Influencer Marketing

About half (51%) of consumers said they had bought a product or service after seeing it used or promoted by an influencer in the past two years, per a study that coupon company Valassis shared with Marketing Dive. Younger adults are more likely to be swayed, with 39% of people ages 25 to 34 saying influencer endorsements affect their opinions about brands. Valassis surveyed 1,000 consumers in August 2020 about their interactions with influencers.

Thirty-five percent of U.S. consumers said they had made an unplanned purchase based on something they saw on social media, while 21% made an influencer-motivated purchase for the first time since the beginning of the pandemic in March 2020. Forty percent of consumers said they're more likely to trust a brand that features an influencer they know, and 25% said influencers who endorse brands shape their perceptions, the study found.

The growing importance of influencer marketing is a byproduct of the increased time that people have spent at home during the pandemic, Valassis' study suggests. Influencers have the power to humanize brands, making them an important bridge with consumers as they spend more time on social media, according to the report. That's especially true for influencer campaigns aimed at younger consumers. Its findings help to support other research, including a study by researcher Kantar that found almost half (44%) of Generation Z has made a purchase decision based on a recommendation from a social influencer, compared with 26% of the general population.

Valassis recommends brands exercise caution in their decisions to work with an influencer, with 65% of consumers saying they would stop following an influencer who says or does something that doesn't align with their personal ethics and values. At the same time, some consumers are embracing brands endorsed by influencers that reflect their social awareness, with 32% of respondents saying they had purchased more products/services from businesses that are endorsed by influencers from different racial and cultural backgrounds, according to the study.

The pandemic has led many businesses to cut influencer marketing as they reduce ad spending — namely, the travel and hospitality industries — but some categories have ramped up activity. Fitness and plant care influencers have experienced stronger engagement and direct-to-consumer (DTC) sales during the health crisis as homebound consumers seek their advice, Business Insider reported. Meanwhile, influencer mentions of insurance policies, mobile phones, recipes and TVs increased during the first two months of the pandemic in the U.S., a study by social media marketing firm Socialbakers found.

While the study points to how influencer marketing is having a larger influence on purchasing as homebound consumers spend more time on social media during the coronavirus pandemic, it also indicates that consumer awareness about social injustice has affected the impact of influencers, with 36% of influencer-following consumers saying they follow a more diverse group of influencers than they did before the protests against racial inequality started last summer.

Article top image credit: Flickr

Triller is gaining traction as an advertising platform as marketers seek to reach a growing audience for user-created videos. Digitally native brands like Manscaped, L'Oréal's NYX Professional Makeup and legacy players including Pepsi recently have developed campaigns for Triller, the buzzy app that uses artificial intelligence (AI) to let users quickly produce professional-looking music videos and has attracted the interest of some big influencers.

User-created video has emerged as a valuable part of brands' mobile marketing strategies, punctuated by Reddit's acquisition of video-sharing social app Dubsmash in 2020 and TikTok's explosive growth. That meteoric popularity has led rivals including Facebook, Instagram, YouTube and Snapchat to crib the format and develop similar features for creating videos set to a music track.

"There's some magic into this style [of] using well-known music clips, allowing people to mash them up together — and you create this kind of purposeful palette where the intent is not about your friends, it's about a shared experience and fun," said Brian Bowman, founder and chief executive of Consumer Acquisition, an agency that specializes in marketing apps on social media. "That is what has changed at least from the experience side."

NYX tests Triller with beauty drop, Snapchat shop

Beauty brands that were once early adopters of influencer marketing also are dipping their toes into newcomers like Triller. L'Oréal's NYX brand of cosmetics kicked off a campaign across Triller and Snapchat in late 2020. The promotion revealed the beauty brand's spring 2021 collection and included a virtual concert by singer Bebe Rexha and an augmented reality (AR) pop-up shop in Triller, according to an announcement.

The virtual store is the latest sign that Triller and Snapchat have developed a way to integrate their platforms after first announcing their collaborative efforts in March 2020. At that time, the companies said they would give Snapchat users the option to post their self-made music videos to a story in Triller. In a stronger platform tie-in, NYX's campaign turned passive users of Snapchat into active participants — and potentially paying customers — through the Triller shop. It was an innovative way for the brand to extend its reach among younger audiences who are less likely to consume content on traditional channels like linear TV.

