According to a new report from Business of Fashion, influencer fraud is costing brands more than $1 billion USD a year. The study, which was conducted by cybersecurity company Cheq and the University of Baltimore, states that influences who pay for fake followers or engagement will cost advertisers $1.3 billion USD this year alone. This number is also projected to grow to $1.5 billion USD by 2020.
The reason behind the staggering amount of lost dollars is due to ‘influencers’ purchasing fake followers and engagements (including likes and comments), which then in turn makes brands believe they are worth collaborating with. Marketers then spend big bucks to provide free trips, gifts and more for these ‘influences’, but don’t gain anything in return. According to Mediakix, this year marketers will spend $8.5 billion on influencers alone.
Celebrities like Kim Kardashian with a following of tens of millions can earn up to $300,000 USD a post, while other top fashion influencers are said to earn around $12,000 USD per post. For those looking to expand their social presence, influencers only need to spend $16 USD for 1000 followers on Instagram.
There are significant further indirect costs – notably erosion of trust and potential brand impact.
Roberto Cavazos, a University of Baltimore professor and economist in the BoF report, also conducted a study and found that 25 percent of followers of 10,000 influencers were fake, while another study stated that out of 800 brands and marketing agencies, two-thirds found out they had worked with influencers with fake followers.
Following the research, Cavazos believes 50 percent of engagement on sponsored content is fake. Aside from buying engagement, Cavazos noted that some influencers post fake sponsored content “to dupe brands into believing they have a proven track record – and in order to get hired for a future engagement”.
Head over to Business of Fashion to read the full report.