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Fan Economy. What Next ?

When I wrote about the fan economy and the reasons behind it a few months ago, I intended to follow up with a second article on the steps brands should take to benefit from this economy. Since then, things have turned upside down, following the authorities’ recent crackdown via the CAC (Cyberspace Administration of China) on this ‘industry’ at the end of August 2021.

Instead of telling you what brands can do to benefit from the fan economy, I will tell you what they can still do before the dust has settled and we can genuinely reassess the situation.

Let’s look at what happened in the last few months. The first significant blow to the fan economy was the ban on celebrity ranking lists. As discussed in my previous article, fans are not just fans in the fan economy; they are “Fansumers”*. They are not just followers who purchase the products of their idols. They also feel engaged in their idols’ marketing campaigns and even in the overall production process. When they support or buy a product, they feel proud to have “raised” it themselves. “Fansumers” participate in crowdfunding, engage in supporter activities, root for or criticize celebrities and influencers. They measure their involvement via different social measures which feed ranking lists

This celebrity ranking ban led to the removal of 150,000 pieces of “harmful online content” and the punishment of more than 4,000 accounts related to fan clubs by the CAC. “Unethical behaviour” is being sanctioned. It includes cyberbullying, rumour spreading, inducing minors to raise funds, flaunting wealth, and extravagant lifestyles.

In early September, the Chinese National Radio and Television Administration shared an eight-point regulation plan to reform the entertainment industry, published in English in the South China Morning Post. It emphasizes banning “effeminate men” and anything “overly entertaining,” as well as boycotting reality talent shows and putting a tighter control on reality shows and offensive social media influencers.  Additionally, the regulators prohibit extremely high payments, urge celebrities to participate in charity shows, and punish fake contracts and tax evasion. Other key points in the broadcast regulator’s statement included promoting and strengthening Chinese culture, consciously resisting temptation, and displaying fame and wealth.

What does this mean for brands?

 As we have already seen in previous articles regarding other industries, this is not entirely new behaviour from the Chinese authorities. The usual approach is first, let things run freely, then observe, and finally – regulate. We have just entered the regulation phase of the process.

 The first implication of the crackdown will probably be ending the superiority of idols over celebrities when it comes to activating sales. One of the main reasons behind the success of the fan economy for brands was the capacity idols had to trigger immediate sales. Idols were called “traffic stars” because their fan base was committed to purchasing their endorsed products. We can probably now expect a loss in performance. Since idol ranking will be banned, the incentive to buy; to help your idol reach a top ranking will disappear.  

This means that their active support will, at best, diminish. Nevertheless, the success of endorsed products will still be visible on e-commerce platforms which could easily replace previous rankings. Fans will not disappear overnight, nor will their will to compete, but calls to action will need to be less evident and transaction-driven. In the short term, if driving immediate sales become more difficult, celebrities who are usually better at brand-building may be preferred to idols.

The second implication is that brands will need to reconsider the profile of the celebrities and idols they use as ambassadors. They will need to make thorough investigations and background checks on the personalities and lifestyles of those they use to be 100% sure they are not putting themselves at any risk of a backfire. They will also need to gain transparency on the celebrity’s compensation.

These new regulations will lead brands to look for social media celebrities who are “famous for being famous.” These new celebrities are famous for what they do and who they are, triggering emotional attachment among large audiences who are more inclined to be endorsed by Beijing. The recent success of Fila’s campaign “Conversation” about the idols of our time reflects the Chinese audience’s growing interest and discordance about what kind of person is worthy of admiration today.

Emma Raducanu, the British teenager who just won the US Open, is an excellent example of the high potential/risk-free celebrities’ brands should seek to sign for the Chinese market today. She has taken China by storm with her humble attitude and immense talent but even more so with her Mandarin fluency and pride in her Chinese heritage. The official state-run press agency, Xinhua, commented: “This smiley half-Chinese girl once proudly said it’s the inner faith she gained from her Chinese origins that gave her the confidence.” Beijing-approved celebrities with the potential to be role models will be the direction for brands in the short term. Diving superstar and Tokyo Olympics gold medal winner, Quan Hongchan, who dedicated her performance to her sick mother, would be another good choice. In the meantime, the fan economy will probably reorganize to produce ‘ethically compliant’ idols. Will they be as efficient as the previous ones? Let’s wait and see.

 A more stringent control process is one favourable implication of the crackdown for brands, is that numbers will now be under increased scrutiny and fake numbers (fans, engagement, etc.). Nevertheless, don’t expect 100% reliable numbers. There have been other attempts at cleaning the numbers in the past, and they have only been partly successful. 

To conclude, brands should adapt to today’s fan economy the following way: 

  1. Don’t expect the sales results of yesterday and think more about brand-building 
  2. Avoid potentially unethical sales-driven operations 
  3. Favour celebrities who are role models over idols 
  4. Be directly involved in the contract signing of the celebrity 
  5. Ask for genuine result numbers.

*Trend 2020, written by Seoul National University’s Consumer Trend Center

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