Virtual Influencers Make Real Money While Covid Locks Down Human Stars

Seraphine’s flowing pink hair and cat-themed Instagram posts had attracted thousands of fans when the news that she was created by Riot Games Inc. — the studio behind smash-hit esports game League of Legends — sent her account viral. Now her follower count is nearly 400,000 and she’s making appearances in Shanghai to promote her music, while most flesh-and-blood social-media stars are stuck at home. Despite not being real, she still sometimes wears a mask.

At a time when interacting safely with other humans can no longer be taken for granted, the appetite for digital spokespeople is accelerating. Brands are expected to spend as much as $15 billion annually on influencer marketing by 2022, up from $8 billion last year, according to Business Insider Intelligence. A growing slice of that money belongs to virtual influencers, and traditional marketing is experiencing serious disruption.

“Virtual influencers, while fake, have real business potential,” says Christopher Travers, the founder of virtualhumans.org, a website that documents the industry. “They are cheaper to work with than humans in the long term, are 100% controllable, can appear in many places at once, and, most importantly, they never age or die.”

Seraphine — who on Oct. 13 was also revealed to be a playable character on League of Legends, which draws as many as 8 million concurrent daily users — is one of about 125 active virtual influencers, according to Travers. More than 50 of those debuted on social media in the 18 months to June 2020. On YouTube, virtual influencers number more than 5,000.

Digital avatars developed by creative agencies, the biggest influencers can attract brand partnerships and other lucrative deals. With 2.8 million social-media followers and a fee of about $8,500 per sponsored post, Lil Miquela — a “model” who’s done promotions for Calvin Klein, Prada and other fashion brands — is the industry’s highest earner, according to OnBuy, a U.K.-based online marketplace. OnBuy estimates Lil Miquela will make about $11.7 million for her creators this year. As Covid-19 leads to the cancellation of product launches and sponsored travel, some human influencers are seeing revenue streams dry up. Meanwhile Lil Miquela recently debuted a music video at this year’s online-only Lollapalooza festival.

The pandemic may be bringing virtual influencers to the fore but the trend’s real driver is Gen Z. That cohort is expected to number more than 2.56 billion by the end of this year. And as its oldest members start to hit their mid-20s, their earnings are growing, making them attractive to marketers worldwide. According to McKinsey & Co., millennials and Gen Z represent spending power of about $350 billion in the U.S. alone.

Being fictional doesn’t make an influencer like Seraphine any less relatable to this audience, says Patrick Morales, the character’s creative director at Riot Games.

“Knowing the interests and browsing habits of our young and tech-savvy player base... it became apparent that social media provided a potential platform for storytelling in a way that wasn’t possible for other parts of our fantasy-based IP,” he said.

Investors are interested too. Superplastic Inc. — the Vermont-based animation and entertainment branding company behind influencers Janky and Guggimon, as well as a range of art toys and apparel — raised $10m in seed funding in August 2019, and an additional $6 million this October 2020. Craft Ventures, SV Angels and Scooter Braun (who manages Ariana Grande and Justin Bieber, among others) all invested. And Aww Inc., a Japanese start-up whose virtual humans include Imma and Plustic Boy, raised $1m in a seed round from Coral Capital in September.

Scrolling on your phone quickly, you could be forgiven for thinking Aww’s Imma — who has bright pink hair, goofy dance moves and a stylish wardrobe — is human. More than 300,000 Instagram followers see her partnerships with brands like Salvatore Ferragamo SpA; she’s shot editorials with fashion magazines and participates in viral challenges on video-sharing app TikTok, where her version of the #syncchallenge, which involves a handshake that ends with a mimed gunshot, garnered over 5.6 million views. Her social posts show her visiting art galleries and — in a recent campaign for Ikea — “living” inside the Swedish homeware giant’s store in Tokyo’s trendy Harajuku district.

Aww employs around 20 people, most of whom have film production backgrounds. The company uses 3-D scanning, motion capture, facial capture and photo-realistic modeling to create its characters, which are also optimized for a number of game engines (tools used by developers to build video games).

“When we created her look, we wanted to think like how overseas [people] think of Japan, so that was the idea of her originally,” said Yumi An Anzai, a director at Aww. She says Imma was originally intended as an art project rather than a marketing tool and just happened to attract sponsorship. “We didn’t create her because we wanted to achieve a marketing plan or anything, we just believed in the possibilities of the future and then the market followed.”

While many virtual influencers are human in appearance, companies like Superplastic are betting on more fantastical creations like Janky and Guggimon, who have 2.3 million Instagram followers between them. Janky is a “celebrity stuntman” who looks like a tall cat crossed with a bear, while Guggimon resembles a towering bunny with shark teeth. In one video, both characters are seen aimlessly dancing, Janky with an ax in his head. In another sponsored post, they stand in front of a Prada store front they’ve just destroyed in their DeLorean car. Both are dressed in outfits from the fashion house.

“Because they live both in the physical world and a digital one, there really isn’t a limit to their universe,” Superplastic founder Paul Budnitz said in an email. “Guggimon can hang out with The Chainsmokers and Rico Nasty and the next day drive his DeLorean through a convenience store window. All our characters wear real clothing labels, eat real food and drive real cars. So it’s a mix between reality and hyper-reality.”

That mix creates huge potential for attracting eyeballs and making money. There’s an endless potential for more content and the creative scope is limited only by what a computer can do.

Still, the ability to travel anywhere, anytime doesn’t preclude an affinity for home. In a recent Instagram post, Seraphine is in her bedroom, cuddling her cat above the caption “self care together!” It has over 100,000 likes.

©2020 Bloomberg L.P.