Everyone Is Talking About Xiaxue's Big Exposé On Gushcloud. Can I Have A Summary Please?
Controversial Singapore blogger Xiaxue has accussed blogger advertising company Gushcloud for unethical practices in a exposé from her year-long investigation. We go through the numbers and facts in her lenghty blogpost to give you what you need to know here.
By Mei Mei Chu — 24 Dec 2014, 03:54 PM — Updated over 9 years ago
Gushcloud Breaks Silence On Xiaxue's Big Exposé And Gives Their Side Of The Story
Some of you maybe wondering why we took more than a day to prepare this as a day on social media feels practically like a lifetime. But it’s important to get things right. We spent the 36 hours speaking with our investors, clients in the region, influencers and lawyers about this matter to assure and clarify the matter with them and to seek their permission to use and make certain data public. As you can imagine, there are a lot of things my team and I had to do through this holiday season, on top of making sure existing clients’ campaigns are running well and of course not forgetting, talking to reporters, well-wishers and supporters.
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Gushcloud's account on the first allegation: There was never an intention to inflate their earnings
One of our employees spoke to the media about our earnings and this was mistakenly construed to be S$170k monthly. This was an honest mistake. With the benefit of hindsight, I should have come out and issued a clarification (I was not aware of the mistake then). Believe it or not, the November 2012 article hangs on our timeline wall but the part that states the monthly revenue is cut off at the bottom.
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There was never an intention to “inflate” our earnings or to deceive and mislead anyone. Think about it logically. There is no reason to attract needless attention to the financials of the company and to pay higher taxes on income the company never even earned.
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Gushcloud's account on the second allegation: The company doesn't force influencers to mask ads, even though the practice is legal in Singapore
In short, does Gushcloud as a company force our influencers to mask ads? The answer is clearly no. Do our influencers then take it upon themselves to do so? We are sure some do, many don’t…
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We give them content guidelines such as “don’t write it like an advertisement”. No one likes reading advertisements for fun and we do not think that’s the most effective.
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Gushcloud doesn’t dictate the disclosure requirements to our influencers because the law does not require it in Singapore.
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Gushcloud's account on the third allegation: Influencers' monthly pageviews are updated manually, so the stats might show some inconsistencies
Gushcloud shares monthly page views for each influencer profile we recommend to clients via a Power Point presentation deck. This is usually done as an approximate number or given number range and we update our decks manually, every few months (sometimes annually) or when an influencer’s numbers changes significantly or that we are alerted to the change.
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The numbers (on Google Analytics) are rounded to the 10,000s or 5,000s for easy reference and we always state that it is an approximate figure or we provide a range.
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The tracking link Wendy put on our influencer’s blog does not show the accurate numbers. There are many technical reasons for this. But between the influencer’s own Google Analytics and her tracking link (which uses an aspect of Google Analytics), we defer to the numbers from Google.
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Gushcloud's account on the fourth allegation: The allegation of buying YouTube views is false, as explained by co-founder Althea Lim
This screenshot of the YouTube Analytics of the YouTube Channel YanKayKay shows where the traffic for her videos came from. Much of the video views come from YouTube’s own recommendation engine and it does so by showing recommended videos it thinks you would like on the side bar, after the video and on the localised home pages of YouTube.
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In summary, we don’t buy YouTube views. We are here for the long-term and our reputation is precious to us.
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Gushcloud's account on the fifth allegation: Influencers do get paid regularly while missing documentations were results of sloppy record keeping
We have been making regular payments to influencers for the last year and a half. Have we had issues with delays in payments to influencers? Certainly. Our influencers have given us the feedback that our policy to pay only after our clients have paid us is not favourable to them. In order to address their concerns and to provide a better service to our influencers, we raised financing and took on normal business loans in order to make payments to our signed influencers in 60 days or less after the completion the campaigns.
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Record keeping was messy. We expanded into many country offices a little bit too fast.
In March 2012, we set up a US office in San Francisco as well as in Malaysia. In doing so, we transferred a large amount of money that we raised to the US to setup bank accounts, put down-payments for the rental of apartments, an office, hire employees and pay consultants. We moved offices from co-working spaces to apartments to houses several times over and many of the receipts and documentation for specific transactions were misplaced.
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24 Dec: Singaporean blogger Xiaxue, who is affiliated with Nuffnang, has published an exposé on rival blog advertising company Gushcloud
Xiaxue's blogpost starts with a disclaimer that although she may have a small shareholder in Nuffnang, she does not get dividends nor have any say in how the company is run. She promises that she has no ulterior motive for exposing Gushcloud. "What I care about is exposing the truth,' says Xia Xue who believes that lies and immoral practices should be exposed.
Xiaxue's year-long investigation is a little lengthy so we've gone through the trouble of compiling a TL;DR summary for you
The beginning: It all started in March 2014 when Gushcloud threatened to sue Xiaxue over a comment she made about "a company starts with G" that uses unethical means to make money
In the post, Xiaxue mentioned that a company that starts with a "G" uses unethical means to make money, including lieing about blogger stats, blowing up company earnings, buying fake followers, fake YouTube views and masking paid ads as honest reviews. Although the post never mentioned Gushcloud, the company's founder Vincent Ha threatened to sue her.
This spurred her to conduct a full investigation on Gushcloud to prove her allegations. She started by creating a fake company called SG Private Trainers to buy banner and Instagram ads from Gushcloud.
After being called a liar, Xiaxue was determined to go all out and prove them wrong. She created a fake company and bought the financial reports of Gushcloud for year 2011, 2012 and 2013.
The first accusation: Gushcloud inflated their earnings in newspaper reports
Gushcloud said that any allegations of the company inflating its earnings on newspaper have no basis and have never happened.
