The $21B influencer industry has gone off the rails | Hacker News Reader

The $21B influencer industry has gone off the rails

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Who even watches this fake-everything crap? How can people bring themselves to care about what some shrill rando thinks they should buy or not buy?

I get the same feeling about scam penis enlargement pills- obviously someone must be buying it, because the ads keep coming, but who the hell is it?

And how can someone become so obsessed by someone that he or she wants to follow that person. I never understood that.

If you enjoy what they post, following them is an easy way to get more of something you enjoy.

This very forum started as a way to follow Paul Graham.

We're all the same in the end, no need to look down on people who follow things you don't care about.

Parasocial relationships. Influencers engage talk to their audience with a tone of familiarity. For some people they associate that tone with actually being familiar with the influencer. The viewer's internal schema for the influencer is familiar if not friend.

This is exploited to sell those people things. It's not all that different from celebrity endorsement advertising, it's just a bit more direct and overt because the influencer might respond to a viewer's tweet or mention them by name/handle if they hit some Patreon level or buy some thing.

I don't know but there are Disney TV shows where the main characters "aspire to become an influencer". It's embedded in the zeitgeist, and I don't know it gets dislodged if at all.

It’s a raw form of the same old celebrity worship we see with athletes, actors, and wealthy people. It’s in your pocket at all times, it’s in your friends pockets at all times, and there’s a tight feedback loop from the algorithm.

Silver lining is the abundance of influencers lessens the stickiness of any particular brand and makes it a shorter term fad.

I think a lot of this is subliminal advertising. My gf sometimes randomly mentions some new product she suddenly thinks she needs and how everyone loves it... and I can only assume she saw something on Instagram without realizing it is an ad.

It's not even subliminal - it's overt. And it works, even if you know it's happening.

I don't disagree with you, but isn't this just how regular product placement works?

You put a coke bottle next to some athlete, someone makes a reference to some car in some tv show, or to some product in a movie.

There are subtle and obvious ways to do it in those other mediums... The problem with "hobby" influencers is that they're supposed to be talking about those products anyway, so it's very difficult to know if they're still in the "initial phase" where they're just interested on products out of genuine interest (and purchasing it themselves), or if it's product placement :(

> You put a coke bottle next to some athlete, someone makes a reference to some car in some tv show, or to some product in a movie.

Would be illegal where I live, but seems to be common on IG (I don't personally use it, so idk)

Interesting, what's your country? Where I live (Germany), AFAIK, there is a partial ban on TV/radio product placement, but not in movies. And definitely not illegal in sports, with sponsorships and all.

I was under the impression that if you do a product placement for which you get paid without marking it as an advertising, that would be illegal due to Medienstaatsvertrag § 8 Abs. 3 [0].

0. https://lxgesetze.de/mstv/7

Yep, that's where I got my info from. I will translate for the international audience:

§ 8th - (7) - Product placement is permitted, except in news programs and programs for political information, consumer programs, regional window programs according to Section 59 Paragraph 4, window programs according to Section 65, programs with religious content and children's programs.

The bullet points below it help narrow it down further. "Just mentioning it" is allowed, as long as you don't emphasise it too much or encourage purchase, etc.

And "just mentioning it" is fine, if you use the product as an example when talking about a certain topic, or if you mention that it exists. Which is IMO more effective than overt advertisement.

> How can people bring themselves to care about what some shrill rando thinks they should buy or not buy?

The answer is pretty simple - they give you a reason for you to care.

Quick example:

Project Farm[1] on Youtube does product reviews. Maybe they're not the best reviews - I don't really know. They seem at least alright.

But they're constructed in such a way as to be transparent, objective, and easy to understand.

Which is why the channel has a lot of subscribers.

Now, depending on the person, "a reason for you to care" will be different. But that's part of the reason why there's so many different influencers in each area - different influencers appeal to different people.

---

1. https://www.youtube.com/@ProjectFarm

I love project farm. Love how much rigor he puts into experiment design but still makes it obvious and appreciable to the layman observer.

