CIM047: Xiaohongshu Causes an Uproar in KOL Community with Restrictive Sponsored Post Rules – Elijah Whaley Gives an Inside Look

May 29, 2019

Today I bring back Elijah Whaley, Influencer and CMO of influencer marketing PARKLU to talk about the new sponsored post regulations on Xiaohongshu or Red, Little Red Book.

When these rules were announced around 2 weeks ago, they caused an uproar in the China KOL community and in this episode we’ll tell you why. Xiaohongshu has since then announced that they will issue another press release on May 27th with additional explanations and modifications and then the app itself will be updated on June 10th.

Elijah also shares that many of their clients have paused their campaigns on Xiaohongshu as they are waiting to see what finally happens and many KOLs have temporarily stopped accepting sponsored posts as they are worried about the repercussions from the platform.

Elijah and I have been big proponents of Xiaohongshu, and while we understand where these new rules are coming from, we both agree it was a poor decision and are a bit worried about the long term effect they could have.

I will be recording another episode in late June to give an update on the situation. Also, stick around until the end of the podcast, I share another bit of information that Elijah learned a day or two after we recorded.

*Note: Today’s episode is about a breaking topic, that is currently still in flux, so I want to caveat that when the dust finally settles things may have changed, but this topic is important both to brands and to KOLs and our guest has an insider’s view into it, so I wanted to get him on as soon as I could to share what he knows and bring everyone up to speed.

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Notes:

What happened:

Earlier this year an article went viral on Weibo about fake accounts and articles on Xiaohongshu, but this might have been planted by Weibo
Pot calling the kettle black – these issues happen on most Chinese platforms and Weibo is notorious for fakes, 40% of traffic on weibo probably fake
Xiaohongshu has always taken the position that they want to promote trust, trying to do things right, which is noble and they have been going back and forth with how to deal w/ KOL collabs without sacrificing trust
Two weeks ago press release came out with new sponsored post rules that were severe. Another press release due out May 27^th and app update 10^th of June
While rules were severe, they was also a lot of ambiguity which has caused chaos, so new press release will hopefully clarify
All PARLU clients currently running campaigns or planning them put them on pause
No KOLs are accepting campaigns because they don’t know what’s going on and can’t risk repercussions from platform

Elijah’s take:

His first reaction is that many creators will leave
But seems that XHS might step back, might not be the death toll for the platform that he originally thought, but will still have negative effects
With their new rules – only 4,700 KOLs pass the requirements and are eligible for sponsored posts (out of 200 M users )
Feels eerily similar to what happened with Meipai
KOLs must put out 4-5 organic posts that meet certain requirements in order to do one sponsored post
He feels like the platform is promoting a low quality content feel, unfair to professional content creators
New rules not serving the creator community
Everyone will suffer for these decisions
Expect KOLs to start charging WeChat rates (1 rmb per view) which are most expensive in the industry
Brands will be paying more for less exposure
Believes users will also end up suffering as top KOLs leave
Niche KOLs will focus more on niche platforms with less restrictions
Left with low quality content creators
Bets you they won’t restrict celebrity accounts
Lots of people aren’t aware of how much platforms manipulate accounts
Doesn’t feel like XHS is creating an environment w/ creators in mind first

Similar issues on Douyin:

People are leaving douyin
Has some systemic issues
Douyin and now XHS are now pushing creators into MCNs
MCN gets 70% or brand deals, 5-year contract, a small percentage of creators ever actually receive the support they are promised
Hard time creating content that consistently gets high views
AI recommendation system favors viral content compared to educational/interesting/entertaining

When will Chinese platforms allow for democratization of content consumption?

Most platforms too contrived
What content is seen is controlled by platform
Frustrating for content creators

Guest: Elijah Whaley

LinkedIn: https://www.linkedin.com/in/elijahwhaley/

Personal Website: elijahwhaley.com

PARKLU Blog: www.parklu.com/blog

Host: Lauren Hallanan

Website: www.chinainfluencermarketing.com

LinkedIn: https://www.linkedin.com/in/lauren-hallanan/

WeChat: H1212118514

Check out my book: Digital China: Working with Bloggers, Influencers and KOLs

Thanks to our sponsors PARKLU: www.parklu.com and The Meet Group www.themeetgroup.com/blog

For additional information and show notes head over to www.chinainfluencermarketing.comIf you like this podcast and know someone who might find it interesting, please share!