Online marketing agency rebuts Xiaxue's claims that it intentionally inflated figures
The latest saga to take the local blogosphere by storm is not over yet.
On Tuesday, celebrity blogger Xiaxue made sensational claims against local social media marketing company Gushcloud.
In her entry, Xiaxue, 30, whose real name is Wendy Cheng, alleged that Gushcloud inflates its earnings, gets its influencers to mask paid advertorials as reviews, pumps up its influencers' blog page views, buys fake YouTube likes and subscribers, and has an unsound financial report.
The blog post sparked heated discussion online, with more than 25,000 likes on her Instagram account and over 800 comments.
On Wednesday, Gushcloud's CEO and co-founder Vincent Ha posted a lengthy reply, refuting Xiaxue's claims point by point. (See report on right.)
This was in addition to co-founder Althea Lim's emotional personal statement issued to Xiaxue on Wednesday morning.
In her statement, Ms Lim questioned Xiaxue's intentions, especially since she is signed with rival company Nuffnang.
Ms Lim also called her "a liar" with "bullying antics" and invited Xiaxue to sue her.
On the same day, Nuffnang published a blog post outlining its business practices and detailing how it operates, including how it encourages all its bloggers to declare if a post is sponsored.
It also updates and presents blogger traffic through its built-in analytics tool, pays its bloggers through an automated process and does not exercise editorial control over its bloggers in any of their organic posts.
Meanwhile, Gushcloud's more prominent influencers like Yan Kay Kay, Eric Lim and Tammy Tay have spoken out in support of Gushcloud, explaining why they have chosen to stick with the agency despite the controversy.
Miss Yan wrote on her Instagram account: "I'm so proud of Gushcloud. We can fight but Vincent (Ha) has shown an exemplary example of how it doesn't have to be ugly at all. This is the kind of company and ethics I want to work with."
Miss Tay posted: "They (Gushcloud) may have made bad calls in their earlier days but I've never been ill-treated, misunderstood or coerced into masking ads since I joined the team. It has always been my sole decision whether or not to take up an advertorial served to me."
She added: "I've seen them achieve and grow from humble beginnings to being a great influencer network now... and I've to say I'm genuinely proud of them."
Gushcloud has also started a hashtag #FaithInGushcloud, in response to Xiaxue's official hashtag for her viral blog post #gushcloudfail and the subsequent popular hashtag #FaithInXiaxue.
Mr Ha ended his post, writing: "Since Wendy's post went live, Gushcloud has been keeping its investors, partners, clients and influencers updated about what happened and what we are doing about it...
"My team at Gushcloud is like my family and when others attack us, it hurts. What I do not appreciate is Wendy calling me and my team dishonest and saying the business is in trouble. These allegations are not true."
He added: "There are many areas in which we can agree to disagree on because this is the nature of competition. But let's look at ways in which we compete on providing the best service to our influencers and our clients instead of dragging each other through mud."
Xiaxue wrote on her Instagram account on Thursday that she is currently penning a reply to Mr Ha's post a day earlier.
She wrote: "So Gushcloud has confirmed that they are not going to sue me... Look out for my reply to the slightly more coherent entry by the other co-founder (Mr Ha)."
"I'm so proud of Gushcloud. We can fight but Vincent (Ha) has shown an exemplary example of how it doesn't have to be ugly at all. This is the kind of company and ethics I want to work with."
- Miss Yan Kay Kay, one of Gushcloud's more prominent influencers
Xiaxue v Gushcloud
Xiaxue's claims: Gushcloud's average revenue per month for 2012 was $33,000, but they reported it as $170,000 to local media.
Gushcloud's response: An "honest mistake" made by one of their employees who spoke to the media about the company's earnings when Gushcloud's CEO and co-founder Vincent Ha was in the US on a work trip, and it was "mistakenly construed" to be $170,000 monthly.
Mr Ha wrote: "There was never an intention to 'inflate' our earnings or to deceive and mislead anyone. Think about it logically. There is no reason to attract needless attention to the financials of the company and to pay higher taxes on income the company never even earned.
"I am also aware that any plan to make ourselves seem bigger than we actually are would go out the window once our accounts are filed with ACRA."
FORCING THEIR BLOGGERS TO MASK ADS
Xiaxue's claims: Gushcloud gets its influencers to mask paid advertorials as reviews
Gushcloud's response: Gushcloud stands by its comments that "blogs and posts should not read like advertisements" as "advertisements are not fun to read and are not the most effective".
Although it gives its influencers "content guidelines", it generally lets them write in their own style. It also does not dictate the disclosure requirements to their influencers because the law does not require it in Singapore.
INFLATING INFLUENCERS' BLOG PAGE VIEWS
Xiaxue's claims: Xiaxue got her programmer friend to track Gushcloud's influencers' blog page views and found out that they pumped up their blog stats by up to five times.
Gushcloud's response: Gushcloud gets the numbers based on Google Analytics which their influencers give them access to. Mr Ha wrote: "The numbers are rounded to the 10,000s or 5,000s for easy reference and we always state that it is an approximate figure or we provide a range."
He added: "The tracking link Wendy put on our influencer's blog does not show the accurate numbers. There are many technical reasons for this. But between the influencer's own Google Analytics and (Wendy's) tracking link (which uses an aspect of Google Analytics), we defer to the numbers from Google."
BUYING FAKE YOUTUBE LIKES AND SUBSCRIBERS
Xiaxue's claims: Xiaxue admits that there is "no concrete way to prove someone bought fake YouTube views or fake YouTube subscribers", so she asked her friend to track Gushcloud influencer Yan Kay Kay's YouTube views, likes and subscribers every day at 11am for months, and found anomalies in the numbers.
Gushcloud's response: Gushcloud's co-founder Althea Lim illustrated in her personal statement to Xiaxue the statistics she got from YouTube, refuting Xiaxue's claims.
Mr Ha supported Ms Lim's post with a chart showing various sources where the YouTube page views came from, and also said that YouTube regularly removes fake video views. Hence, the claim by Xiaxue is false.
IRREGULAR FINANCIAL REPORTS
Xiaxue's claims: Gushcloud is financially unsound and it owed its influencers and third-party vendors more than $350,000 last year.
Gushcloud's response: Mr Ha refuted the allegation, saying in his response: "A younger service-based company usually has a lower cash balance because it is growing and needs to pay out just as fast (if not faster) than it collects money.
"While it does take tremendous effort to maintain cash flow and chase fellow industry players to pay on time, we have managed and we have been delivering on our contractual obligations."
Why all the hullabaloo? It's about the money, silly
This is not just about popularity.
It's about protecting your rice bowl.
The more popular you are, the more clout your influencers have in getting you the marketing dollar.
Popular bloggers can earn four-digit sums simply by writing about their experience with a product and then promoting it.
The more ethical ones will give honest assessments. They would also declare when the product is from a sponsor.
The less ethical ones will even call up restaurants and hotels asking for freebies in return for a favourable review in their popular blogs.
A report earlier this year by PricewaterhouseCoopers LLP (PwC) shows Singapore's Internet advertising market is growing.
Total Internet advertising revenue is forecast to grow from US$162 million (S$214 million) last year to US$264 million in 2018.
The report describes Singapore as one of the most digitally advanced markets on the planet, with many ad companies basing their Asian regional offices here.
And bloggers will be among those hawking products for cash.
But it's a growing marketing pie that is difficult to regulate.
The great Instagram purge shows followers can be bought and numbers, manipulated.
So who to believe?
Stick to that old marketing advisory - caveat emptor (buyers beware).
And if that fails, remember: Don't believe everything you read online.
Share your views with Melvin at email@example.com