International Business Marketing Project

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Snapchat vs. the ‘Influencers’

and stop signs, it’s typically fed thousands or mil- lions of photos, all hand-labeled. To nail a conver- sation, a digital assistant needs to be told over and over when it’s failed. And so Rubin spends 10 to 30 hours a week on her phone or computer evalu- ating search results and chat retorts through a site called Clickworker. Her income, generally $10 to $14 an hour, pays for part of her college commute from New Jersey and some of her mom’s groceries. Each task pays 3¢ to 15¢ apiece, she says, and “they’re easy, so it quickly adds up.”

As automation and AI eliminate a range of rel- atively rote jobs, the need to train software is also creating other employment opportunities. People must label massive collections of unsorted data so computers can perform more complex tasks, such as driving cars and carrying on conversa- tions. Clickworker GmbH is one of several compa- nies feeding the need for training data as machine learning spreads into more business processes. All together, more than 1 million people around the world are chipping in, one click at a time.

Many of the startups are being fed by eager venture capitalists. So far this year, Alegion, Scale, CloudFactory, Mighty AI, and CrowdFlower have received about $50 million in investment funding, and Understand.ai is expecting to raise a few million this month.

Some of these companies have specialties. Mighty AI Inc. and Understand.ai focus on annotat- ing images for autonomous driving. DefinedCrowd tackles natural language processing, so workers record or transcribe speech samples, among other tasks. Microwork photographs and tags brand logos to, say, track exposure on Instagram. Other com- panies are generalists, tagging vehicle damage, categorizing media, handwriting notes, or assess- ing product reviews as needed.

Clients range from startups to the likes of Google parent Alphabet, Amazon.com, Apple, Facebook, International Business Machines, Microsoft, and big automakers. (At that level, most also have in-house sorters.) Jacques Bughin, a director of the McKinsey Global Institute, speculates that the nine-figure market could hit $5 billion in five years. Jonathan Roosevelt, a partner at Industry Ventures who led CrowdFlower’s $20 million round of funding in June, says that’s optimistic but possible. “One of the things that got us excited is how valuable this is to some very rich companies,” he says.

Beyond recruiting workers and sorting data, AI training companies typically create the software interfaces for workers to label data, as well as the quality-control methods. Some of them hire people one task at a time. Alegion Inc. and Clickworker each have about 1 million data sorters, with most of the tasks aimed at machine learning. Daryn Nakhuda, the chief executive officer of Mighty AI, says his company tries to add gamelike elements (experience points, badges, online discussion forums) to make the jobs

more fun and less fatiguing. These services pay any- where from a penny a task to $2,000 a pop for a radiologist to tag a medical image.

Other companies offer full-time work. IndiVillage Tech Solutions LLP hosts about 100 women and youth at its office in the Indian town of Yemmiganur and spends profits on education and drinking water for the community. “We think it’s pretty cool that a tiny community in a rural Indian village today is helping with providing data for artificial intelli- gence,” says Chirasmita Amin, the company’s busi- ness development manager. In Serbia, Microwork pays an hourly wage of at least $3 an hour, more than twice the local minimum, to 100 people in an area where jobs are scarce, and it says it aims to expand its ranks to 1,000 this year. Samasource trains and employs people in Africa, India, and Haiti.

“I can imagine an AI that is connected to all of humanity,” says Andy Gough, the CEO of Microwork, “and whenever it needs to learn something, it simply employs humans to generate the data it needs.” Rubin, the Baruch student, doesn’t worry about possibly training her AI replacement someday. “No matter what the profession,” she says, “we will be working alongside AI in our everyday lives.” �Matthew Hutson

THE BOTTOM LINE The nine-figure market for AI trainers has attracted about $50 million in venture funding this year to a cadre of startups dependent on armies of workers to sort data.

Wes “Wuz Good” Armstrong has almost 700,000 fol- lowers on Instagram, enough to get paid six figures a year to promote Lexus cars and Axe body spray there. It’s easy, he says, to put products in his comedy and stunt videos for an audience that will still like and comment on the posts as long as they’re entertained.