NYX's campaign followed significant growth in the Triller audience. Earlier in 2020, it was one of the five most downloaded video-sharing apps in the U.S. and emerged as a potential rival to TikTok, according to a Sensor Tower estimate. As TikTok faced a stronger possibility of being banned in the U.S., video apps including Triller and Likee expanded their share of downloads from 24% in January 2020 to 44% in August. As of early August, Triller reported 65 million monthly active users, though those figures haven't been confirmed by independent analytics companies.

Cutting in as rivals squabble

The social video app faces a daunting challenge in taking on deep-pocketed tech giants with billions of users and legions of advertisers. However, rivals Facebook, Google and TikTok each are entangled in legal battles that may open an opportunity for Triller to fill in the gaps as brands dabble in more nascent platforms. Facebook and Google are mired in antitrust investigations that may halt more expansionary acquisitions or make them more cautious about quashing startups like Triller. 

Triller is majority-owned by Proxima Media, a Hollywood studio founded by Ryan Kavanaugh, producer of films such as "The Fast and the Furious" and "The Social Network." The video startup was in talks to go public through a merger into a publicly traded shell company, Reuters reported in October.

Meanwhile, Triller has partnered with brands on original programming, such as a November boxing match between Mike Tyson and Roy Jones Jr. The "Tyson on Triller" match was sponsored by DraftKings, SmartStop Self Storage and WeedMaps, and marked the first event by Proxima Media. Snoop Dogg hosted the match, which was the first from a new boxing league that's prepping five to eight events a year on Triller.

Toward the end of 2020, beverage behemoth Pepsi had similarly gotten into participatory events on Triller. The soda brand, which has a long history of campaigns featuring stars like Michael Jackson and Britney Spears, in December announced a partnership with rapper Fat Joe to create a reality competition show on Triller. The "Your Wildest Dreams" contest asked aspiring artists to share performance videos on the app for a chance to appear in a 2021 commercial for its Wild Cherry Pepsi variant. The contest demonstrates how digital platforms like Triller are creating new social media-inspired programming formats that encourage participation and allow for competitions akin to "American Idol" and "The Voice."

NYX isn't the only beauty marketer that's developing campaigns for Triller, as seen in a promotion by E.l.f. Cosmetics. The brand debuted a five-song holiday album on the app while billing itself as the first beauty brand to launch a Triller campaign. The "e.l.f. the hauls" album remixed seasonal classics from emerging artists and included videos starring social influencers. Together, these campaigns indicate that some brands are experimenting with Triller as they seek to diversify their social media efforts and broader marketing plans.

Article top image credit: Courtesy of NYX Professional Makeup

By Blake Marts, Director of Product Marketing at Inmar Intelligence

Oh, what a dizzying whirlwind the brief life of Influencer Marketing has been. What began as a handful of bloggers showcasing their hobbies in the mid-2000s has evolved into the sponsored TikTok mansions and influencer content factories of 2021. This soon-to-be $15 billion industry has gone from long-form recipe content and gardening advice to being largely fueled by fifteen-second videos and messy clips of daily life that expire within twenty-four hours. 

It may be the first historical record of underground mom culture paving the way for the next hip career path.

Throughout influencer’s furious ascent, one unshakable characteristic has remained true — marketers want more, and they’ve been willing to set aside some of their most pragmatic instincts to have it. Even as more advertising professionals began sensibly shouting “show me ROI or I’ll show you the door” regarding every tactic in their toolkit, they continued to scale their investment in influencers despite having limited options for evaluating sales impact. To be fair, we’ve all participated in (or at least witnessed) relationships where one side keeps giving and doesn’t get much validation in return.

Influencer spending is projected to register a Compound Annual Growth Rate (CAGR) exceeding 26 percent from 2019 to 2025, according to Grand View Research. Meanwhile, in a recent Inmar Intelligence survey of over 250 brand marketers, nearly half of respondents (44 percent) revealed they are altogether unable to quantify return on influencer investments.

Measuring ROI, however, is the endpoint in a linear journey that begins by attaining the right data and using it to reach the right consumers — before building the proper wiring to attribute online or offline transactions to customers’ exposure to content. With influencer performance data being scarce, and targeting historically lacking precision, even arriving at the “wiring” phase has been difficult for the collective industry to achieve.

Inmar Intelligence, through its ShopperSync™ data intelligence platform, is focusing on marrying the appropriate data points to make targeting more surgical and measurability more achievable. ShopperSync’s collection and segmentation of retail shopper data across various touchpoints, including transactional and browsing data, allows Inmar to match shopper profiles to social profiles and target users based on their known behaviors — a technique being termed “Social Shopper Targeting.”

