastyearongroundsof“pollut
ing the internet environment”. Luxury
brandsarereportedlycuttingtheirinflu
encerspendinginChinainresponse.Reg
ulatorsaroundtheworld,aswellassome
socialmediaplatforms,arebeginningto
clampdownoninfluencerswhodonottag
theircontentasadvertorials.
Suchworriesexplainwhysomeluxury
housesareleeryofinfluencers.Hermès,
the French purveyor of scarves and Birkin
bags, maintains a socialmedia presence
that is conspicuously influencerfree. But
more feel the benefits outweigh the costs.
Despite Louis Vuitton’s and Gucci’s live
streaming flops, lvmh and Kering, the
brands’ respective owners, continue to rely
on influencers to create socialmedia mo
mentum. To be a topten brand, says Flavio
CeredaParini of Jefferies, an investment
bank, you have to know howtoplay the
digital game. If you don’t, “youarenot go
ing to be top ten for very long.” nGrowing influenceSource:eMarketer *Companies with 100 employees or more100806040200
25242322212020%oftotalmarketersFORECASTUnited States, marketers* using influencer marketing100806040200
25242322212020By social-media platform, %FORECASTSnapchatTwitterYouTubeTikTokFacebookInstagramAppstorefeesStore wars
W
hat doesit take to rein in two of the
biggest companies on the planet? A
coalition of Swedish musicstreamers,
South Korean politicians and Dutch dating
apps, apparently. They seem to be succeed
ing where America’s federal government
has failed: to force changes to the way
Apple and Google run their app stores.
The app stores are big businesses, with
combined sales last year of $133bn, three
times the total five years earlier (see chart
on next page). Apple and Google take a cut
of up to 30%, which is thought to contrib
ute a fifth of the operating profits at Apple
and Alphabet, Google’s parent company.
The 30% levy began in Apple’s iTunes mu
sic store and was copied to its iPhone app
store, launched in 2008. As people came to
use their phones for gaming, streaming
and much else, it evolved into a tax on digi
tal activity. Sign up to a service like Disney+
on your phone and Apple or Google get a
cut of your subscription for ever. Apps
have had to use the tech duo’s payment
systems, and could not tell users aboutLaws and litigation threaten a big
source of Apple’s and Google’s profits