Xiaxue is back.
Singapore-based blogger advertising network Gushcloud received an unpleasant Christmas surprise this morning. Xiaxue, a popular but polarizing blogging personality whose real name is Wendy Cheng, wrote a scathing takedown of Gushcloud and its allegedly dishonest practices. Xiaxue is affiliated to Nuffnang, a rival Singapore-based agency that she calls an “ethical company headed by ethical people.”
The article came out of a one-year investigation by Xiaxue in which she went to the extent of setting up a shell company and buying ads just to reveal Gushcloud’s practices. When contacted by Tech in Asia, Gushcloud did not address the specific allegations brought up by Xiaxue, but issued a statement saying that the article is inaccurate.
“We think that the Blog Post was calculated to disparage and injure our reputation. The timing of the release of the Blog Post also speaks for itself. We are currently taking legal advice and reserve all our rights against Ms Cheng in relation to the Blog Post,” Gushcloud says in a Facebook post. The firm also started a hashtag called #FaithInGushcloud to rally support.
Here is a summary of Xiaxue’s accusations. Nuffnang has responded to our queries, and you can find them below.
1. Gushcloud inflated its earnings.
The company told The Straits Times in November 2012 that its monthly revenue was S$170,000 (US$129,000), up from S$25,000 (US$18,900) in February that same year. However, after digging through publicly obtainable records, Xiaxue found out that that company’s annual revenue was more like S$396,005, or a monthly average of S$33,000. She writes in her typically acerbic tone:
Let’s just give them the benefit of doubt. They said that their revenue went up and that in February it was only S$25,000 per month. Let’s imagine that only in November, when this article is published, did their revenue suddenly become S$170,000 per month. From January to October it was S$25,000.
(S$25,000 x 10 months) + (S$170,000 x 2 months) = S$590,000
Tadah, STILL seems like inflation to me!!!
2. Gushcloud gets bloggers to write posts that are disguised ads.
Xiaxue sent Gushcloud a request through her shell company stating that she’d like an influencer to create an Instagram promotional post with no mention that it is an ad. The post went up, and “not only did [the influencer] not mention it’s a paid ad, she pretended that she stumbled upon the client by herself.”
3. Gushcloud inflates the pageviews of its bloggers.
Xiaxue inquired about the pageviews of certain bloggers and compared them with actual numbers by ordering banner ads and placing tracking codes on them. A comparison between the numbers of three bloggers showed a disparity of between five to ten times.
4. Xiaxue suggested that Gushcloud may have bought YouTube views.
She compared her YouTube video with those of Gushcloud influencer Kay Kay (a former Xiaxue BFF by the way) and noticed some irregular patterns. While YouTube video views tend to taper off after a while, Kay Kay’s held steady. She also noticed that Kay Kay’s video likes increased almost uniforming on certain days, and days with low likes were compensated the day after with a spike in likes.
Kay Kay wrote a post on Instagram denying Xiaxue’s claims.
A Facebook user also wrote a lengthy cost questioning the conclusion Xiaxue arrived at regarding Kay Kay’s videos:
5. Alleged irregular financial reports.
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.
The company recently put in a six-digit investment into Vulcan Post, a tech lifestyle publication.
Nuffnang’s response
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.
“Nuffnang was the first in the industry more than five years ago to recommend heavily to our bloggers to mention ‘advertorial’ or ‘sponsored content’ in their posts. We enforce this as best as we can. This has been a position we have maintained throughout the years and something we have advocated on other channels, such as in the press,” says Cheo.
Nuffnang also ensures that it keeps blogger traffic data and rates regularly updated to account for spikes and drops in an influencer’s engagement stats. It claims to have never misrepresented these numbers.
On practices such as buying YouTube views and owing bloggers money for months, Cheo says that his company has never done those things.
“The outstanding debt owed to bloggers is confidential and I do not have the numbers off hand, however, this reflects amounts of money not cashed out from their accounts. Nuffnang and its associate companies maintain a healthy cash in bank balance that is more than sufficient to pay out bloggers whose payments are due,” he adds.
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.
Both startups have been extensively covered by Tech in Asia in the past. Read more about Gushcloud and Nuffnang.
This post Singapore startup Gushcloud weighs legal advice on Xiaxue’s allegations appeared first on Tech in Asia.
Singapore startup Gushcloud weighs legal advice on Xiaxue’s allegations
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