This Is How Much Brands Are Losing to Influencer Fraud Every Year

As more and more brands tap social media influencers to boost engagement and awareness, there is greater potential that they could come across bad actors on the internet.

That thesis is at the center of cybersecurity firm Cheq’s latest study, which predicts that influencer fraud will rise to $1.5 billion by 2020 — up 15% from the $1.3 billion that’s expected for this year.

Conducted in partnership with the University of Baltimore, the report said spending on influencer marketing could reach $8.5 billion by the end of 2019. The practice has led to a rapid increase in the number of “prominent personalities” on the internet who not only buy fake followers and engage via bots, but also automatically like, comment and share posts on social media.

Such fraudulent activity, the researchers argued, could potentially erode consumers’ trust in companies that partner with these individuals, making them less inclined to buy products, thus negatively impacting brand sales.

“Though there is no precise way of measuring the loss of consumer trust in influencer content, we suspect it’s significant,” the report stated. “Marketers lose receptive consumers, and business marketing ROI diminishes. This highlights our view that fraud and loss of trust extend beyond the affected business and that entire sectors and economies are adversely impacted.”

A bevy of research studies have shown that influencers can be perceived as more trustworthy and approachable than brands themselves — which is one reason why companies opt to work with influencers. But that has opened up a market for businesses selling followers and likes for cheap.

The report also tackled gray areas in influencer fraud, including the use of automated services to act on one’s behalf, as well as so-called “pods” that allow social media users to engage with others’ posts to gain follows and likes in return. “This is clearly not what brands have in mind when creating and paying for campaigns,” the study noted. (Another questionable influencer activity involves posting what appears to be sponsored content to con brands into hiring them for a future campaign.)

By 2020, global spending on influencer marketing is forecast to reach up to $10 billion, reflecting a twentyfold increase since 2015. In the U.S., the Federal Trade Commission has shared endorsement guidelines to provide disclosures that allow for more transparency between advertisers and consumers.

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