In the wake of college admissions charges filed on March 12 — in which actress Lori Loughlin and her fashion designer husband Mossimo Giannulli are among a group of individuals indicted in a cheating scam to help their children get into prestigious schools, allegedly paying $500,000 in exchange for designating their two daughters as recruits to the USC crew team — their influencer daughter Olivia Jade Giannulli’s personal brand took a huge hit. Or so it seemed, as one brand after another from Sephora and Estee Lauder Companies Inc. to hair care brand Tresemme, fashion brand Lulus and HP Inc., said that they had cut sponsorship ties with Giannulli (a student at USC since fall 2018) and had no plans to work with her in the future.
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While advertisers are now questioning their association with a beauty influencer teen whose parents allegedly cheated her way into college, many followers don’t share those reservations. Giannulli’s Instagram follower count has actually increased from about 1.3 million to 1.4 million since the news broke, as she was featured in headlines around the globe. While it’s not a huge bump, it’s still a boost. And several marketers who work with high-profile influencers say that it’s not impossible for a client to — eventually — win back sponsors after a big hit.
“A bump in followers doesn’t wipe the slate of any wrongdoing. When there’s negative press around someone, brands really turn away because brands are risk-averse at the end of the day,” Eric Dahan, CEO and co-founder of influencer-marketing company Open Influence that works with over 500,000 influencers and with companies including Amazon, Procter & Gamble, Warner Bros. and Fox, tells The Hollywood Reporter. “And agencies that are doing their media buying are even more risk-averse. Once that well starts to dry up, it’s hard to get it back.”
When vetting influencers for a campaign, Dahan says that his company always does a background check for any criminal record and then digs deeper for any indications of buying fake followers (which immediately blacklists them) or negative press. His agency also does brand-specific checks for sexual misconduct, DUIs or smoking marijuana, which lifestyle brands might not care about if it’s minimal but financial institutions would. “We found an influencer who was not convicted of rape, but there was negative press that accused him of rape, so we dropped him because it was a bad association for our client,” says Dahan.
To illustrate how much cash is being exchanged here, a single social media post can generate hundreds of thousands of dollars for influencers who have reached celebrity status with millions of followers. Kylie Jenner reportedly makes $1 million per sponsored post, while Selena Gomez racks up $800,000 and Kim Kardashian West charges $720,000 per post, according to the “Instagram Rich List 2018” published by U.K.-based Instagram scheduling and analytics company Hopper.
And in this world, it is easier for a brand to drop or test someone, given that deals are made in terms of “several posts, maybe a few videos, so they’re a little more broken up; most influencers are not going to sign yearlong contracts with brands,” adds Dahan, who says that his clients always become more cautious and ask about extra vetting and added scrutiny after headline-making influencer scandals.
Mae Karwowski, founder and CEO of influencer-marketing agency Obvious.ly, whose clients have included Sephora, Clairol and Saks Fifth Avenue, says: “On an in-the-weeds level, there will be an increasing number of contracts with ‘morality’ clauses for large influencers with product collaboration. There is also a shift to working with smaller influencers and placing lots of tiny bets on people who genuinely love the product and are staking their own reputation on promoting it.”
The answer as to why fans would continue to follow a social media star who has fallen from grace or why brands would continue to sponsor them, after a pause, may be explained by the deep connection that an audience feels after observing someone’s day-to-day life on social media. “It’s all about that emotional connection that you have with the influencer that really drives the influence of that person, whether it’s a celebrity or a digital influencer — that’s what moves the needle the most,” says Krishna Subramanian, co-founder of influencer-marketing company Captiv8, which counts United Talent Agency (UTA) as an investor.
“The reason that digital influencers tend to have more engagement is that you know what they’re doing every single day of their life: whether they woke up sick or fell out of bed or broke up with their boyfriend,” he continues. “With traditional celebrities, you don’t always have that. You only know what you read in media. I think, lately, more traditional celebrities are incorporating social into their lives. Will Smith got on Instagram maybe a year and a half ago and he’s absolutely crushed it. He’s creating content specifically for Instagram and YouTube; his 50th birthday bungee jump off a helicopter was sponsored by Google and YouTube.” (Smith has 29 million followers on Instagram and 4.8 million YouTube subscribers compared to Charlize Theron’s 4 million Instagram followers, for example).
As for Giannulli, Dahan says: “I think with Olivia Jade, there’s a chance she could bounce back, because the crime is more on her parents than on her, per se, so there might be a redeeming factor there. But if the news cycle is really calling her out. She is likely going to have to confront this issue and figure out how to get in front of it. Some brands might still take a bet or think there’s value there. But if it’s between Olivia Jade and someone just like her, they’re going to go with someone just like her who does not have negative PR.”
“When Olivia makes her next step, it’s up to her to really think about what her role is in all of this and reconnect with her audience,” says Holly Jackson, lead influencer strategy consultant at marketing platform Traackr, adding, “It’s something that she’ll have to deal with in terms of the way she’s portrayed online and the way she acts.”
“But I think if she does want to recover from this, and there are influencers who have recovered from things like this, she needs to make sure she is sincere and it’s something she truly believes,” says Jackson. “An initial reaction [in similar situations] was to create these apology videos that I think weren’t sincere and audiences were able to see right through them.”
Subramanian agrees that Giannulli’s reaction will be critical: “I think it really depends on how much ownership she takes of it. If you step back, the motive is that these parents are placing education as a value that’s so important to their children’s lives in setting up their future.”
“Olivia Jade’s got millions of people who love her and follow her,” adds Subramanian. “Maybe she just hides and goes undercover for a while and then comes back and sees who didn’t hear about this or who forgot. Or maybe she grabs it by its horns and says, ‘Hey, this is what happened and here’s what I’m going to do about it.’”
