Besides Covid, the three terms that cemented themselves in the Chinese vernacular last year were PPE, lockdowns and livestreaming.
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Over this time, there have been few articles talking about marketing in China that did not praise the wonders of livestreaming. The buzz around livestreaming has been infectious for both consumers and brands, with 30,000 new Taobao Live accounts opened by merchants in February 2020 alone.
There are many well-publicised success stories supporting the livestream craze at its peak last year, such as the US$6.6 billion in livestreaming sales over the 2020 Singles’ Day festival. Last October, Adidas amassed over 2.2 million users and sold US$31 million worth of gear in a single livestream. The restaurant-supplier-come-retail-brand Xinliangji sold US$3.1 million of crayfish during a short stream last April. There is a god-like gravitas of super-streamers like Viya and Austin Li, each who sold a small country’s GDP-worth of sales in 2020.
Yet riding every successful wave in China, there will inevitably be the scammers capitalising on the mad rush to be a part of it. Just as fake sales have skewed e-commerce data for years, and 70% of KOLs fake their fans or engagement, there are increasing reports of the streaming swindlers preying on unsuspecting brands.
Brands typically engage with livestreamers through multi-channel network (MCN) agencies – the companies who manage livestream talent and negotiate deals with brands. There are over 28,000 MCN agencies in China but there are only a handful of livestreamers who have the pulling power to bring in millions of sales in one sitting.
A few dozen more second-tier livestreamers, can draw material crowds and sales. The large majority of those 28,000 MCNs are bottom feeders, peddling their ‘rising stars’, ‘niche influences’ and even the odd household name to brands wanting to get on the livestreaming wagon. With few genuine credentials to promote, many of the MCNs hire click farms to artificially inflate their stars’ sales and viewing figures.
In a Skinny in June last year, we cautioned brands to be wary of the fake data jacking up livestream results, but with livestreaming now passed its peak, MCNs are faking more than ever to keep the dream alive. This Sixth Tone article quantifies the extent of user and fan shams, noting that even well-known celebs such as TV presenters and judges from reality TV shows are seeing around 80% of the sales on their livestreams bought and then returned in what is clearly a scam. Similarly, Li Xueqing, a stand-up comedian, co-hosted a livestream that attracted 3.11 million views – but investigations found that only the number after the decimal point was real.
These incidences are not uncommon. A single WeChat group of livestream scam victims counted dozens of members representing brands who’ve experienced losses over US$15.5K, with one skincare seller duped of US$466K.
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Although the livestream buzz is fading and tarnished by scammers, the channel can still provide a strong channel to build awareness, encourage trial, boost sales or shift surplus stock, particularly if it is executed in a smart way that will create stickiness with customers. But brands should be aware that many MCNs may not be as wholesome as they appear. Livestreaming is not cheap, so it is worth checking the followers and engagement for meaningless comments, and even talking to other brands who have used them. Tread carefully.