Beware the Influencer

Today I came across this article in Wired chronicling Lashify’s drama as a new brand coming up against influencers. Lashify is a lash extension company which launched in 2017. Long story short, soon after the company’s launch, a Youtuber called MannyMUA with nearly 5 million followers posted a review video slagging the product. Below the video were a list of affiliate links which included, among others, links to Lashify’s competitors. 

Jabs and name calling ensued between Lashify and MannyMUA and it didn’t look good on anyone. Not only was the public squabble bad business for Lashify but their founder and employees received death threats from MannyMUA’s loyal followers. In retreat, Lashify closed their Google business page and disabled their reviewing function on Facebook. Then, nearly seven months after MannyMUA’s video was published, a rumor took hold on Reddit that a Lashify competitor had paid MannyMUA (speculated to be around $70,000) for his eight minute video. The drama created: priceless.

Welcome to the business of influencer marketing. Brands are willing to pay a lot of money for influencers’ endorsements. According to the Wired article, “a [Youtube] content creator with 3 million subscribers will usually charge at least $40,000 per video. If the company wants the YouTuber to produce a negative review of a competitor’s product, that’ll cost extra—often from $10,000 to $30,000 more.” 

Brands are willing to pay so much because consumers see this form of advertising as more authentic – like getting a recommendation from a trusted friend – compared to say a commercial. It’s actually highly effective: 19% of Americans say they’ve made a purchase because of an influencer’s endorsement. This trend is expected to grow.

But in the effort to appear “authentic” some brands would also prefer if influencers wouldn’t mention that they were being paid for an endorsement. There are rumors that they'll even pay more for this. The FTC has rules requiring influencers to disclose sponsorships but they’re clearly not being followed. Only 10% of affiliate content on Youtube contain the required disclosures. 

On the other hand, there is the argument that disclosure enhances the authenticity of an endorsement. Social media users are becoming more and more savvy to when influencers are being paid (whenever a brand’s name crosses an influencer’s lips). In this light, transparency about sponsorship can add to an influencer’s credibility and relationship with their followers. And this must also translate to the brands they associate with. Surely, Lashify's competitor must have felt some backlash over this rumored secret sponsorship of MannyMUA's video.

This puts companies in a tricky situation. Depending on the industry, they may not feel like they have any choice but to pay out large (and growing) sums to influencers. And sure, proper disclosure seems like a better long-term strategy, but what to do if competitors aren’t so sweet? If Lashify’s experience was any example, proceed with caution.