Should the rise in wanghong endorsements ring alarm bells?

HelloRF

The figures for 2018’s advertising spending across different media have been released and, most unsurprisingly, the vast majority was spent online, a large part of which was splashed on the ever-growing wanghong jingji — Internet celebrity economy.

Does this place more impetus on wanghong to be more honest in their endorsements of companies and products? And are they liable for problems that may arise in the course of such endorsements? Today I’m going to break down the situation a bit, and give my own opinion.

Online advertising is big money

Nearly 57 percent of total advertising spending in China this year went online — a whopping 358.4 billion yuan (US$51.6 billion), 13.5 percent higher than last year. More traditional media like TV, newspapers and magazines dived, losing up to 34.1 percent of ad income year on year. This is probably of no surprise to anyone, but what might be a surprise for some is just how much cash is spent on endorsements by wanghong — people who are famous online — and just what an influence they have today with brands and consumers.

Some reports say that the Internet celebrity economy this year will surpass 100 billion yuan, no small amount of money whichever way you look at it.

Because of the faux intimacy created through social media, many online celebrities are able to leverage quick sales from their fans for anything and everything they promote, making them an attractive target for advertising dollars.

China’s celebrity endorsement laws

Following a number of high-profile celebrity endorsement scandals in China over the last decade, coupled with the fast development of media technology, China’s government amended advertising laws in 2015.

Arguably the most famous celebrity endorsement gone wrong in recent times was when actress Deng Jie swore by Sanlu milk powder in 2007, leading to the suffering of thousands of families across the country when it was found that the product contained melamine.

China’s newly updated advertising law mentioned celebrity endorsements for the first time, setting out a number of requirements and safeguards, and assigning legal responsibility should things go wrong. Celebrities cannot endorse products they haven’t actually used themselves, and they are not allowed to endorse products relating to medical treatment or devices and pharmaceuticals. If an endorsement leads to harm to a consumer, the celebrity endorser has joint liability.

Are wanghong aware of their legal obligations?

Hainan Rex, who works fulltime as a health and beauty vlogger and has 336,000 fans, often receives money from companies to advertise their products in his videos. He doesn’t have an agent, though, and is not personally aware of his legal obligations.

He says that as opposed to being legally required, he is bound by his own personal ethics, and only ever endorses products that he has used before and genuinely loves. “If I absolutely love a product, and the company wants to pay me to promote it, that’s a double whammy!” he told me.

“One of the most important things as a beauty guru is to promote great products to your fans,” he added. “If I do my job well, they will naturally trust me, and I wouldn’t want to let them down.”

But He Wei, a reporter for a national newspaper who specializes in technology and the Internet, believes that probably only a minority of wanghong are bound by such personal morals, and that the majority are largely unaware of their legal obligations.

Is wanghong influence cause for concern?

“Word of mouth and social commerce are taking center stage in today’s commerce environment,” He explained.

“People, especially those born after the 1990s, tend to spend big on items that are being recommended or endorsed by social influencers.”

It’s hard to evaluate how honestly wanghong act in their endorsements, she added, which could possibly be cause for concern.

He believes, though, that the big spending and reliance on wanghong could all be a bit of a fad. “Brands are becoming more rational as they begin to reflect on what extent wanghong can drive business, and whether the chosen wanghong fits their brand image.”

Concerns aren’t enough to phase me

Personally, I value the endorsements of ordinary people online, especially if I’m going to make a relatively large purchase. When I bought a new camera recently, I didn’t once visit an official company website for information. Instead I headed directly to YouTube to find reviews and samples from professionals.

It’s clear that companies are interested in only telling one side of the story, and are quite incapable of sharing downfalls or drawbacks of their own products in their glitzy advertising. That’s where online reviewers really become important.

But if online vloggers or reviewers receive money to review a product, I would definitely expect them to be upfront about it and would also probably be more cautious in listening to what they had to say.

Basically I think it comes down to personal preference. Take what anyone says with a grain of salt, choose wisely who you trust, and research products independently before splashing out.