Show Hide image

The march of the micro-influencers: why your friends are promoting toothpaste

When Kim Kardashian promotes a detox tea on social media, you know not to trust that her recommendation is authentic. But what happens when your best mate from primary school starts doing the same?

In the year 2000, Halifax Bank revolutionised advertising. In the place of an actor or a celebrity in its television adverts, it featured Howard Brown – a customer services representative from its Sheldon branch. Who gives you extra? Howard did. So much so that he beat both Britney Spears and Gary Lineker to become the star of the most-talked about advert in 2001. Advertising’s oldest adage, “sex sells”, had changed. Real people do.

It should come as no surprise, then, that this advertising technique has been updated for the digital age. Over the last decade, brands have begun using YouTubers and other social media “influencers” to market their products in a more "authentic" way. Yet when YouTubers become too big to be seen as a teen’s best friend, and the Advertising Standards Agency insists they mark all their adverts with #ad –meaning they lose their authenticity – what should a brand do?

“Personally I think that micro-influencers are appealing to brands because they are often the voice of the public, which is what we are trying to capture in campaigns,” says Melissa Wollard, a commercial manager at Fun Kids Radio, who has four years’ experience in sales.

“Micro-influencers” are ordinary people who are paid by brands to promote their products on social media. An array of websites and apps exist via which anyone can become a micro-influencer – BzzAgentInfluenster, PostForRent, and Buzzoole are just a few. Though the underlying concept is the same with each, some offer money while others offer free products. Some require individuals have thousands of social media followers to sign up, while others require as few as one.

“Celebrities are expensive and with the rise of traditional celebrities on social media, popularity can shift quickly. Having your brand associated with just one big name could be risky,” explains Woollard. Though Fun Kids Radio does not use micro-influencers, Woollard has noticed their rise. “You are spreading the word about your brand through lots of different ‘every day’ people in a seemingly organic way.”

Many posts by micro-influencers do seem incredibly organic, if a little raw. Take, for example, this clip of a man – who has 39 followers – brushing his teeth with Sensodyne toothpaste. “Lol u sound like a commercial promoting the tooth paste,” reads a comment on a similar Instagram post of a woman brushing her teeth.

This raises ethical questions.

“I think it's very important to be clear if you received something for free,” says Chloe Dakin, a 28-year-old primary school teacher who has 543 followers on her Instagram, on which she has promoted products such as face creams and temporary hair dye.

Dakin uses Bzzagent, a service which allows anyone to sign up for free products which they then post about on their social media channels. “You are obliged to post even if you don't like a product, but Bzzagent ask for honest reviews so if you don't like a product then people will write that,” explains Dakin. Though she feels it is “very important” that she is clear when she receives a product for free, she ultimately thinks that this behaviour is more important for celebrities or the “Instagram-famous”.

“They obviously have a lot more followers, and young impressionable people,” she says. It irritates her when celebrities post about diet pills on their Instagram when they clearly have personal trainers. Dakin herself doesn't "really feel like a micro-influencer" and insists "'m not sure how many of my followers would buy products just because I post them". Her friends do not seem perturbed by the move: "The people who generally like my posts still like or comment on these photos just as they would on my other photos.”


Detoxing with @fittea  it tastes amazing and the ingredients are all natural  #ad

A post shared by Kim Kardashian West (@kimkardashian) on

Dakin acts ethically in revealing she received her products for free, but this is also part of Bzzagent’s rules. Bzzagent influencers must disclose their affiliation with the hashtags “#GotItFree” or “#GotACoupon” and they even force users to undertake “disclosure training” if they fail to use the hashtags on three posts. Yet there are other services which arguably work less ethically – with many not requiring or enforcing the use of disclaimers. A lot of the responsibility thus falls to the micro-influencers themselves, who ultimately choose whether they add disclosures or not, and choose how prominent to make such disclaimers.

Aron Vitos is a 21-year-old student from Budapest who uses PostForRent – a website that connects micro-influencers and advertisers – to promote products on his Instagram. The company is located in Hong Kong but is popular with Hungarian brands (PostForRent did not respond to a request for comment as to why this might be). MKB Bank, for example, is a Hungarian bank that asks micro-influencers to take photos outside of its branches. These are then each captioned with the same words: “Mosolygok, mert jobban kezdődik az évem”, which translates as: “I smile, because my year started off better”. This is followed with the hashtags #mkbbank and #mosoly, which means “#smile”.


