Despite the growing sophistication of the influencer marketing industry, fraud is still rampant according to HypeAuditor’s inaugural Fraud Report. The company estimates that roughly 34 percent of influencers are impacted by fraud, either in the form of growth anomalies or inauthentic comments.
Though not all influencers impacted by fraud do it knowingly, HypeAuditor notes, fake influencers and inauthentic engagement could be costing advertisers up to $800 million each year. Keep reading for the report’s key takeaways for influencers and advertisers.
The Cost Of Fraud For Influencers
While some influencers engage in fraud to grow their accounts, either by purchasing comments or followers, others are victimized while trying to grow their accounts using paid social media services that claim to increase their following “organically” and with “real users”–when in fact they are not.
As HypeAuditor’s research reveals, only 59.86 percent of Instagram followers in the US are real users–others are suspicious accounts such as bots, inactive accounts and mass followers, namely accounts with over 1,500 followers.
Because services such as SMM panels are so affordable, and the goals of brand partnerships, self-sustainability, fame and gifts so appealing, it’s no wonder fraud in the industry remains an issue, especially on Instagram.
Based on HypeAuditor’s pricing analysis of 18 SMM panels, to refill Instagram followers, an influencer need only pay 60 cents per 1,000. To purchase followers without a refill, 1,000 followers will cost you just 28 cents. In addition, “US-based” followers cost $3.60.
Similarly, likes cost 28 cents per 1,000 or $2.28 per 1,000 for targeted likes. Post views cost just three cents per 1,000 while Story views cost $1.20 per 1,000.
Inauthentic comments–comments from bots, giveaway comments and comments from “pods”–drive the most fraudulent activities across all sectors analyzed, reports HypeAuditor. Overall, one-fourth of US influencers have more than 30 percent inauthentic comments.
More than half (58.61 percent) of mega influencers have inauthentic comments, according to HypeAuditor. These accounts in particular are disproportionately impacted by inauthentic comments given that their comment sections are breeding grounds for engagement, and thus, advertising.
Micro-influencers are impacted too, as 32 percent of those with followers between 20,000 and 100,000 have fake comments. Nearly 25 percent of influencers with between 5,000 to 20,000 followers also have inauthentic comments.
While some influencers may inadvertently experience fake comments, others actively engage in the mutual exchange of comments on each other’s accounts. About 4 percent of influencers participate in these “motivated comments” either independently or via SMM agencies. Comments as a result of pods increase an influencer’s engagement rate and sponsorship appeal, but don’t reflect interest from genuine followers. Unlike spam comments via bots, the originality of these comments can be harder for brands to discern and thereby manipulate partnership potential.
According to HypeAuditor’s findings, about 1.3 percent of all influencers boost their comments and engagement through giveaways, which typically require commenting, liking, subscribing or tagging a friend.
The Cost Of Fraud For Brands
About 40 percent of Instagram followers in the US are bots, inactive accounts, or accounts with over 1,500 followers. In a digital-first era where consumers now seek out and trust user-generated content (UGC) more than they do branded content to make purchase decisions, the impact of fraud on advertisers is far-reaching.
Demographic And Categories Affected
Naturally, Gen Z influencers (41.5 percent) are impacted more than any other demographic, followed by Gen Y, Gen X and Baby Boomers.
The top three industries most affected by influencer fraud in the US are fashion, modeling and lifestyle; the top three industries least impacted by fraud are artists, comics and sketches, and watersports.
HypeAuditor’s findings are based on its machine learning-powered analysis of roughly 740,000 US-based Instagram accounts from its internal database. It analyzed the authenticity of each influencer’s audience, comments and likes, and then contrasted these metrics to accounts of similar sizes.
Concerned about influencer fraud? Working with ION can mitigate the impact with strategic audience curation, third-party data verification together with our proprietary tools and research. Contact the ION team at firstname.lastname@example.org for more details.