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Xiaxue versus Gushcloud – clearing the storm clouds

By Ariffin Sha

At 6pm on Christmas Eve, Gushcloud released their official statement in response accusations from local well-known blogger Wendy Cheng (also known as Xiaxue) about their unethical behaviour in the blogger endorsement business.

TOC’s has earlier published a summary of Xiaxue’s blog post and Gushcloud’s initial response.

Gushcloud had earlier posted a quick statement via an Instagram post together with an image that says, magnanimously, “Live and let live”.

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In the official response, CEO and co-founder Vincent Ha refuted Xiaxue’s allegations in detail. Mr Ha explained the delay in the official response of more than a day was due to the consultation of its investors, clients, influencers and lawyers and to seek permission to make some data public.

Refutation 1: Mistaken reports on earnings

Mr Ha said that almost half of Gushcloud’s revenue in 2012 was made in the last quarter of 2012. With regards to the interview that Xiaxue quoted, he said that he was personally in the United States and one of his employees had spoken to the media about their earnings which was mistakenly construed to be $170,000 monthly.

Mr Ha acknowledged that the company could have issued a clarification, although he was not aware of the mistake then. He said that there was never an intention to “inflate earnings” as claimed by Xiaxue, and that it was an honest mistake which they will acknowledge and take responsibility for. He assured readers that Gushcloud’s conscience was clear.

Refutation 2: Ad masking? We carry mentions of vendors

Mr Ha stated that Gushcloud does not force their influencers to astroturf or pretend that they are not paid for the promotion of a product. Xiaxue’s accusation was supported entirely by Gushcloud’s email which said “posts should not be like advertisements”. Mr Ha indicated that the company intention was to make it a point that “ad advertisements are not fun to read and are not the most effective”.

Mr Ha added that Gushcloud does not dictate the disclosure requirements to their bloggers as the laws in Singapore do not require it, nor does Gushcloud stop bloggers from including disclosures like “Sponsored Post” or “Advertorial” in their entries. He also cited various examples where bloggers have done so.

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In reference to the request by Xiaxue through her fake company on not to reveal the fact that it was an advertisement. Mr Ha said that Gushcloud would normally check with their bloggers if they are comfortable with it.

“If they are comfortable, we share with them the client’s preference because our intention is to offer the best service to our clients… What we do is lawful. The law does not require disclosures right now and this framework allows our bloggers to have the flexibility to write in their way which they are comfortable with.”

Refutation 3: No inflation of readership figures

Mr Ha claims that the tracking links Xiaxue put on Gushcloud bloggers do not show the accurate numbers. Citing “many technical reasons for this”, he said that between the blogger’s own Google Analytics and Xiaxue’s tracking link, which uses aspects of Google Analytics, Gushcloud chooses to defer to the numbers from the blogger.

Mr Ha also listed several examples where the page views of the bloggers correspond to the presentation deck given to potential advertisers. These figures are updated automatically in the presentation deck.

What Gushcloud presented about Ms Yan Kay Kay in 2014
What Gushcloud presented about Ms Yan Kay Kay in 2014
What Google Analytics says about her numbers in 2014
Numbers presented by Gushclouds on its bloggers statistics from Google Analytics

Gushcloud also noted that its current system of using manual methods to update blogger statistics might be inadequate, and indicated plans to automate this in the near future.

Refutation 4: Buying views and subscribers on YouTube? Figures speak for themselves

Mr Ha made reference to the personal statement by his co-founder, Ms Althea Lim which provided the figures that disputed Xiaxue’s claims of paid views for the YouTube channels of Gushcloud’s bloggers.

In addition, Mr Vincent also noted that YouTube does regularly remove fake video views too.

“In summary, we don’t buy YouTube views,” wrote Mr ha. “We are here for the long-term and our reputation is precious to us.”

Refutation 5: Financials messy for a new start-up

Mr Ha noted that of all the five allegations, this is perhaps the most damaging to Gushcloud as it suggests that they are unable to pay their bloggers and vendors and risk losing their faith, and the company is financially unsound.

Mr Ha accused Xiaxue of cherry picking documents to create a loss of confidence in his company. He made reference to the Qualified Opinion from Gushcloud’s 2012 Financial Report, when the company was a start-up and record keeping was messy as they were expanding.

He reassured supporters that Gushcloud is able to pay its bloggers and vendors and cash flow is healthy.

“The fact of the matter is 2011 and 2012 were tough years, we had many bumps and we nearly failed. 2013 was better but we were still learning our way. In 2014, things have improved but yet we have to face new challenges as a bigger company. I have every confidence that Gushcloud will keep growing, learning and improving because we have good teams.”

Conclusion

Mr Vincent on a somewhat friendly note, expressed that Xiaxue is entitled to her own opinion, but also reminded readers of her association with Nuffnang, Gushcloud’s competitor.

“There are many areas in which we can agree to disagree on because this is the nature of competition. But let’s look at ways in which we compete on providing the best service to our influencers and our clients instead of dragging each other through mud.”

While Gushcloud had indicated earlier that it was exploring legal options, but it is not certain from this statement if they will proceed with any legal actions against Xiaxue.