The Hidden Truth of Influencer Cartels: How Social Media is Being Manipulated

Social media influencers are becoming a bigger part of marketing budgets worldwide. However, there's a hidden problem in this booming industry: influencer cartels. These are groups of influencers who team up to falsely inflate their engagement numbers, making their advertising seem more effective than it really is.

Imagine a university where professors are rewarded based on how often their research is cited. Some professors might agree to always cite each other's work, creating a "citation cartel." This could lead to many meaningless citations, just to boost their numbers. Similarly, influencer cartels work by influencers liking and commenting on each other's posts to make it look like they have more engagement. This might help them in the short term but can hurt both consumers and advertisers in the long run.

In 2023, spending on influencer marketing hit $31 billion, rivaling the entire print newspaper advertising market. Most influencers, however, are not paid based on how well their marketing campaigns actually perform. Instead, they're paid based on the number of followers and engagement they have. This system encourages them to cheat by inflating their influence, leading to about 15% of influencer marketing money being wasted.

To combat this, the US Federal Trade Commission proposed a rule in 2023 to ban the sale and purchase of fake social media engagement. But influencer cartels don't involve money directly; instead, they exchange fake engagement among themselves, making it harder to catch.

So, how do these cartels work? Influencers in these cartels agree to engage with each other's content to boost their numbers artificially. This can mislead advertisers into paying more for ads that don't reach the right audience.

The picture on the left depicts an online chat room, where members of the cartel share links to their content in exchange for increased engagement. To post a link, they must first engage with other members' content by liking and commenting. An algorithm ensures compliance with these rules. The image on the right displays comments generated by the cartel on Instagram. By tracking the cartel's history and rules, we can identify which engagements (comments) stem from the cartel.

Left: Telegram group screenshot; Right: Instagram screenshot. Account identifiers blurred; photo replaced with AI-generated image for privacy.

Not all cartels are equally harmful, though. If the influencers in a cartel share similar interests, their engagement might still be valuable to advertisers. For example, vegan influencers promoting vegan products to each other’s followers can be effective. However, if the influencers have different interests, such as vegan influencers engaging with meat product ads, it misleads consumers and wastes advertisers’ money.

We used machine learning to study the quality of engagement from different types of cartels. Our findings show that engagement from general cartels (where influencers have varied interests) is much less effective compared to natural engagement. On the other hand, topic-specific cartels (where influencers share similar interests) can be nearly as effective as natural engagement.

Based on our research, we recommend three policy changes:

1. Stronger regulation of general influencer cartels to protect consumers and advertisers.

2. Expanding rules against fake social media indicators to include non-monetary exchanges, like reciprocal engagement.

3. Changing the way influencers are paid to focus on the actual value they provide rather than just engagement numbers.

4. Focusing on reel making companies to avoid the pitfalls of influencer marketing.

Fortunately, many brands are already moving towards this value-based payment model. Social media platforms can also help by reporting engagement quality.

Brands don't need to worry if influencer marketing isn't delivering as promised. Instead, they can turn to reel production companies like SelebZ. We specialize in creating high-quality, engaging content that genuinely connects with the target audience. With SelebZ, you can trust that your marketing efforts will be both authentic and effective.