At the point when SAHARA LOTTI begun her lash extensions company, Lashify, in 2017, she didn’t know what she was getting herself into. It wasn’t making and selling counterfeit lashes that baffled her—she was more than prepared for that—yet rather the odd and shadowy industry that appeared to wrap her.
The suggestions started early. Months before Lashify had officially launched, one of her investors, who had ties to the cosmetics industry, pulled her aside. He told her to prepare to pay influencers to speak positively about her lashes on YouTube and Instagram. She thought he was being dramatic. He wasn’t.
Lotti recalls the investor saying that if she wanted Lashify to succeed, quality didn’t matter, nor did customer satisfaction—only influencers. And they didn’t come cheap. She was told to expect to shell out $50,000 to $70,000 per influencer just to make her company’s name known, an insane amount for a new startup. There was no way around it; that’s just how things worked.
At the time, Lotti found the suggestion absurd, bordering on offensive. She thought paying some random person on the internet tens of thousands of dollars just because they had a lot of followers was beneath her, so she brushed off the suggestion. Looking back now, Lotti realizes how horribly naive she was. She may have avoided forking over cash, sure, but she ended up paying for her decision nonetheless.
Lotti found herself thrust into the wild world of influencer marketing, where prices and pressure are high, and hundreds of thousands of dollars change hands daily on murky terms, seeking sway over the posts in your feed. “It was literally like the mafia,” Lotti says. “[It] was a total nightmare because I didn’t understand the climate.”
Social media influencers ply their trade in realms far beyond fake lashes. Marketers of literature, wellness, fashion, entertainment, and other wares are all hooked on influencers. As brands have warmed to social-media advertising, influencer marketing has grown into a multibillion-dollar industry. Unlike traditional television or print ads, influencers have dedicated niche followings who take their word as gospel.
There’s another plus: Many users don’t view influencers as paid endorsers or salespeople—even though a significant percentage are—but as trusted experts, friends, and “real” people. This perceived authenticity is part of why brands shell out so much cash in exchange for a brief appearance in your Instagram feed.
The Federal Trade Commission agrees. As the practice has become more popular, the agency has adopted rules governing the disclosure of paid endorsements on social media. The text is long and complicated, but can be reduced to two essential concepts: If an influencer has received anything—be it cash, free products, or something else—that could affect how a viewer interprets their mention of a brand or product, they must disclose it; and the disclosure must be displayed prominently, and plainly, in the video, photo, or blog.
In interviews, more than a dozen people involved in influencer marketing expressed concerns over the ethics of the burgeoning industry, where brands routinely shell out well over $60,000 in exchange for one video review—or upwards of $85,000 to publicly disparage a competitor’s product. The activity is not confined to reviews. Influencers with a sizable following rarely have to purchase products in their niche. Makeup, clothing, plants, books, you name it—all come free, often delivered to the influencer’s home or office in a highly Instagrammable box. That’s given rise to a new variation of the influencer game, similar to product placements in movies or television: Brands pay influencers to position products on their desks, behind them, or anywhere else they can subtly appear onscreen for a few seconds. Payouts increase if an influencer tags a brand in a post or includes a link to the company’s site, but silent endorsements are often preferred.
Sanders Kennedy, a popular YouTuber with over 200,000 subscribers and known for chronicling the drama within the influencer community, was once offered a couple of thousand dollars to leave a particular beverage on his desk while filming. He does not recall the brand but says a representative told him he only needed to make sure the drink appeared within the frame to get his paycheck. And he would not need to tell his audience that he was being paid for the placement, Kennedy says the rep told him.
Thataylaa, a beauty influencer with nearly a million followers collectively on YouTube and Instagram, says she’s turned down over $100,000 in brand deals in the past two years because of concerns over what she’d have to say. “In most [influencer advertising] campaign briefs, there are ‘talking points’ or things the brand would like you to hit on in your own words,” she says. “If a brand requires that I say certain things that I don’t feel compatible with”—like use language she doesn’t think is accurate or hype a product she thinks is subpar—”I decline the sponsorship.” Kennedy says contracts often dictate not just specific language, but the exact time a post must be published, the number of follow-up posts to be made, and the expected reach.
