June 12
Section Text 1.1

Virtual Virality: The Changing Dynamic of Influencers

By: jacob kozhipatt | July 26, 2023

There is a burgeoning industry of “virtual” or “digital” influencers that brands use to replicate or augment the human influencer experience while minimizing the potential pitfalls of human influencers. So, what are digital influencers — and how are they fairing? Should the creator economy be afraid of becoming digitized?


Thursday, April 27, 2023

9:00 a.m. – 10:00 a.m. ET



Meeting ID: 994 3158 6099
Passcode: 253444

  • Facebook.
  • Twitter.
  • LinkedIn.
  • Print

The growth of social media led to the emergence of online influencers, power users of platforms who have built large, loyal followings.

Influencers often take their fans into their lives –– making followers feel through each Instagram story or YouTube video that they are going along with them for the ride. The bond influencers have with their communities is unique –– as fans often feel closer to influencers than traditional celebrities or companies. As such, companies can leverage influencers to market to communities in a way that transcends traditional advertising. As Forbes reports, the best way to influence consumer behavior is by a recommendation from someone one knows.1

However, humans can have biases and be unpredictable, and recently some human influencers’ actions have cost brands billions of dollars. How do brands continue to leverage the power of influencers but mitigate the problems that arise from human foibles?

There is a burgeoning industry of “virtual” or “digital” influencers that brands use to replicate or augment the human influencer experience while minimizing the potential pitfalls of human influencers.

So, what are digital influencers –– and how are they faring? Should the creator economy be afraid of becoming digitized?

Not-so Hollywood Endings

Currently, the influencer industry is worth over $21 billion, and some project it can grow to $69 billion by 2029.2 Despite this rapid growth in recent years, a host of companies have dealt with the fallout of putting too much faith in celebrity –– or influencer –– brands.

One such prominent example was of popular YouTuber Felix “Pewdiepie” Kjellberg, whose actions led to the “ad-pocalypse.”3 In 2017, the Wall Street Journal found a video of Kjellberg –– who at the time had the most subscribed channel on the platform –– making an offensive, antisemitic joke.4 Immediately, many of Kjellberg’s sponsors distanced themselves from the influencer and demanded greater content moderation from YouTube of influencers’ “Wild West” behavior on their platform. Many YouTubers still cite this incident as seminal for companies exerting more caution when choosing which influencers and platforms they want to associate their brand with.

In the Fall of 2022, Adidas dropped its sneaker deal with Ye, formerly known as Kanye West, after a series of bigoted statements from the celebrity designer. This action cost Adidas billions of dollars and triggered a lawsuit from investors.5 Makeup brand Morphe — which built a significant following by using influencer branding — faced acute consequences when two influencers they bet heavily on, James Charles and Jeffree Star, faced multiple allegations of abuse in 2019. As a result of the controversy, they had to significantly scale back their company’s expansion.6

Influencer problems are not just limited to pop culture. A study revealed that 74% of Americans turn to online resources for financial advice. However, despite this demand, the space is notoriously rife with bad actors.7 Recently multiple lawsuits have been filed against influencers for promoting riskier financial products.8

Moreover, it is proven that provocative content tends to get greater engagement.9 So, many prominent influencers develop and engage in polarizing tactics to build their brand – a strategy potential sponsors should be wary of.

Beyond controversy, human influencers change –– both physically and stylistically –– over time. A mom blogger who builds a following blogging about her children one day will have their kids grow up. At this point, their content may no longer be relevant to the audience they curated. So, for a brand to build its reputation around a human influencer could expose them to the risk of spending money on a person who no longer appeals to the right target demographic.

Enter Virtual Influencers

Given the prominence of influencer marketing and the problems that arise with traditional influencers –– demand for a world of trustworthy, consistent, and community-driven brand ambassadors who avoid human foibles has emerged. The result? The emergence of virtual influencers.

Virtual influencers are defined as “a computer-generated CGI or animated digital character that exists entirely online. The characters are often made to look human-like to allow followers to connect with them and create a bond of trust that has the power to influence their purchasing decisions.”10

Virtual influencers don’t age, give ultimatums about their wages, and likely won’t make controversial political statements. Plus, they work whenever a company needs them to and can be used in media or advertisements doing things humans can’t –– such as flying or being underwater. They may even be a more cost-effective way of conducting business. A company doesn’t need a camera crew or a set to film an ad with a virtual creator–– it can be done by a small team working from anywhere around the world.

