Reference no: EM133323490

Case Study: Much like trolls or the blockchain, the term ink/uencer is one of those words that ubiquity has rendered meaningless. It is simultaneously an insult and an aspiration, the scourge of small business owners and the future of marketing, and a moniker for kids with middling social followings and mega celebrities alike. Some elected officials are influencers, as are many infuriatingly well-dressed pets. So, what is an influencer, really? Apparently, it's someone who wields influence. But that doesn't really match up with current usage. Influencer culture, as we know it today, is inextricably tied to consumerism and the rise of technology. The term is shorthand for someone (or something) with the power to affect the buying habits or quantifiable actions of others by uploading some form of original, often sponsored content to social media platforms like lnstagram, TikTok, YouTube, Snapchat, or Linkedln. Be it moody photos, cheeky video reviews, meandering blogs, or blurry soon-to-disappear Stories, the value of the content in question is derived from the perceived authority and, most importantly, au/henf/cify of its creator.

A fashion blogger tagging her "favorite" basicswear brand on lnstagram or a popular garner name-dropping his "go-to" headset model mid-stream doesn't carry the same heavy-handed transactional connotation as, say, Lionel Messi selling Pepsi. The true influencer assumes that there is a particular type of relationship between content creator and viewer, one that hinges on the willingness of the viewer to be influenced. Users consider influencers more akin to a close friend than an advertiser or paid endorser, as the stream of content they produce and the more

casual way in which it is shared with the public imbues influencers with an air of authenticity that is rarely seen in semicommercial spaces.

It is this perception of ekpertise and accessibility that separates influencers from celebrities. But not all popular social media users are influencers, some are simply online celebrities, entertainers, comedians, or cute animals, nor are all celebrities influencers. Actress Evan Rachel Wood, for example, may have a large following on lnstagram, but she isn't an influencer. The same could be said of YouTuber Shane Dawson, who, despite his more than 23 million subscribers, is more than a mere influencer. On the other side of the spectrum are figures like Kim Kardashian, who, despite beginning as a prototypical celebrity, made a successful transition as an influencer.

Traditional celebrities' fame originates from their participation in an established industry like film, television, or radio; while the prototypical influencer's path to stardom is a more gradual, grassroots affair. They amass a following by creating and posting some form of unpaid (at least at first) original content that not only attracts the attention of other users but earns their trust or respect in some sense. Beauty YouTubers (also known as "Beautubers") such as MannyMUA, Wayne Goss, and Patrick Starrr are prime examples of this, as is lnstagram's Luanna Perez- Garreaud (@Luanna), who became one of the platform's most popular fashion influencers after the blog she started in 2009 took off.

An actor, musician, or comedian can act as an influencer, sure, but it's an auxiliary action, coexisting with, or often in spite of the celebrity's already established public brand. For influencers, the act of influencing and the public self are one and the same. The viewer's primary understanding of them is as a tastemaker, so it feels only natural that they would flex that influence. That perceived expertise and authenticity are hallmarks of an influencer, which is a bit ironic as the term is increasingly synonymous with the more unpleasant sides of the product marketing industry. What once seemed corrupting is now the norm, and given the dismal state of truth online, it's unlikely the lines will ever get unblurred.

As users of all types joined virtual communities, marketers and brands began to understand their potential to shape public understanding. A 2001 Rutgers study on "internet forums as influential sources of consumer information" found that people who read online discussions between other users in forums or message boards about a product were significantly more interested in it than those who read an online promotion from the company itself. Unlike ads or a corporate website's marketing copy, posts from internet strangers are often relatable, funny, or sometimes even moving.

The unique influence of forum power users on consumer sentiment was not lost on retailers and advertisers, some of whom would start covertly seeding their products and clients in popular forums around the same time. In the early 2000s, the media firm MindComet became one of the first to explicitly seek out influential message board moderators and MySpace users to promote brands and products to their followers in exchange for a gift card or promo code. The practice took off among mainstream companies, like Sony BMG, which hired unpaid interns to covertly promote its artists in online communities in 2006.

