The Price of Clout

One of the most fascinating intersections of social media and digital business for me is the existence of “influencers”. Ask any millennial and we’ll be able to tell you exactly who they are.

Influencers are basically individuals who have garnered enough attention on social media that the size of their following possesses value to businesses. The term “influencer” is an umbrella term that contains individuals who have built their brands through one or multiple channels. Some are YouTube personalities who amassed their followings through entertaining content. Others are models (or simply Instagram models) who have built a following on their good looks and promiscuous pictures. Fashion and travel bloggers also count for a large cut of this demographic. Even celebrities are in this category, and the Kardashians are some of the best examples of this. A large following on YouTube, Twitter, Instagram, or Facebook is basically the only prerequisite to be in the game.

The term influencer doesn’t have defined characteristics in terms of quantity of followers. Some influencers have thousands of followers, while other have millions. The amount of followers plays a large role in how much the influence gets paid. Similarly, the audience of the influencer impacts which companies reach out to them.

The concept of an influencer, much less the idea of it being a full-time occupation, is a recent development. In the past few years, the solidification of social media in daily life has forced marketers to see the potential in teaming up with anyone who has eyes on them. There is a big strategic move behind this, too. Traditional mobile advertising has proved unsuccessful with the masses. Banner ads or full screen ads turn mobile users away, because they distract from what the user is going on the phone to experience.

That is where the value lies in influencers. They are the experience. So when I scroll through my  Instagram feed, I am much more likely to positively receive a sponsored post by someone I already follow. I am naturally predisposed to enjoy and engage with their content because I wouldn’t have followed them in the first place if I weren’t interested in their life/lifestyle. Sure, I might hover over the ads that Instagram places in my feed for a second or two, but ultimately I don’t care because my mind marks it “spam” and scroll I go.

In a related issue, conventional advertising has become a sore spot for marketers. Key demographics of young individuals don’t watch traditional TV anymore. “Cord cutting” is an increasingly popular phenomenon with paid streaming services on the rise. In addition, adblockers have become a huge problem for advertisers for obvious reasons. Influencer marketing is a fantastic way for companies to completely bypass these hurdles and get straight to the consumer they’re trying to target.

Not only do marketers benefit from more screen time with their desired audience, but the connection itself is more authentic. People trust the opinions of huge social media stars, which is part of the reason they follow them in the first place. So when an influencer makes a recommendation, people are likely to listen because it feels like a recommendation from a friend. In addition, people associate the influencer and the brand together, leading to a more positive view of the brand being advertised.

According to Catherine Turner of The Drum, “Influencer marketing company Whosay… found that influence marketing performs better than other forms of media and advertising, achieving three times better video view-through rates on Facebook. In addition, the same research found that influence marketing can change the way people feel about your brand, leading to 70% positive sentiment scores.”

So what exactly are these influencers pushing? Some of the most common products pushed are detoxifying diet tea kits, teeth whitening solutions, dating apps, and dietary supplements. However, brands of increasingly different products and services have realized the potential of this segment and hopped on board. Whether it be mattress companies, tequila labels, or private jet charter apps, users have become used to seeing any type of product or service advertised. Anyone who follows Kim Kardashian can hear her personally recommend the doctors she uses for hair removal, dermatology, etc, as she pans through the office and waiting room.

 

While it may seem crazy, influencers with enough of a following can make $100,000 from a single post. This is on the very high end of the spectrum, but it’s easy to see why being an influencer is a lucrative career. While there isn’t a ton of data yet, Forbes and Captiv8 reached out to a crowd of influencers and compiled their data into an informative chart.

 

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This chart reveals many points of interest. YouTube has by far the strongest compelling interest to marketers. In fact, marketers consider YouTube the number two search engine for pushing products. YouTubers with followings of seven million subscribers or more can command a cool $300,000 for a video partnership. In total, mediakix estimates that the industry of influencers is expected to become a $5 to $10 billion market within the next five years.

While there have been major strides in this industry, there have also been problems in the marketer-influencer dynamic. The first and foremost problem is conclusive success. While likes, shares, and comments are great, it is hard for companies to pinpoint influencer campaigns with definitive upticks in sales and traffic.

Another problem that has been seen is transparency. Nowadays, influencers usually include #sponsored or #ad at the end of their post. However, that is in part due to a lawsuit earlier this month where the Federal Trade Commission ruled that influencers must disclose of their relationship with the brands they’re sponsoring. “Influencers should be aware that they’re violating the law if they don’t clearly disclose their material connections to brands,” asserted Maureen Ohlhausen, acting chair of the FTC.

Regulations aside, it doesn’t seem like the influencer industry is going anywhere anytime soon. With brands finding more ways to integrate their products and campaigns with social media personalities, it seems we’ll all just have to take our favorite blogger’s advice with a grain of salt.

7 comments

  1. I thought this was a very interesting and informative post. I see influencer’s ads all the time and I never think twice about it, this sort of advertising has almost become commonplace to me. Your facts and commentary on the amount of money an influencer can make absolutely astounded me!! I guess it really does pay to be pretty (or know how to edit pictures)!!

  2. Very informative post! Influencers are a living reflection that word-of-mouth still trumps many other aspects of marketing because for whatever reason, it sounds more trustworthy when you hear it from someone not related to the company. I also think you bring up a good point about conclusive success from influencers. At my previous job, I worked with Instagram Ads and whenever a big influencer bumped the post, it would rack up more likes and views but not too many meaningful conversions whereas influencers in smaller communities brought other community members to the post. I guess there’s a network bubble for influencers that burst and lose relevance once it gets too big.

  3. This is really interesting – how do you feel about Klout scores? Do you think the score means anything?

    https://klout.com/home

  4. I think Influencers might be popular because our society’s values have shifted. We value an ‘influencer’s’ opinion for the wrong reason. Take Kim K for example, what exactly has she done for society other than create a sex tape or the daughter of Chris Jenner. And why do we value what they have to say? They are being paid to advertise for companies, so obviously their opinion is skewed.

  5. maririera19 · ·

    Really interesting post really connects with the article assigned this week “You Are the Product”, that says Facebook–and all social media sites at that–are advertising companies. It’s customers are not regular users but advertisers who use it as a platform to target ads. Influencers are just another way that advertisers can target and sell advertisements. It would be really interesting to see what generates more clicks, traffic, and sales Instagram and Facebook ads or sponsored posts by influencers.

  6. Very interesting article- what do you feel about companies using celebrities as influencers to market their products and being paid so much to do so?

  7. I really loved how this blog post challenged the success of influencers-another downside that companies are worried about is there is no brand safety with influencers. Pepsi saw this with Kendall Jenner. Companies use these figures to leverage the viewership of their product, but with these influencers it is hard to maintain control of the social media wildfire or “hashtag hijacking” that can take place.

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