This capability, combined with Inmar’s guaranteed views model — which, as it implies, guarantees verified views of influencer content and eliminates the reliance on metrics like follower count — ensures advertisers can be confident the user-generated content they commission will not only be viewed, but also those views will occur among shoppers already interested in their product or category (as proven by their purchase and browsing patterns).

In initial tests using retail data to reach known shoppers with influencer content, click-through rates have exceeded digital display averages by 33% percent, meaning the message is resonating with recipients at a much higher rate. Additionally, the reach rate of these campaigns (a metric used by Inmar to determine the amount of unique impressions actually delivered compared to the size of the initial seed audience of verified shoppers) is greater than 50 percent, on average – meaning Inmar has been able to find and serve content to more than half of the verified shoppers targeted. That is significantly higher than the average percentage of unique impressions delivered to a custom audience through Facebook ads, for example, which ranges from 5-20 percent. This not only proves the retail shopper audiences available in ShopperSync are highly active and engaged on social, but also prevents a high frequency of content being repeatedly served to a smaller audience, reducing the risk of fatigue.

Because the viewers of influencer content are also having their online and offline purchase activity captured in ShopperSync, advertisers will ultimately be able to measure content’s impact on sales. This is the next and final step in closing the loop for Inmar Intelligence — one encapsulating years of work to definitively and routinely prove influencers drive conversion.

When considering influencer investments, it is no longer a requirement to settle for unnecessary trade-offs or justify your spend based on its potential viewership alone. Today, it’s possible to be astonishingly precise with user-generated content as the medium, and it’s time to prove the industry is all grown up — even if its base of creators is perpetually, unapologetically youthful.

Article top image credit: Pexels / Sound On

WPP and TikTok began a global partnership that grants the agency holding group early access to the social video app's latest advertising products and mobile innovations, among other perks, according to a press release. The deal comes as short-form mobile video continues a meteoric ascent and amid a broader quest to reignite growth at the agency giant.

As part of the tie-up, WPP will receive exclusive access to some TikTok creators, opening collaboration opportunities for select advertising clientele. The agency conglomerate, for its part, is developing creator-focused applications for TikTok as the platform's Lead Agency Development Partner, including ways for brands to glean deeper insights into talent and more easily connect with diverse voices. GroupM, WPP's media-buying arm, will continue its work on TikTok brand safety solutions and integrating third-party verification vendors.

WPP scores a big win in securing early access to TikTok advertising products and partnerships with platform creators, which include some big-name influencers as well as lesser-known names that can also provide value for brands. TikTok is in high demand with marketers as the video-sharing platform — the most-downloaded app of 2020 — continues to command consumer attention and set broader cultural trends. The companies are collaborating on training and accreditation programs for WPP that aim to lend agency talent more credibility across media and creative disciplines on the app.

"TikTok has quickly demonstrated the power of mobile video and the many opportunities that exist for brands to engage in meaningful and creative ways on its platform," Mark Read, WPP's chief executive, said in a press statement. "I am delighted that we have formed this global partnership, a first in our industry, and look forward to working with TikTok to ensure our clients continue to benefit from what its platform has to offer."

TikTok has steadily built out an advertising platform to capitalize on massive user growth, with areas like augmented reality (AR) in the spotlight. In 2020, it introduced its first global platform for marketers, TikTok for Business, as well a new Brand Scan AR format. WPP was one of the app's early effects partners through its Subvrsive agency.

Beyond gaining a more direct line into TikTok's mobile innovations, WPP also has a closer ear to the ground with creators, some of whom reach tens of millions of followers and shape what's popular on the platform. The agency will apply its brand safety methodology and trove of client data to develop creator-focused APIs for TikTok, while GroupM will drill down into brand safety and ad-verification controls — areas TikTok has put a bigger spotlight on amid heightened scrutiny. The app has also partnered with OpenSlate, a provider of content ratings for digital platforms, to offer a third-party verified brand safety solution to advertisers.

The latest news marks another sign of maturity for TikTok, a social media disruptor that's emerging from an extremely volatile period. The app owned by Chinese tech conglomerate ByteDance was threatened with a ban by the Trump administration, which viewed it as a national-security threat. It scrambled to iron out a deal that will preserve its operations in the U.S., though the ban order itself now seems unlikely to come to fruition. While there are some lingering questions over how TikTok's ownership structure will ultimately shake out, the WPP tie-up helps affirm that the platform is likely here to stay and to continue to draw advertiser interest.

