Everyone Is Giving Away Cash on Instagram

On March 18, as states sent nonessential workers home and companies prepared to cut costs, the fitness influencer Paige Hathaway posted a message to her more than 4 million followers on Instagram.

“I know it’s tough with the quarantine especially for those who are unable to work so I wanted to do a giveaway for someone to receive $5,000 DOLLARS,” she wrote. Her fans began tagging friends and commenting about how desperately they could use the money. “I could use a miracle right about now,” one woman wrote. Several users posted prayer emojis.

As the coronavirus has continued to disrupt American lives and livelihoods, Instagram has been overrun with cash giveaways like Ms. Hathaway’s. Several popular personalities have offered cash to their fans in exchange for tags, follows and comments, including Harry Jowsey, a star of the new Netflix reality show “Too Hot to Handle”; the lifestyle influencers Caitlin Covington and Laura Beverlin; and the rapper and social media star Bhad Bhabie.

Ms. Hathaway, for instance, was paid thousands of dollars by the social media marketing firm Social Stance to promote the giveaway on her feed. Potential entrants were instructed to follow a list of around 70 accounts that Social Stance was following. The company charged $900 for a slot on the list. Those who purchased “sponsor” slots could expect to earn thousands of new followers overnight.

“If you tell someone they can gain 50,000 followers in three days they’re going to do it,” said Nathan Johnson, 19, who helps YouTube and TikTok stars orchestrate giveaways. The business he runs with his 16-year-old friend Carter is simple: They pay a big influencer a certain amount of money up front to “host” a cash giveaway, then turn around and sell follow list slots to earn a profit.

“Entrepreneurs buy spots to gain followers in order to sell their courses or ebook,” Mr. Johnson said. “Models will do it to gain followers to increase engagement and charge more for brand deals. Doctors do it for credibility and to grow their personal brand.”

Louisa Warwick, the founder of Social Acceleration Group, has orchestrated seven Instagram giveaways with influencers and actresses including Tori Spelling and Natalie Halcro. Her firm is currently selling sponsor list spots for an upcoming cash giveaway by the “Teen Mom” star Farrah Abraham. Interested parties can pay just $270 to be on the list; in exchange, Ms. Warwick said they can expect to gain thousands of followers.

Instagram giveaways have been around for years. They initially emerged around 2016 when small businesses and bloggers began hosting “loop” giveaways. In order to enter, you’d have to follow a group of people, or “loop,” then return to the original person’s page and comment. Loop giveaways are frequently sponsor-free and exist as a collaboration between influencers. The giveaway that Ms. Covington and Ms. Beverlin hosted with their friends, for instance, was a loop giveaway.

But last summer, the first major wave of sponsored giveaways began cropping up. At the time, most stars were gifting things like Louis Vuitton bags, but now everyone is giving away cash. “People really need cash more than they do handbags, and logistically it’s harder to take a promotional pic with the celebrity and the bag when everyone is in lockdown,” said Ms. Warwick.

With many brand deals and sponsored trips on hold because of the virus, giveaways have provided big influencers with a way to make quick money from home. “Corona has been tough on influencers and if you get told you can make $20,000 for posting a giveaway on Instagram you’re probably going to do it,” Mr. Johnson said.

Purchasing sponsor slots on giveaways has also become the fastest and cheapest way to grow on Instagram. “You suddenly get this surge of followers,” said Dr. Thomas Connelly, a cosmetic dentist, who has purchased spots in Kardashian giveaways. “What these giveaway campaigns do is force exposure to live human beings. Then, those people can make a choice as to whether they want to keep following.”

Dr. Connelly said he is pitched daily to be a sponsor. “In advertising there’s really not a whole lot of choices these days,” he said. “With this, you pay anywhere between $10,000 and $20,000, and you become one of these 70 people that Kim Kardashian or Kylie Jenner says, ‘Hey go follow if you want to win cash.’”

When it comes to the people buying giveaway sponsor slots, “the biggest buyers are plastic surgeons and entrepreneurs,” Mr. Johnson said. Ms. Warwick echoed his assertion; each of the giveaways she has organized included doctors.

“It’s the demographic and age group we’re targeting,” said Dr. Nicole Nemeth, an owner of Plastic Surgery of Westchester. “It’s the people we’d want to market to, they are
the ones looking at these influencers.”

“Giveaways allow you to target a demographic that you normally would not be able to reach with such precision,” said Dr. Neal Blitz, a foot surgeon known online as the Bunion King. In his case, he said, that is “women who wear heels and their feet are devastated by the heels.”

“There’s all different ways you can advertise of course,” Dr. Blitz said, “but the younger generation is more interested in Instagram and knowing who you are.” He has sponsored several large influencer giveaways and said that they result in followers who have a much stronger bond than if they simply find your account through a Google or Facebook ad.

Preston Million, the founder and C.E.O. of the digital marketing agency Influential Management, said that up-and-coming artists also frequently buy sponsor spots in influencer giveaways. “It helps with perception when they’re trying to shop themselves around to labels,” he said. “The alternative is to buy ads through Instagram, which can be more expensive. Normally, it would cost around $10,000 to gain 100,000 followers through Instagram ads. Through a giveaway, you could spend $2,000 and grow the same amount.”

Jordan Lintz, a founder of HighKey Clout, one of the largest Instagram giveaway companies, said that he doesn’t like to frame it as buying followers. “It’s like sponsoring an internet event,” he said. Upcoming giveaways are announced on their verified Instagram page, and past winners and campaign results are featured prominently on the company’s website.

Not all giveaways are run with the same level of transparency. “A lot of meme pages are doing fake giveaways right now,” said Mr. Johnson. “Some influencers are too.” Mr. Johnson said that a legitimate giveaway will always announce and tag a winner. Liraz Roxy, a social media influencer in Los Angeles, said she’s refused to participate in any sponsored giveaways. “It’s all very shady,” she said.

A Facebook company spokesperson said that many cash giveaways could be in violation of the company’s community guidelines. “This isn’t the kind of experience we want to create on Instagram,” the spokesperson said by email. Additionally, according to Robert Freund, an attorney who offers a legal training course for influencers, many of these cash giveaways could violate state sweepstakes laws.

“There are a lot of state, federal and local laws that regulate the sweepstakes promotional space and there are special considerations when you run promotions online with influencers,” he said.

For instance, these giveaways need clear terms and conditions, and must verify the age and location of participants, something Mr. Freund said he hasn’t seen most influencer giveaways do. Influencers should also disclose that they are being paid to promote these giveaways.

“Right now there’s a trend where influencers are making it seem like these cash giveaways are out of the goodness of their heart because of Covid,” said Mr. Freund. “But, if they’re getting compensated, they need to disclose that fact when they promote the giveaway and make posts about it. Disclosure in influencer marketing is an area that the F.T.C. is paying a lot more attention to recently and regulators are watching.”

Some influencers, however, aren’t being paid to promote free cash — they’re just giving it away. On April 15, Katie Sturino and three fellow body positive influencers pooled together $6,000 of their own money for a giveaway. Entrants were encouraged to follow all four influencers, and the winner was selected at random.

Ms. Sturino frequently gives away products on her page, but she thought money would be better put to use right now.

“The reception was positive,” said Ms. Sturino. “People were excited that we were giving away cash and they were excited to learn about other Instagrammers who have a positive message. What we did didn’t feel shady. It was a really cool positive thing.”

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