Xiaxue quoted a 2012 The Straits Times article revealing that Gushcloud disclosed a monthly revenue of 170,000 SGD. However, the company's 2012 financial report detailed a total revenue of 396,005 SGD and a total loss of 984,876 SGD. "If a company gets $170,000 revenue per month according to Vincent, in a year it will earn slightly more than $2 million. That's a real yearly revenue of $396,005 to $2 million, does that sound like inflated earnings to you??"
Second allegation: Gushcloud bloggers mask advertisements as honest reviews
Gushcloud said they never make their bloggers sign contracts to mask paid ads as genuine reviews.
Xiaxue busted Gushcloud contacting bloggers to write paid advertisement as genuine reviews in two scenarios. Firstly, she got hold of an email thread of Gushcloud co-founder Althea Lim specifically asking influencer Eric Lim to blog about an event without writing it like an advertisement. Secondly, she used her fake company SG Private Trainers to buy an Instagram ad of blogger Yilin Goh giving a positive testimonial of SG Private Trainers. Under the disguise of Doug Chu SL, Xiaxue specifically asked that she "don't want the post to mention it's an ad". Gushcloud agreed and Yilin's fake review that costs 300 SGD was soon posted.
Third allegation: Gushcloud inflates its bloggers' statistics
Under the disguise of Doug Chu SL interested in buying banner ads, Xiaxue requested for Gushcloud to show her their bloggers' page views. This is what they sent her:
To test the legitmacy of the pageviews, SG Private Trainers bought banner ads from bloggers Yan Kay Kay, Eric Lim and Asyiha Ams as marked with an 'X' above. Xiaxue's programmer friend embedded three tracking links on the banners to track the number of unique views, page views, geographic location of the reader and such. After a month of tracking, the page views gathered from all three bloggers were too low to match the traffic number that Gushcloud provided.
Fourth allegation: Gushcloud buys fake YouTube views and subscribers
Gushcloud said they have never bought fake followers nor fake YouTube views and implore anyone to check the work they have done for clients.
Xiaxue took on the challenge. Since there is no way to actually prove that someone had bought YouTube page views and subscribers, she manually tracked the statistics of one of Gushcloud channels. Every day at 11am, Xiaxue's friend would check the views, likes and subscribers of Gushcloud blogger Yan Kay Kay's YouTube channel 'Babe of all Trades'. This is the data Xiaxue collected compared to her own YouTube channel:
According to Xiaxue, there are hints of foul play in Yan Kay Kay's YouTube traffic looks fishy. She suspects that Gushcloud bought traffic to the channel. One of the evidence she points out is the uniform increase of 10 likes a day on one of the videos. "If you look at the stats, you can also see these weird surges in the views - and they don't happen on new video days or when Kaykay blogs/instagrams about the channel."
Fifth allegation: Gushcloud produces irregular financial reports and owes bloggers payment
Xiaxue points out that Gushcloud received a “qualified opinion” from the accountant, which suggests that its accounts were incomplete or did not follow best practices. This arose from S$233,444 in unaccounted operating expenses and S$150,252 paid to GushAd users that lack supporting documentation aside from bank transfer statements.
She further adds that the company had weak financials, making a loss of over S$900,000 and a profit of only S$56,216 in 2012. Finally, she suggested the firm may have owed influencers about S$351,000 in total, adding that they may have trouble paying bloggers as they only have S$16,215 cash in the bank.
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Within 24 hours, Gushcloud co-founder Althea Lim responded to Xiaxue's accusation. He provided stats to debunk her claims of buying YouTube traffic and questioned her intention of writing the exposé
"I am standing up against you because I am tired of sitting on the sidelines and watching you bully people in our community.
I am standing up against you because I am tired of hearing people in our community saying that they fear being preyed upon by you.
So I, ALTHEA LIM, IN MY PERSONAL CAPACITY, SAY TO YOU, WENDY CHENG, THAT YOUR ALLEGATIONS AGAINST GUSHCLOUD IN YOUR BLOG POST ARE FALSE.
I, ALTHEA LIM, IN MY PERSONAL CAPACITY, CALL YOU A LIAR.
If you truly believe that you are not lying in your blog post on Gushcloud, I invite you to sue me FOR CALLING YOU A LIAR.
And if you do not sue me, then I guess that speaks for itself."
Full post via Vulcan Post.
On 24 December, the firm has also started a #FaithInGushcloud hashtag to rally support
Gushcloud bloggers soon came to the company's defence, some even going the length to prove that Xiaxue is not as honest as she claims to be
One Gushcloud blogger, Kife, wrote in a blogpost: "Client goes [sic] to a company and they pay for their ads, they get to choose what they want us to say, AM I NOT RIGHT? This is just an advertising practice that EVERYONE ELSE IS DOING OUT THERE. We live in 2014, everybody know that these are marketing tactics so please, Xiaxue, didn't you draft out your postings before you publish because your client want [sic] to vet through too?"
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Blogger Yan Kay Kay also responded on Instagram:
An Instagram account named 'Faith In Xia Xue' has been set up in support of Xiaxue
Read Xiaxue's full expose here.
On the other hand, Nuffnang has told Tech In Asia that they do not have any editorial influence on Xiaxue's articles
Nuffnang founder Ming Shen Cheo tells Tech in Asia that they do not engage in the practices that Gushcloud allegedly does. It has never engaged bloggers to write disguised ads. Finally, Cheo claims that Nuffnang has not exercised editorial influence on Xiaxue’s articles, and the same goes for other bloggers. “We trust her integrity and if these allegations are true, [we] will support her as our talent,” he says.
techinasia.com
It seems like an all out war has ensued between #FaithInXiaXue and #FaithInGushcloud. Which side are you on?
