In the past, it was Mary Kay cosmetics and women driving pink Cadillacs that influenced people’s lifestyles and purchasing decisions. Nowadays, waist trainers, hair growth gummy vitamins, and green protein powder supplements are among the products that influencers promote on social media. The emergence of social media has turned influencing people into a career, with influencer marketing becoming a collaboration between popular social media users and brands to promote their products or services.
Over the past five years, the influencer marketing market has grown by over 50% on platforms like Instagram and YouTube in Western countries and Pinduoduo and WeChat in China.
McKinsey, in a survey involving 20,000 European consumers in 2014, anticipated the rise of influencer marketing. The survey noted that the impact of influencer marketing largely came from “power influencers,” but also identified a largely untapped market of less active influencers with smaller followings. In recent years, the rise of micro- and nano-influencers has reflected this trend.
Influencer marketing works for brands, consumers, and influencers themselves. Social media already had a significant impact on consumer purchase decisions in 2014, as noted in McKinsey’s survey. A recent analysis of more than 2,000 influencer marketing posts found that the strategy yields a positive return on investment for brands.
The market for influencers is booming, with a survey of thousands of millennials and Gen Zers in 2019 showing that 54 percent of respondents would become influencers if they could. While it’s uncertain how long this trend will last, social media remains highly popular, and both individuals and brands are taking advantage of the opportunity.
So, what exactly defines an influencer, and how does influencer marketing function? Continue reading to gain a better understanding of this rapidly expanding trend and its potential future developments.
Influencer marketing, what is it?
In today’s social media landscape, influencers are individuals with significant online followings capable of influencing the purchasing decisions of their followers. Anyone can become an influencer if they want to. In the real world, people tend to favor those with money and fame.
This type of collaboration often involves a combination of two models:
- A brand deal, where an influencer receives a flat fee for featuring a product or service in a post. The fee for influencers can range to different figures, influencers fee can range from three to five US figures even for those with smaller followings. Celebrities, on the other hand, can charge six figures or more per post.
- An affiliate marketing program, where an influencer promotes a product or service and includes a link or promo code that directs viewers to a purchase gateway. The influencer earns a commission for each purchase made through the link or code.
How much are influencers paid?
Each influencer marketing deal is unique, as every influencer has a unique audience, follower list, and engagement metrics. For example, Alexa Collins, a swimsuit model and influencer with over two million followers, charges at least $1,000 for a sponsored story on her Instagram account. There are no rules when it comes to charging influence. As a guideline, some influencers view $100 per 10,000 followers as an acceptable rate. According to one influencer interviewed by Insider, they make around $5,000 each month through affiliate links alone. Additionally, brand deals can bring in significant income for influencers, with one influencer with 275,000 followers reporting earning $700,000 in just six months from brand deals.
Most popular platforms for influencer marketing
According to a 2022 survey of over 2,000 global brands, approximately 80 percent of them reported using Instagram for influencer marketing. TikTok is also becoming increasingly popular for influencer marketing campaigns.
Although Instagram and TikTok are the most popular platforms for influencer marketing, brands should not overlook the potential of other options. Perhaps your brand has a specific influencer in mind who has an impressive number of subscribers on YouTube. Influencer marketing, much like other forms of traditional marketing, should be tailored towards a brand’s specific audience.
Furthermore, research conducted by the influencer marketing platform Upfluence indicates that specific platforms may attract certain types of influencers depending on their follower count. For instance, micro and medium influencers tend to prefer Instagram, whereas macro and mega influencers gravitate towards TikTok.
A successful influencer marketing campaign
One way that you can make a successful influencer marketing campaign is by building authentic relationships. Companies should be able to partner with infleuncers that align with the goals of the company. For example, a brand that focuses on kitchen utencils would like to partner with an influencer who cooks and reviews kitcehn tools. When it comes to having a successful influencer marketing campaign, it’s not just about promoting products, its also about making genuine relationships with creators who genuinely support your brand.
Other than authentic relationships, it is also important to partner with a variety of influencers so that you will be able to expose yourself to a bigger audience. For example, for brands that plan on working with transgender creators can allow these brands to connect with the transgender community in a meaningful way.
Affect of metaverse on influencer marketing
The metaverse is a bit of a newer concept to a lot of people. Metaverse is a 3-D digital space that offers almost in real life experiences through virtual reality or other technologies. People usually use the metaverse to create content interacting with brands, cryptocurriencies, and other people.
People are willing to pay for virtual goods, and direct-to-avatar sales of these items have created a $54 billion industry. For example, Gucci sold a digital version of its Dionysus bag for over $4,000, much more than the price of the physical bag. Nike is selling virtual sneakers called Nike Cryptokicks, and Chipotle offered vouchers for real-life burritos to the first 30,000 visitors to the company’s virtual restaurant on Roblox.
Influencers are becoming more involved with the metaverse. For instance, the rapper Snoop Dogg released a music video in The Sandbox metaverse and launched a “Snoopverse” on the same platform, which allows fans to access exclusive performances and content. The potentials are limitless for brand-influencer collaboration in the metaverse, much like the metaverse itself.
Opportunities and challenges of influencer marketing
Partnering with influencers can be a great way for brands to benefit, but it is not without risks. While well-known companies may use influencer marketing to add a personal touch, larger brands may struggle to appear authentic. This is because influencer recommendations may appear paid for, and an influencer promoting a smaller brand may appear more genuine.
For smaller brands, standing out among the noise can be a challenge as the market becomes saturated with influencer marketing. Direct-to-consumer brands have relied on influencer marketing to build their brands and voices, but bigger companies are now entering the space and creating more competition. As more influencers are employed, managing these networks becomes increasingly difficult, and brands need to be cautious to avoid reputational harm.
Despite these challenges, partnering with the right influencers can help brands grow exponentially in the metaverse and online spaces. Brands must be smart about how they conduct business in these environments, but with the right approach, they can reap the rewards.
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