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Why Influencer Marketing is A Scam

Former CMO of Influencer Marketing Company Twistfire Media Tells All

When Unilever’s chief marketing officer Keith Weed called for “urgent action” to clean up the influencer marketing ecosystem, people listened. However, I personally had been talking to agencies and writing about this fraud for years before – and no one wanted to hear what was going on because they were all a part of it.

In 2015, I was hired as the Chief Marketing and Revenue Officer, of Twistfire Media a company based in NYC. Owned by a friend of mine Andrew Moskowitz, it was created in order to put actionable metrics and sell influencer media in a way that could easily be tracked, and put a value on every click and transaction.

It would allow marketers to know the actual value of their media buys from influencers — instead of throwing stuff at the wall, hoping it would eventually convert.

This was the main method of buying influencer media until that time. This was happening as studies showed that many as 15%-20% of Twitter’s users may be fake while up to 60 million Facebook accounts could be automated, or bots made to defraud advertisers. Affiliate marketing firm Rakuten Marketing spoke to 200 UK marketers working on influencer programs and found that post-for-post they were prepared to pay 12% more for Facebook endorsements than they were for YouTube — even with no metrics or proven value, so the companies were going nuts in buying influencer media left and right.

The idea was amazing:  I was able in the next few months to sell millions of dollars of influencer media to marketing companies, that ate up the media as fast as I could introduce it. They loved that they could buy almost in an “exchange environment” media, see the results, and take action if it wasn’t producing real results.

We however learned very fast, that the influencer ecosystem wasn’t just very fraudulent with hundreds of thousands of fake accounts but that the vast majority of real “influencers” had little or no actual value. Several famous “models” failed test after test, with their audience never buying a product – or showing an intent to ever buy. When we questioned them about why clicks would be coming from bots, or their followers often had the same IP addresses, we’d be told excuse after excuse.

Often the “influencer” would just claim he didn’t “understand” media even though it was clear they were involved in the scam. They would tell me that “someone else” put up their ads, and they didn’t really get “how it worked.”

On top of all this, while almost all major influencers that are “famous” on social media would try to sell posts, Instagram pictures and tweets for large sums of money – I learned very quickly that almost all of them weren’t selling most of the inventory at these prices, but were using brokers and other agencies to sell it cheaply “under the radar.”

Within a year we had all the famous names, reality stars, gaming accounts signed up – selling us “influence” for a great deal less than they advertised. In fact, we soon started mainly selling clicks at 2-3 cents in bulk to networks and marketers, who needed cheap inventory for additional exposure. It made a lot of money at first, because suddenly the real value of all these social media accounts was not only exposed, but available to buy.

Yeah, that reality star that posted she made $150k from a company? She also sold us $250 worth of clicks for the same post, multiple times. That gamer who everyone talks about? Begged for money because agencies had stopped booking with her because of fraud.

As time passed, the results continued to get worse and worse.

Most of the inventory being sold by the “famous” influencers was full of bots, international paid clicks from countries like China, and worse – often no value whatsoever. As we bought more and more clicks, the ecosystem turned to attempt to sell us more and more fraud. We also noticed that the bad accounts were being sold over and over again to media companies, working their way up the ecosystem

There wasn’t much value except to broker it to other media companies to buy it in bulk, and take a profit when we could.

Meeting after meeting with other companies, we learned the same thing: they were all facing a real issue in which most of the media was useless and their companies could only sell clicks in bulk to media buyers who would then try to convert it. Companies like Klout (that since went out of business) couldn’t find a way to actually make real money from influencers when they had to PROVE the value.

In discussions with major agencies, we learned something even worse: many of the media buyers for brands were aware that most social media influencer campaigns were junk, but the agencies were making so much money booking “branding” and taking a percentage for easy work, they didn’t want to tell their clients the truth — and why should they, since it was a “new type of media” that required experimentation.

Agencies knew this, the influencer companies knew it – but we were the only people talking about what should be done. If we could have influencers verified, take away the 80-90% of fake and junk traffic – and of course use our tracking and metric system, then the industry would be forced to change.

Agencies and marketing companies made it clear: they were going to ride the fake traffic wave for as much as they could, charging their clients for media they knew was worthless. They’d use Twitter “likes” and “retweets” as metrics to prove the campaign worked. They’d talk about “reach” even though there was no proof anyone actually engaged, read the tweets or cared about the product.

Yes you heard me: everyone knew the media was junk but very few people were willing to admit it because they were making money on the scam. The influencers were getting big checks here and there, the agencies were getting their fees, and the brand managers were just waiting to quit and get a new job in 12 months.

Have things changed since Unilever came out with their warning?

While I am not actively involved day-to-day buying media, I can tell you from my conversations with other people who are, not much has changed. While there are some actions being taken to “protect” brands from influencers, agencies and media companies still are buying media in a way that promotes or at least provides a catalyst for fraud — by not showing actual value of the campaigns besides “clicks and reach.”

 

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Pesach Lattin

Pesach "Pace" Lattin is one of the top experts in interactive advertising, affiliate marketing. Pace Lattin is known for his dedication to ethics in marketing, and focus on compliance and fraud in the industry, and has written numerous articles for publications from MediaPost, ClickZ, ADOTAS and his own blogs.

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