If you were to choose between two brands offering identical products, but one being endorsed by someone you idolize, look up to, and have a massive following, which product would you pick? It’s a no brainer that in all probability, you’d go for the brand endorsed by a celebrity. This influencer is determining a daily life choice for you, me and millions of others just like us. That puts into perspective the power an influencer holds.
Earlier known as “internet enthusiasts” putting out content for the sole purpose of entertaining audiences, influencers have stepped up their game and their market has now grown into a huge multi-million-dollar industry. How did this happen?
The power of social media in the age of technology is unmatched. In an age where our dependence on social media has increased exponentially, those with high reach on the platform have become individuals of significance. What we see on social media guides our beliefs, views and preferences. Influencers have the ability to alter our choices simply because people have utmost faith in influencers. This is naturally because they are relatable and hence people see them as “normal” trustworthy people. Influencers are not just churning out content for entertainment.They are now creators, producers and distributors.
The beginnings of Influencer Marketing involved YouTube celebrity PewDiePie. He teamed up with the makers of a horror film set in the French catacombs, creating a series of videos in which he underwent challenges on the set. It was the perfect content for PewDiePie's 27 million subscribers and received nearly double the views as the movie's trailer, creating the understanding realization that influencers are a powerful medium of marketing.
Rise of Influencer Marketing
Realising the growing importance of influencers, a concept called Influencer Marketing has emerged and has become increasingly popular, based on the concept that people are more likely to buy a product or service endorsed by an influencer. This has proved to be a revolutionary shift from conventional advertising. The once popular tools of marketing such as billboard and magazine advertising did not bring in customers because it lacked a personal touch. These platforms consumed a large budget as well. Then came in influencers who changed the game. They had an intimate approach towards the client which helped rope in as well as retain customers.
Influencer Marketing has become a preferred choice for brands that don’t have enough followers themselves to create an impact. They struggle to curate engaging content to attract an audience, and that is when influencers step in with their large following, and post on their accounts which attract audiences to follow and purchase from the brand concerned.
The influencer market has more than doubled between 2019 and 2021, growing from 6.5 billion to 13.8 billion U.S. dollars in the three years alone. 39% of brands spend over 20% of their marketing budget on influencer marketing. Brands have realised the power of influencer marketing. USA and Canada based brands spent $1.35 billion on influencer marketing in the year 2019 with the fashion brand 'Fashion Nova' alone spending $40 million. Instagram is estimated to have brought in $20 billion in ad revenue in 2019 through ads and influencer campaigns. ShopStyle reported seeing a 65% increase in traffic, and multi-brand retailers selling through the site saw a 250% increase in sales due to sponsored content featuring various influencers.
The Power of Instagram
Instagram is the most used app for marketing because of its user friendly, cost effective and availability of sophisticated data analytics tools. 4 out of five brands prefer influencer campaigns to market their brand. 69% of the brands worldwide have realised the limitless potential of Instagram influencers. Facebook, Youtube and Twitter are also mediums of marketing but none as powerful as Instagram.
Firms can also select segments from Instagram’s platform of 849.3m users which translates to boosted sales if their offerings are attractive. Instagram’s ad revenue is projected to be at $12.32b in 2020, indicating just how willing firms are to pay in order to access this huge pool of potential customers. Watch brand Daniel Wellington is another great example. They made a decision to discontinue traditional marketing and instead chose to use Instagram as their platform for marketing. Its strategy has been to rope in influencers which eventually translated to sales, helping it become Europe’s fastest growing company between 2013 and 2015.
Influencers target highly specific communities through Instagram advertising which goes to show that brands have the opportunity to differentiate their products and really cater to individual needs more than ever. This personalization proves to attract specific audiences as well.
Companies are willing to shell out incredible amounts of money to influencers, which is another reason why we’re seeing more people around us turning to this occupation. This is naturally because the higher the wage that is offered, the higher the number of candidates in the labour supply are willing to work.
Kylie Jenner is the second highest-paid celebrity on Instagram, earning $986,000 per post. Her buyer retention is an astronomical figure which is why brands prefer to rope her in as their ambassador. With 241 million followers, her buyer retention is a higher number which indirectly means a brand is retaining so many consumers and so they will have to spend less on consumer retention and can focus higher budgets towards influencer marketing.
Globally, North America is touted to be the biggest influencer market. In contrast, Asia Pacific (APAC) is expected to grow at the highest Compound Annual Growth Rate 2020 onwards due to the increasing adoption of advanced technologies and rising number of social media users in countries such as China, Japan, and India.
As social media becomes more ingrained in people's lives, the prospects of influencers are on an upward rise. Also, as viewership, audiences, and social platform growth continue to rise, so too will advertising expenditure seeking to capitalize the reach and exposure of marketing. In many years to come, influencers will become increasingly vital tools of marketing, helping to connect brands with consumers on social media in an authentic/relatable manner that will deliver immediate results for the brand. Influencers have created a new way to make money on social media. They also create new jobs, because they require the aid of photographers, videographers, editors and managers to churn out new content. Influencers are no longer just content creators. They are also entrepreneurs and marketers. In their role as an entrepreneur, they help strengthen the economy. The next time you think social media is not a real career option and that it does not yield a sufficient income, try to remember Dwayne 'The Rock' Johnson earns $1,015,000 per post which is an unmatched salary for a day's work. Such is the power of influencers. Though the influencer marketing industry is still at its infant stage, it is fast-growing and gaining wide acceptance amongst brands and consumers alike. There is no stopping the influencer industry because this is the future.