In the first contribution of this series on virtual beings, we examined the impact of virtual idols on the music industry and how companies should beware of potential IP pitfalls when developing virtual idols based on real people. This next contribution will explore what are virtual influencers and how they are used by brands to promote their products.
What is a virtual influencer?
A virtual influencer is a digital character made with computer software and made accessible on social media platforms (e.g. Instagram, YouTube) for the purpose of influence(1). Virtual influencers typically have human-like characteristics and are given fictional personalities, and their activities operate no different from humans in the digital realm. They connect with social media users through many forms of engagement, such as creating vlogs, making posts and even commenting on users’ posts themselves.
Virtual Influencers vs. Virtual Idols
Virtual idols are essentially a sub-category of virtual influencers. This is because virtual idols have, apart from their music-related activities, been utilised by other companies to promote their brands and products. In other words, virtual influencers encompass any virtual being that has high social recognition and online presence and fanbase, which can be determined by the degree of active discussion and participation on the virtual influencer and its activities. Their popularity within young consumers has led to brands lining up to capitalise on their fame.
Virtual influencers have paved a new path for the global marketing industry. The first significant virtual influencer would be Lil Miquela, whose character is a Brazilian-American model living in California and is a self-proclaimed ‘change seeking robot’. As of this date, Lil Miquela has over 2.9 million Instagram followers and has been named as one of TIME Magazine’s 25 Most Influential People on the Internet. She has worked with major brands including Samsung, Prada, and Calvin Klein and her modelling and influencer activities have earned her almost US$12 million in 2020. The success of Lil Miquela has also affected the popularity of similar virtual influencers, including Shudu Gram and Noonoouri, digital models loved by the fashion community.
Virtual influencers are also rapidly gaining traction on the other side of the world. In China, large conglomerates such as Alibaba and Tencent have created virtual influencers to promote multiple products and services on their respective platforms. For instance, the Tencent-developed virtual idol boyband WXWZ (无限王者团) was originally created to promote the company’s top mobile game Honour of Kings (王者荣耀), in which fashion label Thom Browne assisted in ‘dressing’ the band members for their first appearance. The boyband’s subsequent music promotions, such as the release of their albums and a soundtrack feature on Chinese film The Rescue, have boosted activity on Tencent’s other platforms such as Tencent Video and QQ Music. In 2020, Chinese AI start-up Shanghai Xmov and Beijing Cishi Culture Media collaborated to debut China’s first AI virtual influencer and key opinion leader, Ling, who will be engaging in activities and generating content relating to Chinese culture.
The profitability of virtual influencers has led to an increase in investment into the industry. The company behind Lil Miquela, Los Angeles-based AI start-up Brud, has received around US$30 million in venture capital in 2019 and is currently valued at around US$125 million. Meanwhile in China, Shanghai Xmov received approximately RMB 100 million in funding from investors in 2019, among which include Sequoia Capital, which invested in Brud in 2018. With these milestones, it is clear that there will be a sharp increase in utilising virtual influencers as marketing and branding tools in the near future.
Benefits of Virtual Influencers
Companies are now beginning to overlook hiring real-life influencers in favour of virtual ones. Virtual influencers can reach out to a younger customer base as most of their fans consist of Gen Z (people born in the mid-to-late 1990s to early 2010s) and young millennials. This would be a great advantage to companies looking to change or modernise their brand image. The ongoing COVID-19 pandemic has also boosted the use of virtual influencers. While cancelled events and limited travel options can affect real-life influencers, virtual influencers will not be impacted as they are not limited by physical and technical constraints, allowing for a wider variety of content to be generated during a lockdown.
Most importantly, the main advantage to virtual influencers is that they are completely controllable. They can convey a brand narrative that can be perfectly tailored to the company’s preference, as the images and messages the virtual influencer will share is created by its creative team and not the influencer itself. In addition, they don’t engage in controversial or inappropriate behaviour. Companies do not have to worry about distancing themselves from the influencer to limit reputational damage, nor do they have to fork out huge sums to celebrities whose behaviours they cannot control.
The Hidden Side
A partnership with a virtual influencer can be a double-edged sword. Companies looking to work with virtual influencers should conduct sufficient research before signing agreements, as virtual influencers are essentially ideas in the form of a product. Therefore, whoever created the virtual influencer should protect its intellectual property rights as well as any content generated by them, whereas companies should look out for any potential IP pitfalls caused by such a collaboration.
As influencers play a significant role in affecting the purchasing decisions of consumers, they are subject to advertising regulations and provisions on the protection of IP rights. However, it is unknown to what extent virtual influencers are subject to such restrictions. To comply with advertising regulations, advertisements made by virtual influencers should not be misleading or deceptive and should explicitly disclose the promotional nature of the content. It is also necessary to make sure that posts and photos made by virtual influencers do not show brands or trade marks of any entity which is not part of the agreement. The visibility of designs and trade marks of third-parties may constitute intellectual property infringement and cause consumer confusion, where consumers believe that the products or services displayed attribute to the owner of the sponsored trade mark. Individuals would certainly be held liable for such infringements, but would such liability extend to virtual ones as well? What is their status? Uncertainty may lead to situations where content published by virtual influencers is either not adequately protected or infringes third party rights.
Despite the high level of control creators and companies can exercise over a virtual influencer, unlikely factors may cause consumers to associate a virtual influencer to the brand it is partnered with in unintended ways. For instance, Lil Miquela has used her influence to support social causes such as Black Lives Matter, LGBTQ+ and reproductive rights. Companies looking to partner with Lil Miquela as a brand ambassador should be aware that they may be associated with the same views shared by her. Virtual influencers are also not exempt from brand damaging behaviour. In May 2020, Calvin Klein released a controversial video where supermodel Bella Hadid shared a kiss with Lil Miquela as part of its brand campaign. The video came under heavy criticism for improper LGBTQ+ representation, leading to a public apology from Calvin Klein on Twitter. Both brands and creators should therefore consider including moral clauses in contracts to help provide protection for matters such as reputation or appropriation.
Creating a virtual influencer is a new medium that more and more companies are utilising in order to market their brands and products to customers. Virtual influencers have high social recognition and online engagement with young consumers, and the level of flexibility and control companies can exercise over a virtual influencer is also much greater than that of real-life influencers. As virtual influencers are a relatively new phenomenon, both creators of virtual influencers and companies looking to work with them should be careful to protect their intellectual property during such a partnership.