Influencers with millions of followers usually have management teams or agents dedicated to identifying the best advertising deals. Most others turn to sites and apps that operate as digital marketplaces, connecting brands with content creators looking to craft the perfect #ad. There are thousands of these marketplaces; two of the most popular are FameBit and Grapevine. FameBit in particular took off after YouTube bought it in 2016. Brands interested in hiring YouTubers as promoters post an ad on FameBit detailing their goals for the campaign, then influencers on the service can submit proposals detailing how they’d tackle the ad. The marketplaces have grown more popular since YouTube limited content creators’ ability to generate revenue from preroll ads in 2016. Through FameBit, YouTube has partnered with over 9,000 brands and countless influencers, generating revenue from each deal.
Common sense would suggest that these marketplaces operate like, well … marketplaces, where buyers—brands—and sellers—influencers—agree on a price. But the influencer world often defies economic logic. Recently, at least, influencers seem to have all the bargaining power, and prices have skyrocketed to meet their demands. Bennett, the influencer marketing consultant, says that in 2016 an endorsement from a top-level influencer would generally cost about $5,000 to $10,000; now, brands are expected to pay “well over $100,000 for the same placement.”
Gil Eyal, CEO of HYPR Brands, an influencer analytics company, attributes the shifting leverage to competition among marketplaces for the top influencers. The more money an influencer can pocket, the more likely they are to stick with that marketplace, Eyal says. Bigger paychecks also mean a bigger commission for the marketplaces themselves. He says some marketplace operators and influencers even buy fake followers or use other tactics to boost their perceived influence. This often leads to more money in the pockets of influencers with an impressive-looking follower count but a puny actual reach, according to Eyal. There’s no evidence to suggest that some of the larger, more established companies, like FameBit or Grapevine, engage in these practices; it’s more common among smaller marketplace operators looking to get a competitive edge, according to Eyal.
FameBit posts reviewed by WIRED touted potential earnings of up to $20,000 for what appeared to be a single review or video. Some campaigns specified the type of influencer they were looking for, others were more general. Several influencers mentioned seeing high-paying offers from online mattress retailer Casper on Grapevine, another influencer marketplace. Those offers often include a free Casper mattress, valued at $995. In a Grapevine posting from November 2016 reviewed by WIRED, the company said it wanted to convert the influencer’s audience into Casper customers and specified that “with this campaign, we want you to experience and evangelize the outrageous comfort of the Casper mattress as well as the ease and convenience of the shopping experience.” In an email to WIRED, a Casper spokesperson confirmed that the company used Grapevine in 2016 for a YouTube marketing campaign and that it offers free Casper products to its influencer partners. Since then, the spokesperson said, Casper has continued to work with influencers and occasionally pays them “a small fee” in exchange for their endorsements, in addition to the free products.
Lashify’s early 2018 “soft” product launch came and went with little fanfare. At the time, the company’s only marketing was on Instagram, where Lotti promoted Lashify’s posts in a series of sponsored ads. The bare-bones campaign began to take off. She soon noticed users tagging the same handful of super-popular profiles—beauty influencers—in the comments section below posts, begging them to try the Lashify extension kit. One influencer’s handle in particular, @MannyMUA, caught her eye, mostly because the acronym at the end of his name stood for “MakeUp Artist.” She hadn’t engaged with any influencers, as a point of pride, but she assumed that that “MUA” meant he was different. He wasn’t just another pretty face taking photos on Instagram, he was a makeup artist—her dream clientele! On a whim, she sent him an email introducing her brand and offering to send a sample. MannyMUA, whose name is Manny Gutierrez, never replied.
Two weeks later though, Gutierrez’s name popped up on her screen again. He had purchased a set of her lashes. She screamed. Her four-person team jumped with joy. They thought this was their big break. With nearly 5 million followers on YouTube, Gutierrez was the type of super-influencer whose opinion could make or break a beauty brand in a matter of minutes. If he reviewed their product, they’d be golden, Lotti remembers thinking at the time. She made sure his order was filled quickly and tucked a handwritten note in the box thanking him for his interest along with about $200 worth of free products, hoping to win him over. As soon as the package was sent off, the Lashify team scrambled to assemble more inventory to prepare for the coming surge of orders.
One week later, Gutierrez posted a video titled: “TRYING ON THE WORLDS [sic] MOST EXPENSIVE LASHES! $125?! WTF.” In it, he trashed the Lashify lash kit for being too expensive and not “cunty” enough for his style. At the end of the video, he ripped the lashes off, calling them “shit.” His millions of viewers ate it up.
