Lu is an accomplished woman. With 32 million combined social media followers and yearly earnings tipped to reach $17m, the influencer has been on the cover of Vogue Brazil, appeared in music videos, endorsed multiple big name brands and even campaigned against domestic violence.
But what really sets Lu apart is that she’s not real. She was dreamt up by Fred Trajano, CEO of Brazilian retailer Magalu, in 2003 as a way to bring a human face to the brand’s online shopping experience through a virtual assistant. Customers soon warmed to her and began spontaneously asking her questions such as the colour of her lipstick.
Lu is now one of the company’s greatest assets, according to Aline Izo, Magalu’s content and social media manager. She appears in its commercials and on its WhatsApp customer service channel, while her brand partnerships are managed under MagaluAds, the company’s advertising division.
The firm is also continuing to develop the AI behind her persona to create a complete conversational experience between Lu and customers and expand her ability to recommend products. “We tested, learned and this is how Lu built her reputation in Brazil,” says Izo.
Lu is part of an exploding virtual influencer industry that’s set to balloon to nearly $46bn by 2030, according to research by Grand View. In the next two years, marketers are expected to divert 30% of their influencer budgets to virtual personas, according to research by Ogilvy.
The AI-generated personalities built by agencies, tech companies and brands are now commanding followings and fees to rival human influencers and are becoming a hit with marketers and consumers alike. A survey by the Influencer Marketing Hub reveals that more than three in five marketers have worked with a virtual influencer, while 58% of people on social media follow at least one virtual influencer, according to the Influencer Marketing Factory.
The power of the machine
AI-based influencers may have added appeal for marketers. Izo argues that virtual influencers pose less of a risk than humans in terms of reliability and unpredictable behaviour. They’re also constantly available and their output can be infinite. “Even though there are people behind the humanisation of the character, Lu’s actions and behaviours are more controlled, which helps reduce the risk of generating a crisis or being cancelled on social media,” she explains.
Virtual influencers can also be better moulded to a brand’s messaging, says Lewis Davey, CEO and co-founder of Pixel Agency, which connects virtual influencers with brands. “A virtual influencer can not only front a campaign for, say, a global home appliance brand, but can also be trained to engage with followers 24/7 with flair and personality, in multiple languages and deliver consistent product messaging at speed, becoming an ‘always on’ ambassador for that brand,” he says.
It’s not just about creation: sustaining it is even more complex than the creation itself
But underneath the perfect appearance of virtual influencers lie some significant risks. Using AI to communicate with real humans takes finesse in terms of characterisation and storylines and can counteract a brand’s efforts to appear authentic and genuine.
Magalu has tried to make a virtue out of Lu’s lack of humanity. “In her storytelling, she openly acknowledges that she is virtual. Her virtuality is a weakness for Lu, as it imposes limits on her. But by embracing this trait and highlighting it in her narrative, it becomes a strength and adds a touch of humour,” says Izo.
“She plays with this concept in her stories, trying to mimic human reality in various situations and contexts, which has certainly helped build emotional and cognitive empathy with the people in her community and with the brand.”
This resonates with Hyundai Morocco, which recently created campaigns with Kenza Layli, a virtual influencer created by Meriam Bessa of digital agency L’Atelier Digital and crowned the world’s first Miss AI.
“One of the main challenges is overcoming scepticism about virtual influencers. Some audiences may question their authenticity or relatability. Compared with human influencers, managing the narrative and ensuring relatability can be more complex, as virtual influencers are not tied to personal stories or experiences,” acknowledges Saad Bezzate, Hyundai Morocco’s brand director.
“Another challenge was creating an emotional connection, as virtual influencers can sometimes feel more scripted. We had to carefully balance her interactions to maintain authenticity while also ensuring her persona aligned with the lifestyle and aspirations of our audience.”
Backlash against bots
Hyundai Morocco’s campaign with Kenza Layli generated 10 million views on Instagram and YouTube, with an engagement rate of 8%, compared with an average rate of around 5%. But not all brands have experienced such success with virtual influencers.
When lifestyle website Sheerluxe introduced Reem, its own virtual influencer, as part of its editorial team in July 2024, the response was far from positive. Sheerluxe fans criticised the brand for replacing a human role with an AI and for giving Reem an ethnic minority appearance, rather than actually hiring a real person from a culturally diverse background.
Reem is still active on Instagram, while the move was praised on LinkedIn by Diary of a CEO host Steven Bartlett for being bold and unconventional. Still, the experience taught the Sheerluxe team some lessons in launching a virtual influencer.
“We chose to bring the fictional Reem character to life by announcing her as a ‘new team member’. With some major companies now saying AI is enabling them to reduce their workforce, it’s completely understandable that job security is front of mind when new AI initiatives are announced,” says Sheerluxe’s editor-in-chief, Georgie Coleridge Cole.
“We should have made it clearer from the start that, as an AI-generated image, Reem cannot write articles or fill any real job role on our team, which will never be replaced by AI.”
But the biggest concern around using virtual influencers may be security and privacy, warns Oli Buckley, professor in cybersecurity at Loughborough University. “Virtual influencers rely on complex technologies and large data sets, making them vulnerable to data breaches that could expose sensitive consumer information,” he says.
“If these systems were to be compromised then they could be manipulated to spread misinformation, promote fraudulent products or engage in phishing scams, which are damaging to both brand reputation and consumer trust.”
Academics at the University of Portsmouth and Audencia Business School recommend the integration of digital and marketing teams and the introduction of joint, proactive data security management systems to harness virtual influencers. Magalu, for example, has set up a dedicated AI department which continues to develop the technology behind Lu. It has also created a structure for connecting the relevant teams and partners that are responsible for her activity and keeping her audiences safe.
“Companies must be willing to invest in dedicated teams and partners for the conception of a brand character or avatar. We must remember that it’s not just about creation: sustaining it is even more complex than the creation itself,” says Izo.
“The daily challenges are significant and complex, but it’s possible to have a positive impact on the relationship between the brand, its customers and communities.”