For example, when he tests tape, he does not put the tape down by hand. Instead he uses a roller with a fixed weight to push the tape down so that all tapes for sure have the same pressure applied

Project Farm is awesome, but some of the tests he engineers aren't really suited for the tools he's testing.

But if you aren't heavily involved with said type of tools, you'd never know so you can continue to enjoy the entertainment.

Torque Test Channel does something similar, but they're usually just testing the numbers provided by the manufacturers, and then intentionally going off the rails to break the tools.

The dude tests basically anything and everything, and gives them generally pretty reasonable goes at a proper test. Sure, it's far off from an industry standard in a lot of cases, but unlike the industry (generally) he does side by side comparisons.

Some of his tests are like comparing RAM by temperature. They just make no sense.

I've learned from watching vintage computer repair videos on youtube that touching chips on a running system and looking for a hot one is a common troubleshooting technique.

Fun fact if you take a board out of a Burroughs B6700/B6800 that you think is bad (has a bad chip) if you drop it flat on the floor, chips side up from 36" (about belt height) 9 times out of 10 the lid on the bad chip will fly off. Turns out the heat from a failing chip heats enough to release the glue.

YMMV on fixing a now 50 year old computer.

I generally like most of his stuff, but definitely agree.

The last one I watched was about rain repellents like rainx. I'd expect to test longevity over time, under sunlight, maybe simulating rainy days.

Instead the tests had various harsh chemicals applied in succession, and a sponge friction test for some reason.

Project Farm is different because he focuses on reviews, and pays for all products himself to prevent bias. That's very different from makeup gurus, investment channels, vlog celebrities, etc.

Most people aren't really aware or care that they're sponsored though. They want reviews and recommendations, so they follow people that recommend things.

That guy is not an influencer. An influencer is an attractive, young, wealthy person who endorses a product by producing "content" about using/consuming it in their extremely expensive apartment/house or on an extremely expensive trip. They sell stuff by being hot, which is nothing new. The difference is that the companies who make the stuff don't have to pay an ad agency, they just pay a person with a lot of instagram followers to post about it.

Thanks for posting that channel though, I decided I liked that guy within 5 seconds.

It makes sense if you think of those influencers like brands. Buying Kardashian-endorsed makeup is quite similar to buying (dr John Harvey) Kellogs endorsed breakfast cereal.

Not us. We’re here on Hacker News, which is a message board run by an early stage investor in thousands of companies, many of which routinely advertise to us on here.

It’s almost like this is a result of capitalism in general, but pearl clutching is done in specific cases while ignoring the exact same dynamics nearly everywhere else

Note how different the platforms are which are about collaboration instead of competition and profit motive:

Wikipedia

Open Source Software

Science

They feature a peer-review process, for the privilege of publishing your information for free to everyone. And you are held to a high standard, but also you have no obligation to wake up in the morning and continue to be an influencer-expert-on-everything. You can make a small contribution and drop the mic.

That’s a gift economy. And if we had UBI, far more people would participate. Reimagine the whole system! This alternative is far healthier for society than surveillance capitalism and perpetual tribal outrage and depression across all ages.

LAWeekly wrote about it last year: https://www.laweekly.com/restoring-healthy-communities/

The three things you listed all have their own fiefdoms that are fiercely defended even without a profit motive.

Celebrity endorsements have been a thing effectively since the inception of celebrities. Why are those more worthy of people's attention?

They're not. A lot of the internet is now "People Magazine" style tabloid nonsense. Some influencer "reacting" to another influencer getting mad because a third influencer said some controversial political opinion.

This stuff isn't new, just packaged differently for a younger audience.

One key difference is that those celebrities of old were famous for things quite disconnected from the thing they endorsed. And even when it was close (athletes endorsing sports gear, Hollywood beauties endorsing hair products) the "they are getting paid for the endorsement" was still nicely disconnected from what they were faimous for. Most influencers are famous for voicing an opinion on stuff. The stuff they are paid to praise. This seems as if it must be even more obvious, with the fame and the business so well aligned, but somehow this alignment appears to enable the fame to outshine the paid nature, like a person standing between a car's headlights would be perfectly invisible despite getting quite some scatter light on them. When the endorsement is orthogonal to the fame, perceiving it as what it is turns out to be much easier.

