How influencer cartels manipulate social media: Fraudulent behaviour hidden in plain sight
Marit Hinnosaar Toomas Hinnosaar / 2 Jun 2024
Social media influencers account for a growing share of marketing budgets worldwide. This column examines a problem within this rapidly expanding advertising market – influencer cartels, in which groups of influencers collude to increase advertising revenue by inflating each other’s engagement numbers. Influencer cartels can improve consumer welfare if they expand social media engagement to the target audience, but reduce welfare if they divert engagement to less relevant audiences. Rewarding engagement quantity encourages harmful collusion. Instead, the authors suggest, influencers should be compensated based on the actual value they provide.
https://cepr.org/voxeu/columns/how-influencer-cartels-manipulate-social-media-fraudulent-behaviour-hidden-plain