WPP has enacted significant changes to spur growth following a rocky few years, with some pain points amplified by the coronavirus pandemic. But the health crisis has also opened a window to seriously shift strategy, and WPP is among a number of agency groups now ramping up offerings in areas like e-commerce and digital content to better serve client needs.

Article top image credit: Retrieved from TikTok on February 02, 2021

Millions of Americans watch live videos or shop on their smartphones every day, and increasingly, they're doing both simultaneously as marketers experiment with shoppable livestreams. The ready availability of the technology to produce a live show and accept online orders gives marketers a way to set up their own interactive shopping channel for little cost.

The livestreaming trend comes as social platforms expand monetization capabilities for marketers and influencers. As a result, popular influencers with their own product lines are embracing livestreaming, but the space also includes legacy marketers adopting shoppable livestreaming, either from a brand-centric approach or by partnering with influencers.

Ulta Beauty, Walmart, Anne Klein and Samsung are a handful of the brands that have produced shoppable livestreams as part of their efforts to drive e-commerce sales. With many consumers avoiding stores during the coronavirus pandemic, livestreamed programming showed its potential to reach homebound shoppers on their mobile devices.

"The experience and engagement mostly happen on mobile," said Oz Etzioni, CEO of advertising personalization platform Clinch. He estimated that 60% of livestreaming shopping transactions occur on smartphones and tablets.

"We've seen great results — even better than display retargeting in terms of the engagement," he said. "The data show an uplift in people buying directly from the videos."

Livestream shopping sales were forecast to double worldwide in 2020 from $60 billion in 2019, according to Coresight Research data cited by Bloomberg News. While U.S. sales were a small fraction of that total, there are signs of significant growth potential as major brands in the region turn to these dynamic streaming events to lift sales and foster more direct relationships with customers.

Retailers turn to new platforms

Ulta Beauty, the store chain that was forced to close all its 1,264 stores during the onset of the pandemic, introduced a shopping livestream to demonstrate products and drive sales. It teamed with augmented reality (AR) developer Perfect Corp. to expand its Beauty School livestream into a more engaging shopping experience online.

"The interactive experience allows customers to connect with a beauty brand directly on the brand's website," Perfect's founder Alice Chang said in an email. Viewers also can ask questions and virtually try on the looks featured in the show, adding a richer element that helps to replicate the in-store browsing experience.

Ulta plans to build on its efforts to reach homebound mobile shoppers through additional livestreamed shows, according to details shared with Marketing Dive. It worked with female-first wellness brand Love Wellness on December's "Beauty School with Love Wellness," whose reach was amplified on Ulta's owned Instagram channel and the photo-sharing app's IG Live platform for livestreams.

"While there are many platforms to actively engage guests, we see significant value in creating tailored, digital experiences with our brand partners that can live across our ecosystem," Christine White, director of social and content marketing at Ulta, said in an emailed statement. "We believe there is a longer-term benefit in nurturing relationships with our guests in ways that feel authentically interactive."

Walmart similarly made a splash with a first-of-its-kind shoppable livestream on TikTok in December 2020. The one-hour live show let mobile users shop for fashion items featured by selected TikTok creators without leaving the app, removing a level of friction and linking creator-driven video content to sales.

"It gives us a new way to engage with users and reach potential new customers, while bringing our own brand of fun — with the help of fashion-loving TikTok creators — to the platform," Walmart CMO William White said in a statement.

Mobile devices are well-suited for interactivity between consumers and marketers, a natural link that may help to expand the audience for shoppable livestreams in the U.S. as they still lack in popularity compared with countries in Asia. Mobile devices can provide a better response mechanism than traditional TV programming, which mostly provides a "lean-back" experience that people don't want interrupted by having to click past ads.

Scannable QR codes embedded in TV ads may be a savvy method to pull viewers from those "lean-back" experiences and bring them to interactive online platforms for further streaming, Clinch's Etzioni recommended.

"We're trying to adapt to the user behavior, because we don't want to intrude," he said. "We don't want to force anything on you. We just want to go along with the stream and give you value, and provide you with utility."