Snapchat makes things a lot tougher. Armstrong has followers there, too, but he doesn’t know exactly how many. And because of the way the service works, it’s hard for him to track how many people watch the

● The disappearing-message service kept it tough for users to measure their audience, and Instagram swooped in

● There are well over

1m people helping to train AI software (for a fee)

◼ TECHNOLOGY Bloomberg Businessweek September 11, 2017

◼ TECHNOLOGY Bloomberg Businessweek September 11, 2017

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THE BOTTOM LINE Snapchat’s lack of public user data has made it less hospitable for buzz-building types. Its parent company doesn’t seem to mind.

sponsored messages he sprinkles into his posts. To capture the audience for a recent video for Toyota Motor Co., he had to set an alarm on his iPhone for 23 hours and 59 minutes after the post to remind him to take a screen shot of the number of viewers. He was cutting it close: Like most Snapchat posts, the video disappeared at the 24-hour mark, taking his proof with it. He makes a lot less money on Snapchat— maybe $10,000 a year, he says, if he’s lucky.

This is by design. Snapchat’s parent company, newly public Snap Inc., says the app is mostly meant to be used for communication among close friends. The implication: It’s not designed for the so-called influencers who use carefully edited Instagram photos to get internet-famous enough to hawk Axe. Influencer types use Snapchat anyway, and people follow them anyway, but Snap makes little effort to cater to them. And they’re getting annoyed. The number of influencers posting Snapchat stories in the second quarter fell 20 percent from the first quarter, while Instagram saw an 11 percent jump, according to data-analysis company Captiv8.

The company doesn’t send executives to VidCon, the influencer conference in Anaheim, Calif., where Instagram and its corporate parent, Facebook Inc., have a heavy presence. There’s no special Snapchat team catering to the pitchmen and no easy way for the influencers to tell how many views they’re getting, making it less obvious why the Lexuses of the world should pay them. And since Instagram copied Snapchat’s “stories” feature, letting users string together videos that disappear after a certain amount of time, “Instagram has taken a lot of Snapchat’s swag, for sure,” Armstrong says. Snap declined to comment for this story.

Instagram’s clone (also called “stories”) has made it easier for advertisers to cut Snapchat out of their plans. At last year’s New York Fashion Week, market- ing agency United Entertainment Group used other services to pay teen girls and college-age women to pitch a large hair-care brand to their peers. “It would have fit right into the Snapchat demographic, but right now there is just so much available on Instagram and on YouTube and on Facebook,” says Josh Kaplan, senior director at UEG’s influencer-focused division. “It makes it very difficult for us to justify pushing content to Snapchat.”

Instagram has catered to this kind of advertising only in the past year or so. Since 2016, the company has made it easier for brands to track the popularity of posts by the influencers they pay and let the brands pay to promote those posts as they would regular ads. (It’s also started to indicate more clearly which posts are paid ads.) Facebook and Twitter Inc., like YouTube, allow some influencers to get a cut of ad revenue from videos they produce.

Snap would be wise to catch up, says Erin Dorr, vice president for digital and social strategy at MSL Group, a PR conglomerate. “Agencies everywhere are just waiting for Snapchat to come out with more

functionality and capabilities and transparency for influencer campaigns,” says Dorr, whose company represents Procter & Gamble Co. and General Motors Co., two of the biggest advertisers in the world.

But Snap isn’t interested, say people familiar with its executives’ thinking. As a compromise, the company has started providing viewership data to a handful of popular users who produce posts Snap considers broad or interesting enough to be tagged as “official” stories. Michelle Obama made the cut; most latte-foam artists didn’t.

This break with self-promotional social media types is one of the many ways Snap has deliberately eschewed the examples of Facebook and Instagram, despite outside pressure for it to start making more money. Without mentioning the company by name, Snap executives aren’t shy about criticizing Facebook’s obsession with growth during investor presentations and earnings calls, arguing that the service’s value has been diluted by meaningless con- nections and notifications about acquaintances users haven’t seen in years. Snap maintains it’s focused on holding the interest of a much smaller group of higher-value eyeballs.

However big or small the audience, brands want to know exactly who they’re reaching, says UEG’s Kaplan, whose clients include Microsoft, Samsung, and Unilever. “It’s very important to us to have an apples-to-apples comparison with how we’re spend- ing our dollars.” If clients choose Snap, he says, “we get a lot of screen shots.” �Sarah Frier

① Armstrong hails a Lyft to class and nods to the Fresh Prince of Bel-Air theme, after oversleeping ② The freedom of the internet, the former Vine star says, helped deliver him a Toyota Corolla ③ He credits Axe body spray with getting him out of the “friend zone”

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