The Cost of Influencer Fraud: Are you losing 15% of your budget?

Kelsey Formost

29 Oct 2019 · 3 min read


It’s no secret that influencers with profiles big and small are guilty of inflating their followers and engagement numbers in order to secure coveted brand partnerships. Until now, brands have been blindly spending their marketing dollars without knowing how much of their efforts were being shown to fake and inactive accounts. So how much is influencer fraud really costing marketers per year, and more importantly, what can we do to reverse the trend?

A new study by Professor Roberto Cavazos of the Merrik School of Business reports that brands will lose about $1.3 billion this year to influencer fraud. In an industry that’s projected to spend $8.5 billion this year globally, a $1.3 billion loss- or just over 15% of the market- is incredibly significant.

But the situation isn’t as dire as you may think: brands can protect themselves from fraud and work to reverse the industry trend by learning more about how influencers have been scamming the system, and investing in new technology that allows users to measure authenticity as well as engagement.

There are a few overall factors that affect brands’ monetary loss per contract: The platform on which campaigns are running, the size of an influencer’s following, and the ability to use technology to measure both the authenticity and the activity level of an influencer’s followers.

Fake followers and click farms: By the numbers

It’s no shock that paying for likes and followers is a common theme in influencer fraud. But what may surprise you is that it matters which platform you’re using.

It costs more for an influencer to buy fake engagement on YouTube than it does on Facebook, Instagram or Twitter, with Twitter being the least expensive to boost. Paquet-Coulson found that click farm clients pay an average of $49 for every 1000 YouTube followers, $34 for 1000 Facebook followers, $16 for Instagram, and finally $15 for Twitter. Therefore, with it being more difficult and more expensive to buy followers and engagement on YouTube, and Facebook, you’re less likely to see fraud there than on Instagram or Twitter.

With most of these click farms being located overseas, technology now exists that can flag large influxes of activity in countries outside the influencer’s country of origin. The ability to measure engagement and follower activity behind the scenes is going to be one of the most crucial investments brands can make in the coming year.

Inactive profiles are just as bad as fake ones

Even real followers can cause trouble when audience inactivity is considered. According to a study covered by Business Insider, about 30% of social media accounts are claimed to be inactive, meaning, the account exists and belongs to a real person, but that person is no longer using or interacting with their social media profile.

In a study done for Traackr on the future of social media influence, Digital analyst Brian Solis says, ‘‘Many influencers have no access to 90% of their audience simply because it no longer uses the social network where they were followed. This doesn’t stop them from touting millions of followers, who will, of course, never see your content.’’

Fewer followers = Less fraud

It’s important to note that a brand’s projected loss to fraud goes down the fewer followers an influencer has. If a profile has over 1M followers, the cost of fraud may actually be higher than the cost of the paid post. But when it comes to influencers with 100K followers or less, the likelihood of fraud decreases significantly.

If brands are looking to protect themselves from fraud and get more bang for their proverbial buck, they should focus on building ongoing relationships with influencers who have smaller audience sizes. Similarly, using an influencer marketing platform that allows brands to hone in on incredibly specific affinities sharply increases the odds of a viewer authentically connecting to content, branded or otherwise. Smaller audience numbers can mean a more specific (and therefore, more valuable) pool of data.

Protect yourself from fraud: Invest in the right technology

With the explosive rate of growth of the influencer marketing industry in the last year alone, it’s imperative that brands and marketers alike invest in the most effective, up-to-date technology. Special attention should be paid to a platform’s ability to measure an influencer’s authenticity; both the authenticity of their followers and their engagement metrics.

The bottom line:

Every industry must combat fraud. In fact, this year the projected losses from ad fraud will cost marketers almost 4.5x as much as losses from influencer marketing fraud. What really matters is how brands and marketers use available technology to guard against fraud, and invest in ongoing relationships that cultivate trust.

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