Tech giants get in the game

Technology companies have incorporated livestream content to their respective platforms over the past few years to support online sales. Amazon in 2019 started Amazon Live, which features hosts discussing and demonstrating products sold on the company's website. Google's research group started testing Shoploop in July 2020, while Facebook has made shoppable livestreams more prominent on its apps including Instagram.

Livestreamed shopping has potential to grow in the U.S., if China is any indication of the possibilities. Chinese e-commerce giant Alibaba generates billions in sales from its Taobao Live shoppable streaming platform. During Alibaba's Singles Day shopping festival in 2020, Taobao Live spurred about $7.5 billion in sales during the first 30 minutes of a presales campaign among its concurrent livestreams, the South China Morning Post reported.

More than 300 celebrities hosted individual livestreaming sessions on Taobao Live to showcase everything from cosmetics and electronics to cars and apartments. For marketers that don't want to hire a celebrity presenter in a livestream, social influencers can be equally or even more effective to reach their loyal followings.

Etzioni has seen brands develop shopping livestreams with influencers consumers trust for their ability to demonstrate products and offer reliable opinions.

"The results are great, but you've got to keep it authentic and relevant to people," he said. "They have many different channels and opportunities to see what's most valuable to them."

Article top image credit: Courtesy of Anne Klein

Global esports revenue is projected to exceed $1.5 billion in 2023, and as the industry continues to grow, it remains an important channel for brands looking to engage millennial and Gen Z consumers for which gaming is a way of life — a trend accelerated as the coronavirus pandemic upends outdoor activities and traditional sports.

As early adopter brands parter with esports organizations and gaming influencers who are able to deliver branded content while leveraging their authentic voices, the space continues to evolve and mature in a way that benefits all parties, according to executives on a livestreamed Advertising Week panel in October.

The key for esports partnerships is the specific type of engagement the channel allows, as well as the emerging ways to measure and track value creation. Steve Arhancet, co-CEO of leading esports organization Team Liquid, pointed to a 15-second spot the team ran as pre- and mid-roll ads on Twitch. Beyond impressions, Team Liquid could measure the engagement in the chat as viewers raved about their favorite players before a big game.

"Those moments are really critical because that level of engagement doesn't exist on linear formats," Arhancet said.

Esports allow brands to reach both the coveted 18-34 age group and 12- to 17-year-olds who are starting to build brand affinities, per Matthew Archambault, head of esports partnerships and business development for North America at Riot Games, the company behind League of Legends. These groups aren't as easily captured by traditional sports, especially with the deeper level of engagement esports can provide as pro players are often more accessible to viewers via one-to-one, two-way connections than traditional pro athletes.

"You don't see LeBron shooting free throws and [have] the opportunity for a bunch of people to watch him and ask him questions," Archambault said.

Passion for products meets passion for gaming

The consumer engagement that esports provides is a boon to brands that have made inroads in the space, like Honda. The Honda Civic is the top vehicle for Gen Z and has been for millennials since 2011, according to Phil Hruska, manager of media strategy at Honda in America. Since then, the brand has looked to connect the audience's passion for its vehicles to its passion for gaming. Honda became the official car sponsor of Team Liquid in January 2019, and the partners have rolled out several initiatives since, including an "Ask Me Anything" on Reddit that netted 7,500 comments in 12 hours and was viewed as successful by both parties.

"For us as a brand, [that] is exactly the type of thing that we look for because we want to have that authenticity, we want to give something to this audience; we don't want to just slap a logo and call it a day — we want to present ourselves in a meaningful way that gives something to the fans," Hruska said.

The need for meaningful activations has driven long-term partnerships, like the one between Honda and Team Liquid.

"When we endorse a brand to our community, we follow through with that. There's not a transitory nature to it. We owe it to our fans: this is here to stay. We've also made sure this is the right kind of partner for us," Team Liquid's Arhancet said.

The same desire for authenticity is true from the esports organization perspective when looking for brand partners.

"If it's, 'I want to check a box for my board to hit an 18-34 year old demo,' there are a number of platforms that can deliver that very well for you… but if you're looking to really engage … and dive into some unique layers that only esports and gaming can deliver, that's what gets us excited," said Riot Games' Archambault.

Finding the right partners, with or without top-down pressure

Another brand that has attempted to be culturally relevant by embracing the gaming community is Nestlé, which detailed some of its gaming efforts in a separate Advertising Week session.

Executive leadership showed an early interest in gaming activations, according to Douglas Veney, Nestlé's influencer and esports marketing manager.