I've never understood why those worked either. They were _obviously_ paid for their endorsement and appearance in the commercial so why would that make me believe the product is good? Obviously it has worked for people but I've never understood why Shaq shilling some product is shorthand for "it's a good product" to people. I feel like people are really gullible.

Maybe it doesn't work at any reasonable rate of return and the advertisement sector is mainly a scam?

Humans are evolved to be in a small tribe of 50 or so people they know.

They see Shaq holding a product, they "know" Shaq, so their brain automatically puts the product into the category of something they've seen someone they know using.

How effective this is is a matter of debate.

I guess this is why companies are so quick to drop celebrities that do something unpalatable. Because then the product would go into the category of something that someone I don't like uses.

The same reason they watch a reality show for the Kardashians. People want a glimpse into the life of the rich and famous.

My guess is that the profit margins are so high, and the marketing is so cheap, you don't need a ton of sales to make money.

Anecdotal, but: I know some music equipment influencers and most of the ones I know just receive a free product, so yep it is very cheap. There are exceptions of course.

My sister know some perfume influencers (who knew it existed) and it's very similar.

Is it really "just a free product" when that stuff starts around a few hundred bucks and can easily run into the thousands?

Well, it is by definition, but yeah: with expensive products they obviously only send units to a small number of influencers, and often I know some stories of people only having it for a few days for making a video and having to return, almost as a favour.

The more professional influencers obviously get paid a rate, and might or might not get a free unit.

Most of that stuff has embarrassing margins. Sending a couple samples to an "influencer" (paid advertiser) is the same as sending a retail shop floor samples/demo units. It's a tiny fraction of an advertising budget to get it in the influencer's hands then in front of potential customers.

An influencer campaign is probably a fraction of the cost of TV commercials with an order of magnitude better attach rate.

I think y'all are missing the further implications. A lot of these influencers talk up the gear they're sent for free and then sell it.

A lot of gear sent to influencers is on a trial basis unless it's a "we want you to be seen using it". They usually have to return stuff after they make their ad.

There's a subset that are directly selling stuff either as drop shippers or affiliate marketing. They're video versions of SEO blogs. I'd put those in a different class than the ones just running ads on their existing content channels. While they might be called "influencers" they're just running ads for their sales hustle.

This is not big enough to put a dent in sales.

If the product is sold by an influencer, it will be sold as "Used", long after the "hype period" is over. This initial period of booming sales is very important for products announced trough influencers.

Paying for the influences to do the work is more expensive than the products themselves, in pretty much every case I know of.

And even for expensive products: if you send something to an influencer with the expectation to get back, it will come back used and has to be sold as B-Stock for a loss anyway. For stuff up to $200, $300 it ends up being much cheaper to just give away.

Independent of the actual unit cost, if delivering one unit free of charge to an influencer results in just two extra sales, the manufacturer has made a profit on the free sample.

That is true only if the profit margin is > 50%. It is independent of unit cost, but not independent of profit margin.

Most influencers literally don't even know their own worth, and don't really know how to negotiate, and have weird feelings about monetizing what is often a creative endeavor in general.

So most brands actually get a HUUUUUGE discount from influencer advertising, because it is explicitly more effective than most modern forms of advertising and you can get your product or service in front of half a million people for low 5 figures. You don't have to do anything, the influencer will take care of shooting and editing and all the hard work.

Also, nearly everything shilled through influencers is extremely cheap garbage, with significant profit margins that they just pump into more advertising, like raycons or other practically whitelabeled products

People who don’t know any better, yet because there may not be a way to locate alternatives as easily

To quote the tshirt.. if the goal is to stop making stupid people famous (by glorifying celebrity)..

It may require the people with a variety and diversity of authentic perspectives to get off the sidelines of silence and also create content not for everyone but those who are also interested.