These prolific posters (people who posted about certain brands or products in their online communities) were influencers in their own right, but their sway over consumers and advertisers would pale in comparison to the power commanded by weblog authors in the early to late 2000s. The rise of personal blogs and their subsequent commercialization brought about many of the tropes of modern influencer culture more than a decade before it became a widely understood phenomenon. Companies sending freebies to influential bloggers in the hopes of earning a

review or promotion had become a common enough practice in the early days of the blogosphere that high-profile discussions around the ethics of disclosing such conflicts took place as early as 2002.

In 2004, Ted Murphy, the founder of MindComet or today known as IZEA, started the BlogStar Network, likely the first influencer marketing network. It began as a private email database of influential bloggers interested in getting paid to post about his marketing firm's clients, which included companies like Red Lobster, Turner, and Burger King. Murphy sent out email blasts to the database detailing potential offers and would manually negotiate the terms of each content deal based on the blogger's response. In 2006, Murphy said that a "couple thousand" bloggers had joined. When asked about disclosure requirements, he shrugged off the question. "It's up to the bloggers to be their own morality police," he said. And they paid nicely: a flat fee of $5 or
$10 per post. In June of 2006, Murphy launched PayPerPost, the first automated d 9ital marketplace connecting advertisers with influencers from the blogosphere and beyond. Brands could pay to put a listing on the site detailing what sort of influencer they were looking for, what they wanted promoted, and how. Bloggers with a bigger audience were able to command higher rates. At the time of launch, disclosure was not a requirement, lhough it would be later.

Internet users received PayPerPost's launch poorly. Though sponsored content today is considered a permanent fixture of the digital land scape, at the time, the notion of influential bloggers being paid to promote or mention a brand online outraged users around the web and caused a meltdown among the general community of bloggers. Nevertheless, a few months after PayPerPost launched, other marketplace companies joined the fray. People began to call this the "PayPerPost Virus Spreads". By the end of 2006, it had become a full-blown infection, with companies paying for influencer marketing left and right. Another scandal ripped through the blogosphere in December after some prominent tech blog9ers reported that Microsoft had sent them free Acer laptops. Although companies have long sent promotional materials by the boatload to journalists who typically disclose that the item was a gift, but given the increasing influential power of blogs, it's no surprise that companies are beginning to try the same tactics on bloggers who often hold even more sway over tech-savvy consumers. While companies have been offering money to prominent bloggers in return for posting links to products and favourable reviews but getting paid some money from PayPerPost is nowhere near getting a $2000+ Acer laptop, which started a whole new ballgame.

Influencer marketing campaigns would only grow more obvious in the coming years. When British mobile company Hutchison 3G UK Limited launched its Skypephone in 2007, it gave influential bloggers the device for free in exchange for reviews. Kmart, through Murphy's firm, gave $500 gift cards to six influencers and asked them to blog about their shopping experience at the discount store in that same year. The resulting campaign generated 800 blog posts and 3,200 tweets, reaching 2.5 million people in 30 days. The obvious choice of bloggers for PayPerPost to serve Kmart's push for sales were the "Mommy bloggers". These were women who wrote about parenthood, which happened to be one of the most popular and lucrative genres of early influencers, regularly commanding valuable advertising deals and high-profile partnerships with brands from Walmart to TNT.

Presumably, influencers are supposed to disclose if they have received anything, be it money, free products, or something else, that could impact how a viewer interprets their endorsement of a product or brand, but enforcement is rare, and the few influencers who are caught by agencies like the Federal Trade Commission (FTC) are almost exclusively celebrities and usually let off with a mere slap on the wrist.

Over the last seven years, influencer marketing has grown into a multibillion-dollar industry, with brands large and small coming to view the practice as a less amateurish way to aggressively promote their products. In the early days, brands that sent an influencer free product or offered to pay them a small commission in exchange for their consideration would often receive a mention or casual promotion. But as more and more companies came to see the practice as an invaluable marketing tool, the power balance flipped, and influencers began to command significantly higher fees for each post, mention, or product placement.

That didn't slow down advertisers' thirst for an effective way to secretly raise the profile of their brand in the eyes of consumers. Average payment rates only continued to soar, especially after influencers started to retain agents and managers. Today, influencers are all over social media platforms like lnstagram, YouTube, TikTok, Twitch, Tumblr, and Snapchat, and sponsored content has become so ubiquitous that some platforms, like lnstagram, now have built-in tools to help influencers disclose and promote their paid partnerships in Stories or feed posts.

