t 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.
It is time to realise that social-media influencing is more than just a hobby https://t.co/CQ4jRQngqs
— The Economist (@TheEconomist) March 31, 2022