Mosolygok, mert jobban kezdődik az évem ;) #mkbbank #mosoly

A post shared by Adam Sipos (@sipinhoo) on

“Up until now I have completed 14 campaigns of all sorts,” says Vitos. He explains his last post was the “most exciting”, as he got the chance to try out an expensive drone and then got paid for his posts. “It was really a unique experience and my favourite campaign so far.”

Vitos has been involved in several campaigns that involved going to a restaurant, getting a free meal, and then posting about it online – sometimes receiving an additional payment after the fact. He says he has worked for Costa, H&M, Forbes, and Vodafone. “The money varies from brand to brand but I get around £15 to £40 per post, which counts as a lot more in Hungary than, for example, in the UK. I couldn't live on it, but it is some extra pocket money that always comes in handy.”

Vitos varies between disclosing and not disclosing whether he was paid for his posts with hashtags such as #ad (advertisement) and #spon (sponsorship). “I think not using [them] creates a more authentic look of the post," he says. "When you have to tag the brand itself and add the hashtags the brand asked you to, people would already know it's an ad. I sometimes do it to clear my conscience but I don't think this has that much weight on the post.”

Ethically speaking, this is up for debate. Though social media users are savvier than ever, there are arguably many people who would not know enough to assume that their friend is being paid by brands. Marketers know that we trust our friends more than cold, clinical salespeople and are using this to their advantage. In a world of micro-influencers, how we can know whether our friend really wants to tell us about her latest liquid lipstick, or has been paid to do so? More to the point: is it even legal?

“If there is payment and control [of the message], any posts the micro-influencer publishes should be ‘obviously identifiable’ as an ad,” explains a spokesperson for the Advertising Standards Authority, the regulator first responsible for ensuring traditional influencers use “#ad” in their paid-for posts.


tavaszi répatorta, a kedvencem (tudom fura vagyok) #legyenhappyday

A post shared by Noemi L. (@nnooemi) on

The spokesperson says the micro-influencing services and the brands that use them should be impressing on their influencers that they need to be upfront and clear with their posts. However, the variation between different services (with some people receiving payment, and others simply free items) means that the ASA would assess any complaints “on a case-by-case basis”.


Love Clarispray! It relieves stuffy noses, itchy, watery eyes an tickles in the throat! #clarispray #gotitfree #bzzagent

A post shared by Jennifer Redd Neighbours (@jen_jen_n) on

Products that people are sent in the hopes they review them, for example, do not normally fall under the ASA’s remit, though the spokesperson says the lines “blur” when an individual is sent the item on the proviso they review it. “In that scenario, the lines around payment and control start blurring and we might start taking a view that material falls under our remit,” he says.


Sensodyne Deep Clean gentle on my teeth & minty fresh! #gotitfree #sensethefresh #sensodyne #bzzagent

A post shared by Michael Brown (@manchu_813) on

At present, then, micro-influencing is a recent trend that might yet be subject to new rules and guidance. Nonetheless, ethical questions undoubtedly remain. Might people end up feeling duped by their friends? This could be exacerbated by the raw appearance of many micro-influencing posts, which are a far cry from the poised and polished pictures posted by celebrities. A world full of micro-influencers would undoubtedly lead to an erosion of trust between friends, and would leave many questions about our capitalistic society. 

Yet the issue also cannot be overblown. Many micro-influencing services are frankly not very good, with some websites or apps having little in the way of brand deals, or requiring users to take multiple surveys before they are allowed to create a post. Although marketers espouse micro-influencing as the next big thing, currently it seems relatively rare and seems to have little effect on most people's lives and choices. 

For micro-influencers, posting adverts - with the correct disclaimers - seems like a good way to gain money or freebies. For the rest of us, the trend simply means that we have to be a bit more cynical when our best friend recommends a toothpaste.

Amelia Tait is a technology and digital culture writer at the New Statesman.

Photo: Getty
Show Hide image

Enough to educate 17 million children: the true cost of Brazil’s Car Wash scandal

As a new Netflix series dramatises one of the world’s largest corruption cases, Global Witness puts a figure on the cost of the scandal.

