Despite challenges, influencer marketing is here to stay: Part 1
Despite the rapid growth and adoption of influencer marketing by brands big and small, the relatively new channel has no shortage of shortcomings and controversy, ranging from transparency and fraud to declining engagement and measurement challenges. According to a research report by NeoReach, ViralNation and Influencer Marketing Hub, 64% of marketers deem influencer fraud as a big concern and only 11% of influencers were compliant with CMA and FTC regulatory guidelines. This article touches on key challenges facing brands, influencers and platforms yet outlines a compelling case for the tremendous growth potential of influencer marketing.
Influencer marketing and fraud
One of the greatest challenges facing brands investing in influencer marketing is fraud. According to Arkose Labs, 53% of social media account logins are fraudulent. In Q2 of 2019, nearly 19% of a $314 million Instagram influencer marketing spend reached fake followers. Other common challenges include finding relevant and qualified influencers, managing contracts or campaign deadlines, bandwidth or time restraints and payments. The good news is that tools and platforms are improving rapidly, allowing brands to more easily identify, connect with and manage influencers.
While the industry (influencers, platforms, brands and regulators) evaluate solutions to these challenges, there is one near-term alternative to paying third-party experts to endorse your brand: become an influencer yourself. I’ve written on this topic in the past. In brief, start by educating yourself and others, then build a network and give back to your industry and local community.
Aligning brands and influencers’ core values
Since many brands do not have the interest or ability to create influencers from within, they must look outside their walls. This means marketers must be aware of the challenges facing influencer marketing and address them head-on as they build or refine programs. Brands must ensure they select influencers that align with company values, are transparent with sponsored content, have legitimate (non-bot) followers and are able to set up and track key performance indicators (KPIs) that accurately value the impact of the investment in influencer programs.
KPIs are under scrutiny and Instagram is responding by threatening to remove the number of likes on posts. While many influencers are up-in-arms about the suggested change, sophisticated marketers appreciate the need to evolve to more meaningful metrics. ‘Likes’ are arbitrary and can be easily gamed by influencers. More powerful metrics, some of which can be expensive to measure, include purchase intent, brand affinity or sentiment. Easier metrics to track include reach (brand awareness) and conversions (to lead or sale), but brands and influencers must agree on how to best track success. For example, a recent study by InfluencerDB indicated the average engagement rate for sponsored influencer posts in Q1 of 2019 fell to 2.4% from 4% in just three years. With declining engagement on Instagram, the platform, influencers and brands need to get creative with content and measurement.
The Explosive Growth of Influencer Marketing
Despite the challenges facing brands, influencers and platforms looking to profit from influencer marketing, the future looks bright. Over the past 3 years, searches for "influencer marketing" on Google have increased 1,500%. The influencer marketing industry is now estimated to be between $6.5 and $10 billion, with plenty of room for growth.
There are a variety of reasons consumers follow and engage with influencers. First and foremost, consumers like to learn new things in general, but also like to learn more about the influencers themselves. Many consumers like to get inspiration for their own lives and want to stay updated on pop culture as well. From a brand perspective, a major growth driver for influencer marketing is the return on investment companies are experiencing. According to NeoReach, the average earned media value (AEMV) per $1 spent on influencer marketing in 2018 was $5.20, while branding-focused influencer campaigns averaged an 8x ROI. I’ve seen studies with ROI as high as 10x as well.
Here are a few more compelling statistics for skeptics:
- 87% of shoppers are inspired by an influencer to make a purchase
- 80% of Instagram users follow a business
- 70% of consumers say they trust the opinions of influencers as much or more than their real-world friends, while 78% said they trust influencer opinions more than traditional ads, and more than half said they consider the influencers they follow to be an extension of their circle of friends (Sideqik)
- 61% of people interact with an influencer daily
- According to the Digital Marketing Institute, teenagers trust influencers more than traditional celebrities
- Whalar recently found influencer ads to be 277% more "emotionally intense" than TV ads
Investing in Influencer Marketing
As a result, brands are responding by making bigger investments in influencer marketing. According to Influencer Marketing Hub, Instascreener and Vamp Brands, 86% of marketers plan to invest in influencer marketing in 2019. Some 39% of marketers increased influencer marketing budgets this year, with an average 83% year-over-year increase.
What is your influencer marketing strategy? In next week's next installment, we will outline fundamental influencer marketing program success factors.
Kent Lewis, president and founder of Anvil Media, started his digital marketing agency career in 1996. He frequently writes and speaks about marketing and entrepreneurship, has been an adjunct professor at Portland State University since 2000 and co-founded a search engine marketing industry trade association, SEMpdx, in 2006. In 1999, he founded pdxMindShare, an online career community, to help others learn and grow professionally.