Brands can utilize virtual influencers in a myriad of ways. Companies can build an in-house influencer who can serve as a point of contact and representative for potential clients. Lu do Magalu, a virtual spokeswoman for Brazilian retailer Magazine Luiza, currently has 14.6 million followers on Facebook, 6 million followers on Instagram, more than 2.6 million YouTube subscribers, and over 1.3 million followers on Twitter and TikTok, respectively.11

Alternatively, brands could work with existing prominent digital influencers. For example, Miquela Sousa, better known as Lil Miquela, is a virtual robot model created by a Los Angeles start-up that has already worked with some of the top fashion brands like Prada, Dior, and Calvin Klein.12

Drawbacks of Virtual Influencers

While virtual influencers seem like a promising venture for brands looking to leverage influencers–– there are drawbacks.

The technology is still nascent, and many current virtual influencers still seem fake. A recent study at Boston University found that “users may not find advertisements by AI influencers as genuine, since the digital characters cannot really experience and recommend the product themselves.”13

Beyond this, virtual influencers are at the front of current sociocultural issues –– like the movement against exclusionary beauty standards. As the New York Times writes, “many of the [digital influencer] characters advance stereotypes and impossible body-image standards.” Since many prominent AI influencers are very thin and feminine presenting, people could feel averse to supporting influencers that don’t match their own look and shape.14 In this way, human influencers are likely easier to relate to since they come in every shape and size.

Finally, there are risk and compliance considerations that have not been settled around AI and LLM technology, that when combined with the unpredictability of a LLM influencer's reactions, could result in undesirable responses.

Can Digital & Human Influencers Co-exist?

In Japan, an art form called “Wabi Sabi” states that beauty comes from what is “imperfect, impermanent, and incomplete.”15 Perhaps when one boils down to it, it is the imperfect aspects of human influencers that make us feel connected to their stories –– and thus trust their advice for certain parts of our life.

Yes, there are parts of our lives where we need clear, succinct, non-controversial answers. It’s in those cases where virtual influencers may have the most value.

As with most innovations –– the true value is the synthesis between old practices and new technologies.

  • Facebook.
  • Twitter.
  • LinkedIn.
  • Print
3Alexander, J. (2019, April 5). The golden age of YouTube is over. The Verge; The Verge.
5Adidas sued by investors over Kanye West deal. (2023, April 30). BBC">
9Barrett, P., Hendrix, J., & Sims, G. (2021, September 27). How Tech Platforms Fuel U.S. Political Polarization and What Government Can Do about It. Brookings; The Brookings Institution.
12Who is Miquela Sousa? @lilmiquela, explained. Virtual Humans.
13Zhang, L., & Wei, W. (n.d.). Influencer Marketing: A Comparison of Traditional Celebrity, Social Media Influencer, and AI Influencer.
15Walther, A. (2021, January 8). What is Wabi Sabi? The Elusive Beauty of Imperfection. Japan Objects.
Please enter a valid e-mail address
Please enter a valid e-mail address
Important legal information about the e-mail you will be sending. By using this service, you agree to input your real e-mail address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an e-mail. All information you provide will be used by Fidelity solely for the purpose of sending the e-mail on your behalf.The subject line of the e-mail you send will be "Fidelity.com: "

Your e-mail has been sent.

Your e-mail has been sent.

This website is operated by Fidelity Center for Applied Technology (FCAT)® which is part of Fidelity Labs, LLC (“Fidelity Labs”), a Fidelity Investments company. FCAT experiments with and provides innovative products, services, content and tools, as a service to its affiliates and as a subsidiary of FMR LLC. Based on user reaction and input, FCAT is better able to engage in technology research and planning for the Fidelity family of companies. FCATalyst.com is independent of fidelity.com. Unless otherwise indicated, the information and items published on this web site are provided by FCAT and are not intended to provide tax, legal, insurance or investment advice and should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security by any Fidelity entity or any third-party. In circumstances where FCAT is making available either a product or service of an affiliate through this site, the affiliated company will be identified. Third party trademarks appearing herein are the property of their respective owners. All other trademarks are the property of FMR LLC.

This is for persons in the U.S. only.

245 Summer St, Boston MA

© 2008-2024 FMR LLC All right reserved | FCATalyst.com

Terms of Use | Privacy | Security | DAT Support