Brands and marketing
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Social inﬂuencers are becoming a serious business
IT IS A sure sign that a hot trend has reached the mainstream when the tax authorities
catch up. This week China promised a tax-evasion crackdown on social-media
inﬂuencers, who are paid by brands to promote products online to armies of followers.
One of the big stars, Viya, a 30-something fashionista known as the live-streaming
queen, has already been fined $210m for not declaring her income. The size of that levy
shows the sheer scale of the industry, which accounts for 12% of online sales in China.
Outside China, inﬂuencers are also likely to have an enduring role in e-commerce. For all
firms with brands—and together those brands are worth over $7trn—it is time to realise
that inﬂuencing is more than just a hobby.
The use of personal endorsements used to be about harnessing existing celebrity power.
Elizabeth Taylor touted Colgate-Palmolive's shampoo in the 1950s, and Michael
Jordan's deal in 1984 with Nike revolutionised both basketball and branding. Inﬂuencers
turn the logic on its head: selling things helps make them more famous. Through curated
feeds of clipped videos and filtered photos they offer recommendations to consumers,
mingled with glimpses into their daily lives that give their artifice an aura of authenticity.
Sometimes they disclose how they are paid. Often they do not.
Initially dismissed as credulous Gen-Z folk who had mistaken posting selfies for having a
job, these entrepreneurs have become a big business, boosted further by the e-
commerce surge from the pandemic. Total spending on inﬂuencers by brands could
reach $16bn this year. Whereas the number of wannabe inﬂuencers outside China is in
the millions, an elite of under 100,000 of them who have over 1m followers each get the
bulk of revenues and the front seats at fashion shows.
Their staying power suggests that they add value in several ways. They can save money:
Elon Musk is an honorary inﬂuencer whose raucous online presence lets Tesla do without
any conventional advertising (General Motors blew $3.3bn on it in 2021). Inﬂuencers'
networks reach new audiences, particularly younger shoppers. Global brands can localise
their appeal by cutting deals with them. In China local shopping festivals and style
sensibilities matter, so transplanting marketing campaigns from the West does not work.
And inﬂuencers are technologically proficient in a way that old-style brand ambassadors
never were. They are quick to adapt to newer platforms like TikTok and to the ever-
changing algorithms of older ones like Instagram.
Yet one-third of brands do not use inﬂuencers. They worry about tarnishing their
reputation. Having a swarm of freelance advocates is riskier than the command-and-