The influence of influencers goes beyond the media data and advertising revenue, and becomes a political issue. The case of cryptocurrencies advertised by Iniesta, Kim Kardashian and other network stars, and how it was addressed
We publish an excerpt from the book “The party of influencers. Because the power of social networks is a challenge to democracy “ by Stefano Feltri (Einaudi, 2022). A timely reflection, both chronological and theoretical, on the rise not only of advertising and information, but of politics, of influencers. On the paradoxes of a power centered on digital consensus. On the possibilities and limits of regulating this power through legislative, economic and cultural initiatives.
If we can’t rely on the authorities national regulations e not even on platforms to limit the ambiguities and problems that the rise of influencers generates, what alternatives remain? Only one: the market. Or rather, it is easier to act on companies than on testimonials, i.e. transparency can be more easily imposed on the clients of the contents disclosed on social media than on the protagonists of communication (also because a single company can recruit, through external agencies, tens or hundreds of influencer). And the same goes for politics.
Companies that are sanctioned for trying to surreptitiously present their products to the public by manipulating potential customers through influencers they face a sure reputational sanctionwhether big or small depends on how sensitive there is to the subject.
This appears to be the approach pioneered by Spain. In January 2022, the Spanish government set new rules for all companies that want to sell cryptocurrencies, that is an asset that very few have the skills to manage but which attracts many savers seduced by the most fashionable financial innovation which – as far as we know so far – is a highly speculative investment. Therefore at risk and that should be limited to those who have the skills to evaluate what they encounter.
The new rules establish that companies active in the world of cryptocurrencies that want to advertise must inform the CNMV, the supervisory authority on the Spanish stock exchange, in advance, and communicate their communication strategy. In particular, they also need to clarify whether they intend to advertise themselves directly or through third parties, including influencers with more than 100,000 followers.
At the origin of this regulatory tightening is the case of the footballer Andrés Iniesta, that CNMV sanctioned in November 2021 for promoting the cryptocurrency exchange platform Binance through his Twitter and Instagram accounts.
The motivation for the censorship by the authorities is interesting: the CNMV does not deny Iniesta of having made hidden advertising, but of not having the faintest idea of how cryptocurrencies work and therefore of giving a dangerous message in proposing them as a mass investment. to its 25.5 million followers.
Iniesta may have been the captain of Barcelona and the Spanish national team before ending his career in Japan but, as he himself admits on Twitter on November 24, 2021, he is only “learning how to start” investing in cryptocurrencies.
Sanctions of this type, and in this sector, make the gambling on the influencer high-risk: Binance could have hoped that relying on a popular testimonial like Iniesta could push many football fans to take an interest in a speculative investment like that in cryptocurrencies.
The CNMV sanction turns Iniesta’s popularity back against the company that had tried to exploit it: no one would have noticed the new rules of the Spanish stock exchange regulator on cryptocurrencies if they had not become an attractive story for journalists and search engines because it involves a character as popular as the former Barcelona midfielder.
It is safe to bet that other companies in the same sector will think twice before attempting such unscrupulous communicationthat is, all emotional and not of content, because they know that the outcome can also be that of finding themselves labeled as an unreliable subject who has tried to take advantage of popular credulity.
CNMV’s move has a precedent. In 2018, even the SEC, the authority that supervises the American stock exchange, had sanctioned some influencers to draw attention to the abuses in a particular form of speculative investment known as IcoInitial Coin Offering (a kind of high-risk fundraising by start-ups that need money to develop their innovations).
Boxer Floyd Mayweather jr and music producer DJ Khaled had been the testimonials of some ICOspresenting them to their followers as excellent investment opportunities, without claiming to be remunerated with tens or hundreds of thousands of dollars from the beneficiary companies.
Mayweather also found himself at the center of a damages action together with superstar influencer Kim Kardashian for promoting Ethereum Max, a cryptocurrency used, among other things, to pay for concert tickets whose value in euros (or dollars) collapsed by more than 90 percent during 2021. Kim Kardashian had dedicated a post to Ethereum explaining that “this is not an investment advice” but only the sharing of what some of her friends had told her about the cryptocurrency.
According to savers burned by speculation gone badly, that and other posts – although correctly presented as advertisers – were part of a preordained scheme to artificially inflate the value of the currency, to the detriment of naive savers attracted by famous testimonials.
Net of legal events, the involvement of high-profile influencers in events like this indicates that regulators can use these celebrities to message a mass audience that otherwise they would never achieve: a sanction to an influencer active in promoting cryptocurrencies is much more effective in drawing attention to their financial risks than any traditional awareness-raising initiative through regulations, training seminars and sections of the site dedicated to explaining the characteristics of these complex assets.
The rise of influencers is based on what economists call network externalities: the more people are on a platform, the more interesting it will be for each user to use it; and if millions of users follow a certain influencer, then the incentive also increases for all the others to follow him, for fear of missing out on something relevant, regardless of whether they are really interested in the products or themes he deals with (an attitude that is now considered a syndrome of the digital age, Fomo, Fear of missing out: the fear of missing something, in fact).
These network externalities make them very powerful but, in some ways, also very vulnerable: everything that concerns them instantly becomes news and the same algorithms that inflate their popularity also favor the lightning destruction of their reputation, if the news that enters the social stream is against them.
This dynamic indicates what the possible may be, and perhaps the only corrective mechanism capable of controlling the excessive power determined by their rise: if regulators have the courage to target even the most powerful influencers responsible for misconduct, this sends a clear message to the whole system.
And while followers become more demanding when it comes to transparency and conflicts of interest, they can create significant damage to even the most powerful of influencers. whose main asset to protect is reputation: movements such as the #metoo or the waves of social indignation that critics brand as “cancel culture”, have shown that in our contemporary attention economy, users can have the last word over even the most established celebrities.
Societies founded on the values of liberal democracy go into crisis if some individuals have a power of influence that is disproportionate to that of all others. Fortunately, they also have many tools to self-correct, both in the physical and digital world. Social media aristocrats should begin to fear the follower revolution.
*Stefano Feltri, graduated from Bocconi in Milan and Masters from the University of Chicago, was director of ProMarket.org and deputy director of Il Fatto Quotidiano (from 2015 to 2019). From 2020 he directs the newspaper Domani
Opening image: from Kim Kardashian’s Instagram profile
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