In the 1980s, Alberto Youssef was, alongside an older sister, smuggling whisky and electronic products from Paraguay to Brazil. Once, while being chased at a high-speed by police, VCRs kept falling out of the pick-up truck he was driving. Few would have guessed that this almost comical character would, one day, become a key player in what has been called the biggest corruption scandal in history. But then, the Car Wash, or as it’s known in Portuguese, Lava Jato, stretched far and wide across Brazil at a huge cost.

New research by Global Witness shows the damage caused by the Car Wash scandal far exceeds the sums stolen. The cost to the Brazilian treasury may be nearly eight times higher than the £1.4bn actually taken, enough to cover the salaries of more than a million nurses or provide a year’s education for over 17 million children.

Police only began to uncover the extent of the Car Wash scandal in 2013, when they became suspicious about the sheer quantity of cash churning through a bureau de change in a humble petrol station in the country's capital Brasilia. That led to the arrest of Youssef, which in turn led to further arrests. It soon became clear that this was no ordinary money laundering operation. Police had stumbled upon a racket that would involve at least 28 major corporations and 20 political parties, resulting in over 100 convictions. The list of those implicated reads like a Who’s Who of the Brazilian political elite, including two of the country's presidents.

Former Brazilian president Luiz Inacio Lula da Silva has been sentenced to more than 12 years, after it emerged he took bribes for helping a construction company win contracts with Petrobras. Lula says the case is politically motivated and remains free while appealing it. A ruling in a federal court on Monday, however, could send him behind bars, even as he takes the case to the Supreme Court.

Current president Michel Temer has also been at the centre of corruption investigations, most recently over allegations of bribery concerning a deal for operating services at the Port of Santos, Latin America’s largest container port. Congress has twice blocked Temer from standing trial on corruption charges while in office, and he denies the allegations.

The scandal has also inspired The Mechanism, a new Netflix drama from the director behind the biopic of Pablo Escobar, Narcos. The sums of money involved in Car Wash were almost at Escobar levels, but the billions lost to Brazil’s hard-pressed public services mean the scam might also have caused harm on a scale comparable to the druglord’s activities.

The fraud revolved around Petrobras, Brazil’s state-owned oil company. Instead of awarding huge contracts for construction projects, oil rigs, shipping and so on in the normal manner, the work was rotated around a cartel of companies in orderly fashion. Petrobras would over-pay the companies by at least 3 per cent, with the extra money forming a kickback to the directors responsible for awarding them the contracts. These directors would pocket some of the money, and hand the rest to the politicians who had appointed them to their lucrative posts. The money then went to the campaigns of Brazil’s political parties and provided backdoor funds that kept otherwise unstable governing coalitions together.

The result was a Byzantine racket of astonishing intricacy and scale in which everyone took a cut. Bribes came in the form of bricks of cash, expensive art works, aircraft and yachts; anonymously-owned companies in tax havens and foreign bank accounts helped launder the loot. One Petrobras director alone channelled €20m to banks in Monaco from accounts in the Bahamas, Panama and elsewhere.

“Once the mechanism is established, only the corrupt can take part,” says José Padilha, the Brazilian writer and director of The Mechanism. “If you’re an honest politician you’re doomed. The honest businessman will not get any contracts. There are only crooks.”

This “mechanism” had been running uninterrupted for at least 12 years.

Was this really the biggest corruption scandal of all time? Virtually every Car Wash explainer in the UK press poses the question – but none provides an answer. That’s probably because it’s notoriously hard to quantify value throughout history. In 193 AD, the Roman Praetorian Guard assassinated their emperor and held a fraudulent auction to appoint his successor, striking a deal worth 250 pieces of gold for each soldier in the army. (The empire was not theirs to sell). If not the earliest documented fraud, it was surely the most audacious – but trying to convert the ransom into modern currency is a fool’s errand.

But Padhila has no doubt. “It’s the biggest corruption scandal in the history of mankind,” he says. “It involves a mechanism which has been operating in Brazil in one form or another since at least the Eighties. Too many Brazilians fall into the trap of ideology, but the mechanism has no ideology. It is left wing and right wing. The whole political system is corrupted. Democracy has failed.”

Regardless of whether Car Wash is the biggest bribery case of all time, it certainly features in the ranks of the world’s corruption mega-scandals, sitting alongside mammoth state-thieving operations such as Malaysia’s recent “1MDB scandal” – US lawsuits claim an estimated $4.5bn has gone missing from a state development fund – and France’s Elf scandal, which shook the body politic and in which at least $400m was creamed off international oil contracts. All these scandals were linked to illicit political funding.