>Who even watches this fake-everything crap?

the reason it works is precisely because it's not fake everything. A lot of these influencers are content creators who have built genuine followings, and are outside of their sponsor and brand deals significantly more personable than your average TV figure.

That's why a lot of these people can command such high prices per user. I know a few people in the streamer space and they can usually charge about 1$/viewer/hour for sponsored content. So a streamer with 10k viewers can make 20k just playing a sponsored game for two hours. The audiences are incredibly invested because it's people they've been following for years.

> Who even watches this fake-everything crap?

Very few people. If it makes $21B in the US, that means that it's getting an average of $50/yr out of each of us.

To be honest, I don't even know what "the dollars driving the industry" is supposed to mean. I assumed it meant $ in influencer pockets, but it's unclear from skimming the link. It could even mean "revenue estimated to have been driven by influencers."

Young people, stay at home moms, people who are addicted to social media… I think it's the same kind of people who would buy things from the TV that they don't need. And a weird twist, I think it's entertainment for some

My friggin teenage kids do, it’s super annoying

> Despite the industry's known problems, Camp said that in some cases, influencer marketing was still perceived as more desirable because there's a level of authenticity when someone you follow and trust is pitching a product versus just an anonymous ad.

This is the linch pin. It's a $21B industry because it works. A lot of influencers do not have the expertise and infrastructure for the same level of red tape and guard rails traditional celebrity endorsements include. Some brands, such as bud light, have had bad responses when using influencers to promote their products. I think the worst thing that could happen is that disgruntled companies that used this marketing channel wrong lobby to add a ton of legalize to the channel that will ultimately lower the authenticity of the whole market.

I'm increasingly finding the opposite to be true: someone I trust hocking a product of questionable value makes me question their authenticity and their expertise. The most stark recent examples was NFTs. Anyone pushing this stuff wanted their audience to lose money to scammers or was at least indifferent if they did. Instant bozo bit[1].

[1] https://en.wikipedia.org/wiki/Bozo_bit

I'm not sure how old you are, but as far as anecdotes goes it absolutely works on my teenage nephew and his social circle. Basically every product they own seem to be something they've seen someone with a lot of followers use on social media.

Oh I can totally see that. I think when I was growing up it was musicians and other celebrities that drove teenage fashions. Most people hopefully grow out of it eventually - maybe after they get burned a few times by bad purchases.

I may be sort of rose tinted, but I don't remember celebrities having as much of an impact on my generations compared to the SoMe influencer celebrities today. Possibly because they're so much "nearer" to the consumer than celebrities were for us. There just wasn't that same para-social relationship, partly because you couldn't write (and get a response) from celebrities instantaneously back then. Today you can join their Discords and sometimes they'll talk directly to you, and I'm sure that's very hard to "deal with" (for a lack of a better way to put it) for a lot of young people.

Sometimes I just stop and wonder how great the margin on these products must be. When you look at the how often they appear, what is the normal price, what is the given discount and so on. The conversion ration can't be perfect, but still it must be great or the margin must be substantial that single spot can pay hundreds of thousands...

Just go on AliExpress and find out the real price.

This is really just affiliate marketing, and opportunities for new entrants are about to dry up as corporations begin to deploy swarms of AI influencers. https://arstechnica.com/ai/2023/12/ai-created-virtual-influe...

... until influencers can prove they're human, at which point they'll become highly sought after.

People watch influencers because they want to hear from a person who tried the product. We can argue how much value paid recommendations have, but that's the core of it: Did $PERSON_I_LIKE use it and like it? Then maybe I should try it.

Same as asking your friends about cool restaurants, just at scale and monetized.

Once there are AI swarms, there'll be a backlash. Because that human connection is what influencers ultimately sell.

> People watch influencers because they want to hear from a person who tried the product.

Having seen hundreds (thousands?) of these kinds of videos on TikTok and Insta, as a viewer you almost never have any idea who the people are, or whether they actually use or like the product they're pushing.