"As a marketer, that's the dream: You want the CEO, CMO and executive leadership saying, 'Why aren't we doing this,' and I can easily go to a brand [and activate]," Veney said.

For Nestlé, its Hot Pockets brand has led the way for the company as an early adopter in the space. While not exactly an endemic brand, Hot Pockets are familiar to the gaming community as an inexpensive and convenient snack to eat while gaming. The brand also keys into nostalgia for gamers in their 30s and 40s. This familiarity helped Nestlé partner with influencers who were able to deliver branded content while leveraging their authentic voices.

"We don't want an influencer to come through as a parrot... if an influencer is using our marketing verbiage, we're failing," Veney said.

Not all brand marketers will have the type of top-down pressure from leadership that Veney received at Nestlé, and finding the right partners can be difficult within a gaming ecosystem that includes many games, leagues, teams and players.

"When brands come to us, they always have that question: What niche matters, and how do we reach that niche? Our job as a company is to find content creators that help them take over that niche, but also find the right one," said Justin Warden, CEO of Ader Gaming, a media and talent management company in the space.

Once brands find the right influencers, brands should trust partners to deliver messaging and to create what works with their audience, the panelists encouraged. However, Ader cautioned that trust must come with a critical eye.

"There are a lot of content creators out there who really love working with brands, and a lot that really don't, and your job as a brand is to figure out who wants to support you authentically, and who's just at it for a paycheck," he said.

Article top image credit: Courtesy of Honda

Influencer marketing appears to have been resilient during the pandemic among brands that show little signs of cutting back their spending, even as the broader advertising market experienced a significant pullback in 2020's second quarter, a report from Forrester Research suggests. 

The number of social influencer campaigns fell 3% during the early days of the coronavirus pandemic, slightly reversing a trend of rising activations in the past few years. While activations slowed in March, they returned to near normal levels by April and May, according to Forrester's study.

A poll of 15 marketers at large brands conducted in April found that 13 of them expected their influencer investments to continue to grow, while the remaining expected investments to be flat. No one in the survey said they expected their influencer marketing spending to fall.

Marketers used influencer campaigns for creative work and content that was unavailable from advertising agencies when pandemic lockdowns began, helping them get in front of consumers at a time when social media usage was increasing. That shift helped to buoy spending on influencer campaigns in April, per Forrester.

In contrast, major ad holding companies reported falling revenue during the period, including a 23% drop at Omnicom and 13% declines at Interpublic Group and Publicis Groupe, with the automotive, travel, financial services and industrial categories experiencing the biggest cuts in ad spending, the Wall Street Journal reported.

Forrester, whose analysts worked with 20 influencer marketing businesses to learn how the pandemic affected them, compiled several insights about working with influencers on campaigns during the ongoing health crisis. The researcher found that overtly commercial posts by influencers may be perceived as "mercenary and inappropriate" during the pandemic. To avoid damaging the reputations of brands and influencers, posts must have an appropriate tone, the finding suggests. In kind, airlines, hotels and retail chains may be wasting their spending on influencers amid pandemic restrictions, per Forrester.

The resilience of influencer marketing came as marketers expected a slower economy to result in lower spending on all media channels. Forrester forecast a 10% to 20% decline in social media marketing in 2020, even as homebound consumers spend more time online, including on social channels where influencers have remained active. The influencer activity came as 46% to 51% of U.S. adults said they increased their social media usage during the pandemic, per a Harris Poll study cited by eMarketer.

A variety of brands recruited influencers for their campaigns during the first few months of the pandemic to reach consumers through digital media platforms. Among the examples in Q2, NYX Professional Makeup's campaign on social video app TikTok included influencers who guided viewers through a makeup routine, while chocolate maker Russell Stover enlisted TikTok star Jason Coffee to urge people to join the "world's biggest virtual hug" as the pandemic kept people apart.

Article top image credit: Hipster Mum via Unsplash

Yumi, an ambassador for Procter & Gamble's SK-II brand, is adept at interacting with the Japanese skincare company's customers online, offering beauty tips around the clock to help people better understand and care for their skin.

But unlike the products she's hawking, Yumi is not real. She's a computer-generated avatar powered by artificial intelligence — a chatbot with a face that doubles as a lifelike brand ambassador. In June 2019, SK-II unveiled Yumi as "the world's first autonomously animated digital influencer" that can answer customers' questions and suggest skincare products based on a shopper's preferences.