Taking a look at the cost of Car Wash to Brazil, first off there is the amount filched from the state oil company in improper payments. A Federal Police report seen by Global Witness conservatively estimates this at £1.4bn – all of which had to be laundered, sometimes moved physically. To put this logistical feat in context, if withdrawn in £10 notes the sum would make a stack eight miles high equivalent to almost 16 Burj Khalifas, the tallest building in the world (or, if you like, 343 Christ the Redeemers). The 119 tonnes of cash would take a fleet of 97 Ford Transit vans to deliver.

Then there is the £2.1bn fine Petrobras has agreed to settle a US investors’ class action, already bigger than the amount actually stolen. But both the theft and the losses are dwarfed by (and reflected in) the collapse in Petrobras’s share price. Before the scandal broke in September 2014, shares were at $19.33 but as of March 2018 they had dropped to $14.07. The government suffered a paper loss of £14.1bn for its 29 per cent stake in the company.

September 2014 was also the moment that global oil prices began a long decline, but the damage was too great for Petrobras to hide. “I would say 90 per cent of the fall in share price is due to Car Wash,” says Tiago Cavalcanti, a Brazilian economist at the University of Cambridge.

Petrobras’s 3.7 billion shares are supposed to furnish Brazil with a healthy income, and in the three years before Car Wash exploded, they provided Brazil with an average annual dividend of £360m. No dividend was paid in 2015, 2016 or 2017, costing the country £1.1bn.

Then comes the kicker. So vast was the upheaval  with billions slashed in investment   that some believe it helped bring about the worst recession in Brazil since records began. In March 2014, when the first Car Wash arrests were made, the Brazilian unemployment rate was 7.1 per cent. By last summer it was at 13 per cent. São Paulo consultancy GO Associados, headed by economist Gesner Oliveira, calculated that the fallout from Car Wash hit GDP by 2.5 per cent in each year the investigation was going on, from 2015 to 2017. The consultancy has now told Global Witness it has revised those figures up to an extraordinary 3.6 per cent — which would mean almost the entire drop in output during 2015 and 2016 was accounted for by Car Wash.

GO Associados said that would imply an annual $4.6bn (£3.3bn) in lost tax for each of the three years the fallout from Car Wash was at its most extreme £9.9bn. This figure would appear to be on the conservative side: it is based on the hit to the economy from Petrobras’s reduction in spending plans  but does not take into account the wider impact on Brazil’s giant construction companies, many of which lost contracts elsewhere in Latin America as a result of the scandal. Such firms were also banned from any public contracts in Brazil. The figure also fails to include the reduction in foreign investment in Brazil as a result of the political turmoil.

So even setting aside Brazil’s paper loss – Petrobras shares may well continue to rise  Lava Jato could have cost the government at least £11bn in revenue in lost tax and lost dividends from its stake in the company. That’s almost eight times the amount stolen from Petrobras in the first place.

“That number sounds very plausible and the calculation is logical,” says Cavalcanti, who has himself calculated that without Car Wash and other governmental policies Brazilian GDP would have grown by 1.2 per cent in 2015 and 2016 (as opposed to an actual fall of 3.8 per cent and 3.6 per cent). “Another reason for the recession was the falling price of commodities, but Peru and Chile did not have the fall Brazil had. Certainly Car Wash was a very big factor in the recession.”

Who knows the real difference that £11bn could have made in a country where universal healthcare is still some way off and about 7 per cent remain illiterate. The real price of Car Wash is incalculable.

“I feel disgust and exasperation,” says Padilha.

You might think that at such terrible cost, the Brazilian public would rather the fraud had never been exposed. But a recent poll suggests 94 per cent of Brazilians think the investigations should continue despite the current turmoil. For many, this is a golden opportunity to tackle the corruption that has afflicted the Brazilian body politic for decades before the mechanism started turning.

Because according to the filmmaker, Petrobras is the tip of the iceberg.

“There is no public contract in any village, town, city or state that is not affected, from the tiniest new road to the biggest government project,” he says. “All are corrupted - and none of this is exposed yet. In my country you can turn any stone and there will be cockroaches underneath.”

Ed Davey is an investigative journalist for Global Witness.