Casper Acknowledges Social Media Influencers As A Huge Risk Factor To Its Investors

Published on January 13, 2020

The mattress-making company known as Casper has emphasized the skyrocketing power of social media personalities, known as influencers, and their power over the fate of brands. The organization launched in 2014 and took full effect when Kylie Jenner showed off pictures of its products. After filing for an IPO (Initial Public Offering), despite their success, Casper warned its investors about their inability to control their future involvement with influencers, which puts their investors’ money at risk.

Here’s The Catch…

The company stated in their documents that:

“Use of social media and influencers may materially and adversely affect our reputation.”

“Influencers with whom we maintain relationships could also engage in behaviors or use their platforms to communicate directly with our customers in a manner that reflects poorly on our brand and may be attributed to us or otherwise adversely affect us.”

For those who don’t know, an Initial Public Offering is a process in which companies sell their shares to institutional investors, as well as retail investors. So, it makes sense to give businesspeople a heads up about the nature behind Casper’s main modus operandi. According to an article published by the Financial Times, influencer marketing has grown to become an $8 billion business. This is due to celebrities and other people with large social media followings and platforms charging thousands to promote products. Young startups, such as Casper, deal with Influencers at a low cost. They even offered to contact potential clients directly. Nevertheless, the problem remains since influencers run the risk of losing interest with the brand and shift the marketing of products away from the public.

Influencers are also becoming a legal risk as companies, because of the Federal Trade Commission, are now establishing guidelines that obligate influencers to “more conspicuously disclose their relationship with brands.” Casper said that its influencers could be prone to make the company go through regular investigations, lawsuits and “other penalties” that might endanger their finances. Yikes.

Big Brother’s Always Watching

With that being said, Casper’s IPO will be under Wall Street’s scrutiny. With reason, of course, since they will be one of the first tests of the year regarding “the investor appetite for unprofitable consumer businesses.” In addition, another problem is the realization that brands are usually held accountable for whenever the internet personalities they sponsor go rogue. At the end of the day, companies have no choice but to keep distance from their former influencers, as it is the protocol. An example can be found with entities such as Logan Paul and PewDiePie. They suffered major losses when YouTube and Disney decided to sever all ties affiliated with the personalities.

Despite Casper being expected to monitor their influencers’ social media, they have publicly admitted that they neither check nor approve every post an influencer makes. They explain that “if we were held responsible for the content of their posts, we could be forced to alter our practices, which could have material adverse effect on our business, financial condition, and results of operations.” As any other company founded after 2010, Casper makes extensive use of their online presence through influencers. Their ads are proportionally distributed across well-known social media platforms including social media strategists, teen Nickelodeon stars, radio show hosts, and fitness gurus.

They’ve Been There Before

They seem to have a rollercoaster for success, since they already know what it’s like to deal with the negative effects of influencers. Back in 2016, Casper engaged in lawsuits against three popular mattress-review sites. The company claimed that they wrote reviews about Casper’s competitors without properly disclosing that they received the products for free as well as affiliate revenue for creating sales for these companies. Casper suffered a significant monetary loss. Nevertheless, all three bloggers settled their differences aside with Casper, as reported by Fast Company in 2017.

Argenis Ovalles is an Editorial Intern at Grit Daily. He currently writes at Vocal Media and Theater Pizzazz.

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