SK-II is far from the only brand to incorporate virtual influencers into its marketing strategy. Chanel, Prada, KFC, Vans and Rihanna's Fenty Beauty are among the established players that have explored driving brand buzz with similar digital characters.

Much of what's supporting the uptick in virtual influencers is consumer curiosity and mounting uncertainty around the authenticity of traditional creators, according to Anna Gilligan, senior strategist at agency T3.

"There is a lot of skepticism right now about what's organic content versus paid, so this gives brands an out-of-the-box way to cut through that conversation," she said.

Whether or not these characters have much staying power as influencer marketing's next big thing, they are raising a slew of legal questions around proper disclosure, intellectual property and blurred lines between creator content and outright ads. Coupled with few concrete guidelines from the Federal Trade Commission, these questions point to the current state of legal limbo in influencer marketing as the federal agency that protects consumers from misleading advertisements catches up to the trend.

'Common sense can go a long way'

The FTC proposed guidelines in 1972 to crack down on misleading advertisements. It has continued to update its rules since then to match modern trends and technology, but is often months or years behind. One workaround emerged in 2009 when the organization provided examples of how established rules could extend to include social media ads, and again in 2017 when hundreds of human influencers were called out for burying disclosures of paid partnerships or omitting them entirely. The FTC released additional guidance for social media influencers in November 2019, though it failed to specifically address virtual influencers. However, an agency spokesperson told CNN that "advertisers using CGI influencer posts should ensure that the posts are clearly identifiable as advertising."

According to Venable LLP Partner Melissa Steinman, the legal agency often provides fresh guidance in informal ways — spokesperson statements, speeches, interviews and letters — to keep apace with rapidly developing trends.

"The FTC may not have come out and made new rules, but the sentiment is there. This is advertising, and it should be treated as such," Steinman said. "The FTC is mostly concerned about whether consumers can clearly tell when something's an ad, and they've indicated that nothing will be that different in the rules around influencers: CGI or flesh-and-blood."

Currently, the agency is observing the landscape around virtual influencers and how well consumers understand their role in advertising before developing definitive rules. The safest move for brands in the meantime is to treat these CGI personas as human influencers and double down on disclosure to avoid legal action or negative brand attention, Steinman said.

"If it feels like you're trying to hide something, that's a red flag. This is an area of consumer protection, and we're all consumers, so disclosure and common sense can go a long way," she said.

What's driving the hype?

Much of what's powering these virtual characters' emergence is fatigue around their human predecessors. Influencer marketing has long surpassed the threshold as a buzzy trend and is now a mainstream tactic that's nearing saturation on platforms like Instagram. Despite concerns around overcrowding, influencer marketing spend was forecast before the pandemic to surge to $15 billion by 2022 from $8 billion in 2019.

As more brands double down on working with these typically young, stylish tastemakers who have amassed extensive online followings, consumers are beginning to show signs of influencer fatigue. On Instagram, the top social media platform for influencer marketing, creators saw their engagement rates hover near all-time lows in summer 2019 as Instagram grew congested with sponsored posts, per a study by analytics firm InfluencerDB.

Brands responded to this decline by exploring creative ways to renew excitement, which became even more imperative as social platforms like Facebook and YouTube considered removing the "like" count from posts.

While virtual creators have shown significant brand power, they have yet to match that of traditional influencers, according to Gilligan. Perhaps the most recognizable virtual star, Lil Miquela, has amassed 2.5 million Instagram followers since her 2016 debut and has collaborated with brands such as Prada, Calvin Klein and direct-to-consumer athleisure line Outdoor Voices.

Brand safety vs. authenticity

Like traditional influencers, Lil Miquela and her virtual counterparts appeal to brands because of their fast-growing followings, consumer intrigue and consistent social media content that young users can relate to. A key differentiator, however, is brand safety. Even marketers with the strongest influencer partnerships and detailed legal contracts can't predict what human creators do or say. Opting for the CGI type gives brands tighter control over content, whether they run their own virtual stars like luxury brand Balmain or partner with a third-party operator like KFC did in 2019.

But because authenticity is the cornerstone of influencer marketing, can these virtual stars be trustworthy or relatable when someone else is strategically directing their entire existence to foster positive brand image?

"They're not able to actually use the product. Lil Miquela isn't wearing that Calvin Klein shirt. She doesn't wear anything," Steinman said. "Certainly they're not eating, so how can they really endorse something?"