I think you're right that AI influencer tech will have far less impact on mainstream (Martha Stewart) and niche (MKBHD and Linus Sebastian) celebs, but I do think their marketing teams will increasingly use AI to scale celeb/micro-celeb efforts as well.

> Once there are AI swarms, there'll be a backlash.

Maybe! But this hasn't happened in response to AI text bots. Why would it be different for AI video bots?

Was it ever on the rails? Influencers are just ad folks who found even the limited ethics of the big ad companies too constraining, right?

> Influencers are just ad folks who found even the limited ethics of the big ad companies too constraining, right?

I think that's confusing influencers with the companies that pay them to promote products.

The whole idea with "influencers" is that it's not "some shrill rando", but somebody known and trusted pushing the products.

On YouTube, for example, I'd count FortNine, 3blue1brown, and asianometry as influencers, and none of them (that I know) started out with the explicit purpose of pushing products. In each case they've taken their popularity in a niche and used it to plug products for money.

But in many cases there is nothing about the influencer that has earned that trust.

If you are a musician who has 10000 followers, it makes sense that you might post about say some music-specific brand.

But if you are guy who just posts funny videos on TikTok, how does your endorsement mean anything?

> asianometry

He sometimes insert sponsor ads in his videos but is it really an influencer? The videos aren't designed to promote the product.

Wouldn't that definition of influencer make everybody that make ads-sponsored videos an influencer? What about actors on network TV, their content contain sponsored ads, are they influencers?

> The videos aren't designed to promote the product.

That's my point, really. Nobody's looking at influencer videos explicitly to learn what to buy or how to behave. The whole idea is to piggyback on whatever influence the influencer may have in their niche to sell to that niche. Like concentrated peer pressure, I guess.

At least that's what I've seen - it's entirely possible there are insecure people seeking out influencer videos with no useful content other than telling them what to buy, and I just never see those videos. There's something unsettling about that idea, though.

Social Media influencers are another category that go in the "low interest rate phenomenon" bucket I think. Being reliant on big social media corporations for the business model to work means it's always been precarious, but now that all the big tech firms are tightening the belt and a lot less generous to their users (consumers and businesses alike) the industry's days are probably numbered.

Why is the industry still growing if it's limited to low interest rate environments?

As people watch fewer and fewer ads on TV and the internet, I see the influencer market growing. Those ad dollars will go somewhere.

I'd think average people are seeing more and more ads, not fewer. ie. low-tier subscriptions with ads, google getting really aggressive about ad-blocking, etc.

Have to remember that magazines and many of the newspapers are dead too. Those had quite substantial costs in production and logistics that adds had to subsidise...

A colleague of mine is dating a local influencer. She is well enough known that they get stopped on the street on a semi-regular basis. About a year back, an air carrier gave her two plane tickets, a stay in a high-end hotel for 1 week (or 2?) and some cash, in exchange for a 30s clip that had to make an off-hand mention of them (the air carrier) once. Crazy stuff.

I think that's generally how influencer deals go. Some mix of discounts on products/freebies/cash. In return they get some level of exposure, up to what looks like an ad, delivered by the person to camera. Much of the time I think it's just having their name appear somewhere (eg sticker on equipment or poster on the wall).

As to the relative values, you don't mention her follower or view count, which is probably the key metric.

The air carrier probably has a $10+ million marketing budget. It's easy for them to throw $10,000 toward a 30 second clip to test the waters. Ad teams have to spend that budget, and they likely get more enjoyment out of dealing with that influencer than say running ads in a bunch of subway stops.

I know a handful of "influencers", one a popular bartender at my bar who has something like 400k tiktok subs and I think only in the tens of thousands on IG, another a $cityDateNight type, ala "where to go on dates in $city" with I think 300-400k on Instagram that is run by a couple in their 30s.

I know nothing about this world aside from what I learn from them.

TikTok Bartender said she makes no money on tiktok, but she's recognized all the time. She never says in her tiktoks what bar, or where she lives, but I see people at least once a week pop in and realize it's her and get super excited to meet her. I've never actually asked what she does it for since she doesn't get paid from it, I assume she just likes making skits, teaching bartending and it'll surely help her land gigs if she ever leaves.