Lotti was dumbstruck. She had no idea how a popular beauty influencer had looked at her months-old startup and decided it was worthy of such a brutal public takedown. Then, she looked down. In the description below the video, Gutierrez included a list of links, titled “AFFILIATE SHIZ!” which viewers could use to buy products he recommends, and receive a discount by using his “MANNYMUA” affiliate code at checkout. Influencers typically make money each time a viewer uses one of these codes while making a purchase. Two of the affiliates listed below the anti-Lashify video were Lashify competitors: Lilly Lashes and Nubounsom Lashes. In an email, Lilly Ghalichi of Lilly Lashes said the company pays influencers a commission for any sales using the influencer’s affiliate code or link. The FTC says that influencers who earn a commission from an affiliate link must disclose it in plain language near the link. None of the codes and links posted below Gutierrez’s Lashify video include a disclosure beyond the phrase “AFFILIATE SHIZ!” Nubounsom did not respond to a request for comment.
$50,000 for a YouTube Video
Payments for influencers are rising so fast that some advertisers feel priced out of the market. Marlena Stell, the owner of cult cosmetics brand Makeup Geek and a popular beauty influencer on YouTube, used influencers to promote her brand when it launched in 2011. However, over the last year or so, she’s cut back, as content creators demand $50,000 to $60,000 for a video.
These rates are common, according to the more than a dozen people involved in the industry who spoke with WIRED. For a single photo post with a product, prices for an influencer with a million followers on Instagram start at $10,000, they say. YouTube is more expensive. A content creator with 3 million subscribers will usually charge at least $40,000 per video. If the company wants the YouTuber to produce a negative review of a competitor’s product, that’ll cost extra—often from $10,000 to $30,000 more. And, of course, rates increase with the influencer’s follower count.
Many influencers with substantial followings “are not promoting products without being compensated.”
KEVIN JAMES BENNETT
Nearly every influencer and brand representative WIRED spoke with attributes the soaring prices to the agents and middlemen that have swooped into the industry over the past few years. Agents usually charge from $1,000 to $20,000 a month as a retainer, plus a 20 percent commission on every deal the influencer lands, the influencer and brand representatives say. Even if an influencer has a massive, highly engaged following, one product review video or post is unlikely to generate enough direct sales to recoup the most extreme rates, Stell says. But brands continue to pay.
“The system is a bit broken,” says Eyal Baumel, CEO of Yoola, a digital media company that works with influencers on YouTube and other platforms. Some brands are so set on working with a particular type of influencer that they’ll pay astronomical prices for a single post just to get their name in front of the right audience, Baumel says. Ben Neiley, who has worked in influencer marketing and will soon join L’Oréal as a marketing associate, says the prices reflect the relative youth of social media marketing and brands’ eagerness to participate. He says brands crave the perceived authenticity that comes with more subtle campaign styles like influencer marketing. Even if a sponsored post is properly disclosed as an ad, many viewers won’t recognize it as such.
The ethical concerns can be more pointed for products more sensitive than cosmetics. More than 100 prominent YouTubers, including Gutierrez, have promoted BetterHelp, a wellness app that offers a therapy-like service. For fees ranging from approximately $140 to $320 a month, users are connected via text, voice, or video calls to counselors. In August, hundreds of YouTube users accused high-profile influencers like Philip DeFranco, Shane Dawson, and Bobby Burns of profiting off of their fans’ insecurities by promoting the app in lengthy videos about their own mental health issues. In the videos endorsing BetterHelp, the influencers had encouraged their fans to sign up for online counseling through their custom affiliate links, touting BetterHelp as a good resource for people struggling with mental illness. An email sent to an influencer on behalf of BetterHelp and reviewed by WIRED suggested YouTubers post personal videos about mental health. In the email, BetterHelp offered to pay $200 for each user who followed a link from the influencer and signed up for the service.
Some BetterHelp customers have reported issues with the service, and over 80 complaints have been filed against the company with the Better Business Bureau. Most of the concerns relate to unresponsive counselors or allegedly inadequate care. Some influencers tempered their glowing endorsements of the service in August after users raised these issues. DeFranco, for example, said he was putting his relationship with BetterHelp “on a temp hold.”