According to T3's Gilligan, virtual influencers are arguably more authentic than the traditional kind. She said users are savvy enough to recognize that virtual influencers are used as extensions of brands and, thus, any product mentions are ads. Hundreds of human creators have been hit with FTC warnings for burying or omitting disclosures, prompting users to now question any product endorsement on social media, even if they appear to be organic.

"We know their content is a direct byproduct of a brand. Their intentions are not hidden, so us users can kind of let our defenses down," Gilligan said. "Instead of having brands be hidden puppet strings behind [human] influencers we consider relatable, maybe we prefer them to own it and just create their own so we can filter through that content and not make us question [human] influencers' motives."

Murky legal landscape

The bigger question, according to Steinman, is whether brands should be required to disclose that these influencers are not human. Lil Miquela and her fellow CGI characters look almost real, but there's still enough nuance where the average consumer may be unsure. That gray area introduces opportunities for riskier brands to go rogue, using the lack of clear FTC guidance as a loophole around fully disclosing partnerships.

"If consumers can't clearly tell that these influencers are virtual, then you really should be disclosing that on top of any paid relationship between the advertiser and the influencer's creator," Steinman said.

Risk-averse brands can avoid damaging press or potential private litigation by over-disclosing while the FTC clarifies its rules, she said.

Other legal considerations when working with virtual influencers include standard contractual agreements around intellectual property ownership, trademark licensing, copyright, compliance and a moral clause, which outlines behavioral standards for paid partners to safeguard brand reputation. If a virtual influencer breaks the agreement, Steinman suggests marketers treat the situation as they would for a human creator.

Aside from a terminated partnership, brands whose CGI influencer crossed the line could face fines, class action or private lawsuits, and a headache-inducing level of bad PR. Steinman expects consequences for virtual creators' misdeeds to mirror that of human influencers, where the first few cases usually serve as industry examples with no monetary fines, but beyond that, potential penalties could cripple a brand.

"Legal orders that bind a company to not engage in similar behavior can last years or decades," Steinman said. "Nobody, especially in the technology age, wants to be restricted to what they can and cannot do when it comes to marketing on social media or elsewhere."

Article top image credit: Balmain

Generation Z and millennial consumers tend to follow social influencers who they consider most authentic and relatable, per a survey by market researcher Cassandra. When deciding to follow an influencer, 89% of young consumers said it's important that the influencer seems like a nice person, while 86% want to feel that the influencer "isn't just trying to sell them something," the survey found.

Eighty-six percent of respondents said they follow influencers who make their day better or improve their mood, while 85% said it's important that influencers they follow try to make the world a better place and are people with whom they'd want to hang out, the survey found.

Cassandra's research on the influencer following activities of Gen Z and millennials indicates that young consumers are looking for people who they can trust to provide good advice. That's an important characteristic amid a social media environment that's flooded with misleading information, fake news and inflammatory content. For brands that are developing an influencer marketing strategy to reach these young and increasingly valuable consumers, it's important to vet those influencers to ensure they'll make good brand ambassadors.

Authenticity has become a more important theme amid growing concerns that influencer marketing is associated with misleading advertising. In early 2020, the Federal Trade Commission (FTC) took a key step toward cracking down on marketers that disguise paid advertising as authentic reviews or endorsements from an influencer. The agency voted to seek public comment on whether to update its rules on the use of testimonials in advertising. The concern comes as spending on influencer marketing is forecast to reach $15 billion by 2022 from $8 billion in 2019, Business Insider Intelligence estimates based on Mediakix data.

While fashion and lifestyle influencers are most associated with consumer purchase activity, Cassandra's data indicates that influencers in categories such as beauty, interior design and video games also have followers who are more likely to buy products.​ Eighty percent of people who follow these influencers buy beauty and grooming products, followed by fashion and style (74%), meditation and mindfulness (71%), books and literature (68%), interior design (68%) and health and wellness (66%).

Kylie Jenner, Huda Kattan, Zach King and James Charles are among the personalities who have parlayed their massive social media audiences into lucrative endorsement deals with major brands. However, microinfluencers with audiences as small as a few thousand followers are also important to marketers' influencer strategies. Microinfluencers comprise 40% of brands' annual influencer spending versus 28% for celebrity influencers, Rakuten Marketing found in a 2019 survey.

Article top image credit: Louis Amal / Unsplash