The digital marketplace model pioneered by PayPerPost is booming, with thousands of companies now vying to play matchmaker between brands and content creators to craft the perfect ad. Grapevine and Famebit are two of the most popular. Famebit, which connects YouTubers and lnstagram users with sizable followings to companies interested in sponsored content, took off in 2016 after it was purchased by YouT ube. The company has since integrated Famebit into its platform, making it easier for content creators looking to monetize their YouTube accounts to find an ad campaign that aligns with their interests. It seems like only a matter of time before lnstagram attempts something similar.

On YouTube and lnstagram, product placement deals are now common, as are the use of affiliate marketing links and sponsored coupon codes. Popular YouTuber Sanders Kennedy, who chronicles drama in the influencer world, shared that a brand once offered him a couple thousand dollars to place a beverage on his desk while filming a video. In 2018, an investigation into the influencer marketing industry found that payments increase if the influencer tags or shouts out the brand specifically, but covert or more indirect endorsements are often preferred. Influencers like Luka Sabbat, a model-turned-actor with two million followers on lnstagram, can charge upwards of $40,000 to promote products in story and feed posts. The cost of a single promotional photo posted by lnstagram influencer with a million followers starts at $10,000. YouTube is more expensive. A video from a YouTuber with 3 million subscribers will cost at least $40, 000. Influencers charge up to $10,000 to $30,000 more to post a negative review of a company's competitor.

Influencer payment rates have risen so quickly that advertisers that used to be some of the industry's biggest advocates now feel priced out of the market. Marlena Stell, a popular beauty influencer and entrepreneur, relied on influencers to promote her cult cosmetics brand Makeup Geek since its launch in 2011. However, she cut back on the practice in 2018, indicating that content creators had begun to regularly demand $50,000 to $60,000 per video. These prices are a function of the fact that, online, value is quantifiable. Or at least it's supposed to be. The worth of an idea, person, movement, or meme is based on how many likes, views, clicks, and shares it has. An idea eKpressed in a tweet that garners thousands of likes seems inherently more valuable and widely accepted than one with only four likes or views. An lnstagram user with tens of thousands of followers is assumed lo have an audience of that many real people, and a YouTube video with millions of views is thought to have captured the attention of millions of actual viewers, although those interactions can easily be bought.

That an influencer's potential earnings are directly linked to their reach has come as a major boon for fake engagement marketplaces, where key metrics like followers, views, and likes can

be purchased anonymously online for cheap. As the influencer marketing industry grows increasingly overheated, with more and more brands getting onboard each quarter, the problems posed by rampant engagement fraud have only worsened. According to cybersecurity firm Cheq, influencer marketing fraud is projected to cost brands $1.3 billion in 2019 alone. Which, of course, has led to the rise of influencer fraud detectors. Some companies rely on human investigators to filter fake or inflated accounts, while others use proprietary programs designed to spot signs of fakery, but it's largely a cat and mouse game. A return to a less quantifiable era of influence may seem like a loss, but if anything, it's the opposite. Trust, ultimately, is unquantifiable. And perhaps in the absence of futile attempts to assess it, non- definitive authenticity will reign once more.

QUESTIONS:

1. Describe the THREE (3) phases of social influencer evolution in the digital age based on the article.

2. In 2018, an investigation into the influencer marketing industry found that payments increase if the influencer tags or shouts out the brand specifically, but covert or more indirect endorsements are often preferred. Influencers with millions of followers on lnstagram can charge upwards of $40,000 to promote products in story and feed posts. The cost of a single promotional photo posted by lnstagram influencer with a million followers starts at $10,000. A video from a YouTuber with 3 million subscribers will cost at least
$40,000. Influencers charge up to $10,000 to $30,000 more to post a negative review of a company's competitor.

Explain how this "social influencer" phenomenon is gaining so much traction through the social marketing process.

3. Describe the business model components, primarily the customer value proposition, revenue model, and market strategy for the following commercial entities:

a) A social media influencer.

b) A digital marketplace that plays matchmaker between brands and content creators to craft the perfect ad (such as Grapevine and Famebit).