Gutierrez has posted at least three videos that mention BetterHelp. On June 15, Gutierrez posted a lengthy videoabout his father’s alleged anti-LGBT past labeled “EMOTIONAL.” Beneath the video, he urged viewers to “Check out https://betterhelp.com/mannymua.” On June 27, he posted a shortened version of the BetterHelp affiliate link in the description of a video about struggling with mental illness. Each video received more than 2 million views. Three days later Gutierrez disclosed he was being sponsored by BetterHelp over a multipart Instagram Story and posted a paid endorsement on behalf of the company.
The FTC guidelines say influencers must disclose their relationship with the company when sharing an affiliate link. Neither the June 15 nor June 27 videos included disclosures. In an email to WIRED, Gutierrez’s father said that his son did not receive any commission or compensation in exchange for signups using his affiliate link on his first two BetterHelp videos, but that the link tracked the number of clicks Gutierrez’s videos referred the BetterHelp site.
BetterHelp CEO Alon Matas dismissed many of the concerns raised by dissatisfied former clients and YouTube users as conspiracies and cherry-picking in an October 8 Medium post. “We were unable to verify the authenticity of any of these claims,” he wrote, “but it’s inevitable that on a platform that has facilitated over 30 million counseling interactions, there have been cases where we did not meet expectations.” He said the BBB complaints were far outnumbered by positive comments about the company. In an email to WIRED, Matas confirmed that the company sponsored Gutierrez’s June 30 Instagram endorsement of BetterHelp, but said the June 15 and 27 videos were not “endorsements” and thus not subject to FTC guidelines.
Lashify Falls, and Rises
Gutierrez’s negative review of Lashify blew up hours after it was published in March, when Lotti issued a series of controversial responses to the video on social media. She responded to his “cunty” comment by writing “not everyone wants to look like a drag queen” on Instagram. Gutierrez fired back at her on Twitter. Shortly after, in another Instagram video, she raised the subject again: “Honestly, I don’t know what he thought they were. But I have to remember, at the end of the day, he can have all the makeup he wants. But he’s still a dude.”
“The system is a bit broken.”
This infuriated many of Gutierrez’s fans. Lotti and other Lashify employees received death threats from his fans over the phone and on social media. They called Lotti a “cunty old hag,” a bigot, and a sexist, and implored her to commit suicide, according to more than 50 messages reviewed by WIRED. People who had never purchased products from Lashify (according to Lotti’s customer records) started leaving terrible reviews of the eyelash kit and the company. Lotti initially tried to respond individually to each reviewer, but eventually chose to delete her Google Business profile and turn off the reviewing option on Lashify’s Facebook page.
As the feud grew more heated, Lotti received emails from other popular male influencers offering to publicly come to her company’s defense. In one email reviewed by WIRED, a popular Australian beauty influencer offered to make a post on Lashify and Lotti’s behalf. “I think after what happened with Manny MUA you need a strong profile in the LGBTI community to do a post and review of your lashes and I’m willing to help,” wrote 26-year-old Jade Kevin Foster. Foster did not name a price, but he attached his “media kit,” which contained a detailed description of his reach on Instagram and Instagram Stories, pages of information about his targeted audience and engagement statistics, and examples of positive press coverage about his posts and lavish lifestyle. Foster did not respond to a request for comment.
By August, less than six months after it launched, Lashify’s brand was toxic. When Wayne Goss, another popular male beauty influencer, posted a (non-sponsored) photo of Lashify lashes on August 9, his fans turned on him. Shortly after, in a video dubbed “SOMEONE TRIED TO BLACKMAIL ME [sic],” Goss shared a graphic message he received from a viewer who threatened to “destroy” his life if he ever spoke kindly about Lashify again. Goss posted a positive video review on YouTube anyway, and the drama grew only more intense. Then came the Reddit episode.
On August 29, an anonymous person on r/BeautyGuruChatter claimed that Lilly Lashes paid Gutierrez to make the Lashify video. The allegation was unsubstantiated; both Lilly Lashes and Gutierrez deny it. Still, the comment marked a turning point. High-profile influencers began to speak publicly about the ills of influencer marketing, and fans listened. A video posted by Stell about the “truth regarding the beauty community” went viral, gaining over a million views, and inspiring responses from other popular influencers. In a subsequent video series about influencers, PrettyPastelPlease, who has over 200,000 subscribers, mentioned Gutierrez’s battle with Lashify and directed viewers to the Reddit comment. Fans latched on to this theory and filled the comment section of Gutierrez’s original Lashify video with accusations of impropriety. In a matter of days, the narrative had switched, and Lotti was no longer the villain.