Mode Media Abruptly Closes and Stiffs Influencers Who are Owed Thousands


UPDATE: VentureBeat reports that Mode had an offer that they didn't take, despite saying that they ran out of cash. “According to a document obtained by VentureBeat, the company had access to $10 million in financing as recently as six months ago.”

The news a few days ago of the abrupt closure of Mode Media came as a shock. There's a lot of bloggers talking about what to do and for recommendations on how to respond. Of course there are the tweets of distraught bloggers left without pay.

The $1 billion ad network and influencer platform that paid bloggers (mostly women/lifestyle bloggers), to write sponsored posts for brands and to manage their ads, closed without warning. They couldn't secure funding, were probably deeply in debt, and they went bankrupt. According to Business Insider there may have been more to that story too: greed. Cofounder and former CEO Samir Arora liked a lavish lifestyle.

“A penchant for fancy suits and a seemingly lavish lifestyle left an impression on the rank-and-file…and rumors circulated about Arora's extravagant personal expenses and his use of company property like houses in the Hamptons and in LA.”

What is terrible is how unethical and awful it is that Mode Media ended this way. Many bloggers depended on them for all or most of their income. There are many bloggers who are owed everything from a few hundred to several thousands of dollars. They will probably never see a cent from Mode. Ouch. Some smart bloggers have decided to try to collect from brands directly for sponsored posts. Others don't see a chance of getting paid, especially on the advertising side.

Here are some tweets from bloggers who were rightfully upset:

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@Chrissy publicly stated they owe her over $15k:

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Bloggers couldn't even log onto their dashboard to check their earnings:

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It doesn't matter if you were owed for ads or for sponsored post campaigns…everything has shut down.

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This is criminal.

The Financial Risk of Blogging

When you work for yourself, as influencers do, we get a lot of upside. There's creative freedom to do things as you envision. There's flexibility to work around your family's schedule or your passions. There's a downside too. Unpredictability. Not getting paid. Getting paid less than expected.

That affiliate program that's making you thousands a month could shut down suddenly (happens time – I don't know if there's any precedent of giving warnings in this industry). They can drop their commissions, despite your performance. Clients can simply not pay you, as happened to me last month after a particularly long and difficult campaign. Or, your client could go to jail and be unreachable and that check for $16k could bounce after months of smooth sailing. That happened to me too.

What's the answer? There isn't a perfect one but here are some ways to protect yourself.

Diversify your Income

As my friend Lisa Koivu, quoted in the AdWeek article I linked to above, says: “The only way you can truly protect yourself is to diversify your income. This means utilizing different ad networks, different affiliate networks, and different influencer networks. Try to work with all of the options that are available to you, as not only will this protect you in the event that one company shuts down, but it will also open up more doors to you.”

Large networks will try to get your business for everything and it may work out for you because you can negotiate higher prices, but it's also more risky.

Notice Signs of Trouble, Find Replacements

Besides agreeing with Lisa's advice, my advice is to look for the signs on social media.

One sign that I would notice is a pattern of late or missed payments. If it happens at work, not getting paid on time is a red flag. I worked for a company that I thought would shut down at any time and they never missed paying me. They never paid late.  As a consultant/freelancer it's a little more tricky. It's usually the company is collecting from the client to pay you. It can take a little longer. If a business frequently pays you after the date promised, I would look at things more closely. Look for substitutes who have a record of paying on time. If you search #modemedia you'll see complaints so you know it's a more widespread issue. That's when I'd consider taking down the ads or stop accepting more work.

Speaking of ads, in over a decade of making money from Google guess how many times they've paid late?

Never.

When I was thinking about Mode I decided to put up AdSense ads. I hired someone on Fiverr (affiliate link) to put them up and optimize them. It cost me $16. Guess what? My ad revenue has gone up dramatically already. I have peace of mind. One dashboard to manage. One paycheck I can count on. It's worth it to me.

Evaluate Your Risk

As I look over my income horizon and my goal to be queen of revenue streams, I evaluate my main sources of income. I look for new way to generate income. New products I can create or promote. New skills I can develop (right now it's Facebook ads). I consider the risks, from legal to the history of how the company chooses to work with influencers. I start planning on how I can replace or supplement the weakest partners. I also look at the ones who may expand and how I can be first in line to take advantage of growth. I really love startups because there's less competition at the beginning. It's exciting. There's also more risk. Which means I need to diversify between bigger and smaller companies.

Besides that I look at a company's social media sites and reviews. In August bloggers were complaining about late payments and lack of response. I went to check how back they stopped tweeting – it was June – about 3 months ago. Their website and Facebook pages are shut down so I can't see when the complaining started and when they stopped communicating. Since I never partnered with them I don't know if the communication was good and then stopped or how it went down.

Should You Drop Influencer Networks and Go Direct?

After being burned, some bloggers are calling for doing away with networks altogether and working with brands directly. Research from GroupHigh supports that this is a common sentiment.

Just ask yourself. Do you really want to fly to meet with PR firms and companies to secure deals?

Are you a good salesperson?

Is that your job or do you want to blog, create products and content?

Some people can do both well. If you can, great. I don't think you have to be 100% either way. If you can get your own campaigns plus pick up some from a network, then it's a win/win, right?

A lot of companies outsource influencer marketing because they know hiring specialists can be more effective than trying to do it in house. For the mega influencers it may work because brands will work directly with you or an agent who takes a cut. Or maybe you have your own PR firm to handle all of your campaigns. For most of us it's more efficient for both sides to have someone manage the program.

I've hired bloggers for over a decade (never missed paying) and I know which bloggers I can count on and what ones I'd never work with again because they flake out every time, are hard to work with, or get no/low results. I also know the ones I can count on and who can sell or meet other goals my clients have. I've noticed some brands or even PR firms they hire don't understand or have the bandwidth to do their own influencer marketing campaigns. They might invite the wrong types of influencers. Or lack the connections. Usually when I see a list it's full of A listers who probably won't answer them, come to their event, or who may not even be a fit. For example, good luck getting fashion blogger Cara Loren to your restaurant opening (unless it's a VERY fashionable and exclusive restaurant)!

I'd love to hear from bloggers who have tried going direct and from companies who work with influencers directly to see how it's going.

To the bloggers who were affected by Mode Media's bankruptcy, I'm sorry! I hope you can recover what is owed.


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