$cityDateNight on the other hand, according to TikTok Bartender, makes "a ton of money" from their instagram. I didn't ask for specifics but she emphasized "TON" of money so I'm assuming tens of thousands.. I can't imagine $100k+ but I have no idea.

The genius thing $cityDateNight does aside from that, they go around to different restaurants/bars/clubs/events and get everything for free for advertising the place to their audience. I barely know them but I follow their instagram and they're out running around the city every night.

There's another one that goes to restaurants with poor ratings on Yelp and makes those "You're missing out on this place!! Check it out!!" and a lot of the places are very sub-par and deserve their rating. So we don't trust their reviews at all. They do a great job of making the places look fantastic though so I'm sure they draw in a good crowd to restaurants that need it. No idea how the trade works there.

An ex of mine is a popular skateboarder on ig and gets free skate stuff and sells skate stuff to her crowd but I think it also made her completely addicted to monitoring her social media 24/7. She had a very difficult time putting her phone down no matter what we were doing and her Apple Watch was constantly turning on with notifications. Super frustrating, especially as someone who opens Instagram once a week.

I missed out. I want all of my date nights covered!

> In a traditional celebrity endorsement, the people promoting brands' products are well known and well represented and deliver a predictable result for the businesses that hire them

This sounds like a hit piece by "old" style influencers that lose to new style ones.

Those celebrity endorsements and wasting money on sports simply does not work that well. Especially when you compare it to instagram endoresements and youtubers / streamers who can peove their numbers (assuming the numbers are not cooked).

Marketing is a very strange space - on one hand it can be measured, one can target very specific audiences with super targeted ads - while at the same time you see incredible things like teamviewer wasting 70 million per year to sponsor a football team. Because their marketing department sucks, or their CEO likes football.

Microtargeting works, especially meausred one. It is difficult and full of scams.

But a targeted instagram post is much better than giving some random actress your products and hoping it makes you sell more.

Can't wait for the entire content creator industry to implode when advertisers can just tell a sora like system to generate all of these ads/podcasts. So many people make their sole income off this stuff and more than likely someone else has done, said, or complained about whatever they have to say. Doomsday is coming to a theater near you!

Good podcasts and videos can't be replicated by AI. I watch two channels on YT; Eric Rosen playing chess, and a guy nicknamed Hoover who runs Pilot Debrief. Both bring subject matter expertise that can't really be fooled.

I also listen to the ATP podcast, and do so because of the personalities and experience the three members have.

They aren’t buying content. They are buying relative trust and authenticity.

So Sora doesn’t replace the influencer.

https://archive.is/d7JJe

Influencers are sort of a created midpoint probably enabled by large population and or the internet .

But it’s not like these things never truly existed . Unethical practices for advertisements have existed for over a century . FTC already regulates this and will have to extend those regulations but as long as people can keep secrets it’s an endless fight .

What is telling that there are entire articles devoted to something that never had any rails to begin with.

That fact that this is the level of discourse today, is a sad commentary on society's average intelligence. As long as you slice the day to pick the best moments, it all seems like we've reached the stars using batteries.

I read the article and am having a hard time giving a single fuck about anyone involved here. I'm not even sure what point this article is trying to make. It's essentially a scam industry, who cares?

That you are this downvoted and flagged suggests how much SV is reliant on being in bed with advertising.

Lot of start-up growth is build on burning money on advertising or even something like b2c models...

I think it's more because it runs afoul of the "Please don't post shallow dismissals..." entry in the HN guidelines. If they don't care, that's fine but the world doesn't need to be informed about it.

It's a big scam industry, one that a number of other industries are counting on. When that much money is on the line, people care.

I think more accurate would be “That there exists a $21 billion influencer industry is off the rails.”

That is shocking... only $21B?

It is a safe investment betting on peoples narcissism, ambition, and irrational competitiveness.

This is hardly a new phenomenon:

https://www.youtube.com/watch?v=ygU2bCx2Z3g

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