Brands Are Building Their Own Virtual Influencers. Are Their Posts Legal?

Computer-generated influencers are blurring reality — and advertising regulations.

In a weeklong #SponCon blitz, an Instagram influencer raved to his followers about the “ice-cold, refreshing” taste of Dr Pepper, how “there’s no better way to sleep” than on a Casper mattress, the way Old Spice makes him “look good and feel good,” and how TurboTax helped him secure a $3,194 federal tax refund last spring.

In each post he dons a signature cream suit and coiffed silver hair, and dutifully discloses that a brand sponsored his endorsement. But he has never tasted soda, or taken a nap, or filed taxes. He’s not a real person — and his posts appear to break the law.

Sexy Colonel Sanders,” as he has come to be known, is a computer-generated marketing gimmick operated by KFC to promote its fried chicken (though he has scored outside brand deals, too). Lifelike in appearance, he’s among a growing number of so-called “CGI influencers” who shill everything from apparel to cupcakes to exotic birds. Some are run by ad agencies and are not tied to any one brand, while others are run by brands themselves. Balmain even created its own “virtual army” to model its clothing.

Like their real-world counterparts, CGI influencers post selfies and memes, use slang and divulge “personal” information to connect with their audiences. Their humanlike behavior is part of an effort to make their sponsored endorsements seem more genuine, and they appeal to brands in part because they’re less prone to scandal than actual people.

As these automated figures gain hordes of followers and claim their turf in the world of influencer marketing — which is projected to hit $15 billion in two years — advertising watchdogs worry this kind of marketing misleads consumers and is against the law.

The Federal Trade Commission, which investigates deceptive advertising practices, states that the “most important” principle of an endorsement is that it must “represent the accurate experience and opinion of the endorser.” In other words, the agency says: “You can’t talk about your experience with a product if you haven’t tried it.”

Of course, no matter how realistic they may appear, CGI influencers can’t try anything. But that hasn’t stopped them (or the brands or agencies behind them) from telling their followers that OUAI products keep their hair “silky smooth.” Or that they enjoy eating a fast food chain’s tacos. Or that TurboTax saved them an oddly specific amount of money.

KFC declined to comment on the $3,194 tax refund the Colonel claimed to receive by using TurboTax, noting only that the CGI influencer represents “one example of the way KFC inserts its iconic founder, Colonel Harland Sanders, into pop culture trends.” TurboTax said the dollar amount was based on the average IRS tax refund in 2017.

That approach is still deceptive, “because that’s not what the ad is telling us,” said Bonnie Patten, the executive director of nonprofit watchdog Truth in Advertising.

“For quite a number of virtual influencers, it’s also really hard to tell if they’re real or not,” Patten added. “I can foresee a substantial minority of consumers being deceived into thinking that it’s a real person. That’s where things get pretty misleading.”

In fact, 42% of millennials and Gen-Zers have followed an influencer on Instagram without realizing that he or she is computer-generated, according to social media consultancy firm Fullscreen, which surveyed 534 Instagram users between the ages of 13 and 34 in 2019. Fifty-five percent have made a purchase as a result of following a CGI influencer, while 53% have followed a brand and 52% have researched a brand.

Even though CGI influencers started popping up as early as 2016, the FTC has yet to adapt its policies to account for the unique transparency challenges they bring.

The agency is still struggling to get human influencers to comply with its policies requiring sponsored content to be clearly and conspicuously labeled as such, despite hounding brands and social media stars with warning letters for concealing their paid relationships. It’s often impossible to know if influencers are featuring a product simply because they enjoy using it, or because they were paid to do so — leaving consumers in the dark.

In addition to disclosing when they’re running ads, Patten and other experts say CGI influencers should be honest about the fact that they aren’t real, so consumers are fully informed before deciding whether to spend their money.

“42% of young Instagram users have followed an influencer without realizing it was a CGI.”

- 2019 Fullscreen study

“People should have all the information upfront: If a post is paid, if [an endorser] is a CGI influencer. That disclosure removes a veil of any deception,” said Mukta Chowdhary, director of strategy and cultural forecasting at Fullscreen.

A handful of CGI influencers, including Shudu, Koffi and Dagny, already attempt to make that clear in each of their posts by using hashtags such as #virtualinfluencer and #digitalmodel, but there’s nothing requiring them to do so.

The FTC did not answer HuffPost’s specific questions about regulating CGI influencers, and instead provided a general statement.

“While the FTC hasn’t yet specifically addressed the use of virtual influencers, companies using virtual influencers to promote their products should ensure they comply with all applicable FTC laws, including the requirement that advertisements should be clearly identifiable as advertising and that any claims communicated about the product are truthful, not misleading, and substantiated,” said Mary Engle, associate director of the FTC’s division of advertising practices.

Meanwhile, free of any rules requiring them to identify as computer-generated, many CGI influencers are going to great lengths to blend fiction and reality, and to make themselves seem more relatable to consumers.

Miquela, the digital brainchild of Los Angeles-based startup Brud, portrays the carefully curated life of a teenage starlet on Instagram. Though she has admitted to being a “robot,” in between her sponsored posts for Calvin Klein, Prada and other luxury brands, she regularly confides in her 1.9 million followers about deeply human experiences: being bullied, drama with her friends, her dating life and even being sexually assaulted during a Lyft ride — a stunt that drew backlash against Brud for making light of a serious issue.

Still, as with her many CGI peers, Miquela’s contrived candor has been effective in establishing trust among her teenage and adolescent followers. Time magazine even named her as one of the most influential people on the internet in 2018.

That influence has also been a highly effective tool for CGI influencers to drive sales, even if it’s rooted in deception, Chowdhary said.

“I think part of the reason human influencers became so popular is that their fans really trust them and trust their taste,” she said. “Miquela doesn’t have taste. She doesn’t have free will; she’s not human. But it’s easy to forget that.”

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