The influencer marketing industry is estimated by Business Insider research to be worth up to $15 billion by 2022.
Its continued growth might have come as a surprise to some. After all, the industry has been subject to criticism and scepticism over the past few years, with influencers coming under fire for failing to disclose brand involvement, as well as perceived difficulties for marketers in proving ROI.
At the same time, however, the continued success of influencer marketing is not so surprising considering the growth of the very platforms that spearheaded the strategy. With over a billion active users by July 2018, Instagram remains a powerful force behind brand marketing.
At the same time, measurement has also become more strategic. A report by Influencer Marketing Hub states that conversions or sales is the most commonly-used metric in 2020, despite being the least-supported metric just one year previously. This highlights a shift to more strategic and goal-orientated brand campaigns, and is also an indication of the wider growth of social commerce.
The number of influencer marketing platforms and agencies has nearly tripled since 2017
As the influencer marketing industry has grown in popularity, so have the platforms and agencies that support and oversee brand influencer strategies, as well as enable brands to connect with the right influencers.
Influencer Marketing Hub found that the number of influencer agencies and platforms grew by 380 in the year to 2019 to 1,120 in total. To put this into context, there were just 190 influencer platforms and agencies in 2015, when the strategy was still in its relative infancy.
As the influencer landscape grows, however, it’s becoming all the more difficult to navigate, raising questions about the right influencer operating model and how to effectively outsource campaigns.
Deciding on a suitable operating model
Back in 2015, the vast majority of businesses identified and managed influencers in-house. According to Influencer Intelligence’s ‘Rise of Influencers’ report, 78% of brands said they did this in-house, while just 14% said they used a specialist agency to identify and manage influencers.
In 2020, this doesn’t appear to have shifted either way too much. But if anything, the trend towards in-house has grown somewhat. Influencer Marketing Hub’s ‘State of Influencer Marketing 2020’ report states that 78% of its survey respondents run their influencer campaigns in-house, with the remaining 22% opting to use agencies or managed services for their influencer marketing. This report surveyed 4,000 ‘brand representatives’, mostly from relatively small companies. Just 10% of those surveyed came from large enterprises with over 1,000 employees. This is important to consider, of course, because size could impact whether a company chooses to run campaigns in-source or outsource them.
Smaller companies with lower budgets might choose to remain in-house, as this can enable them to allocate spend accordingly and directly to influencers (rather than towards agencies, where fees can be expensive). With that said, it can also be costly to curate the right in-house talent, with additional spend on recruitment and training potentially counteracting any savings a company might make from not outsourcing.
It also depends on sector. Fashion and beauty brands typically take a tiered approach to campaigns, running multiple campaigns with different types of influencers throughout the year, meaning they’re more likely to benefit from an in-house strategy.
Sarah Penny, head of content at Influencer Intelligence, suggests taking a number of factors into consideration. “I think it is really important to first really interrogate what you as a business need in terms of size and type of your influencer marketing strategy, in-house resource, budget, and objectives on a campaign and wider perspective. This will help decipher what type of solution is most suitable, efficient and cost-effective.”
The benefits of influencer marketing platforms (and pitfalls to consider)
For brands starting out on their influencer marketing journey, one option is to use an influencer platform. According to Influencer Marketing Hub’s survey, 44% of respondents currently use tools developed in-house to execute influencer marketing campaigns, while 40% use third party influencer marketing platforms.
Some platforms largely act as databases, allowing brands to find and connect with influencers – they can also enable teams to delve deeper into data and analytics. However, these types of platforms typically require much more resource from in-house to narrow down and analyse chosen influencers, as well as organise and execute campaigns. Other platforms might offer a certain amount of campaign management tools, which essentially take the ‘leg work’ out of manual management, but more often than not, brands will still need to dedicate time and effort to overseeing campaigns.
According to Alessandro Bogliari, Co-Founder and CEO of the Influencer Marketing Factory, brands should be wary of these types of influencer marketing platforms (particularly self-serve), unless they have the knowledge and resources to oversee any gaps in platform management.
“A platform is not enough a lot of the time, mostly because it can offer you data and demographics – but that is not everything when it comes to influencer marketing.” he says, “You also need to consider the message, the storytelling, the type of creative. There’s also the contracting, the media licence release. There’s so much involved that if you use a platform, and you don’t know too much about the industry, you could come up against problems.”
One of the problems Bogliari is alluding to is regulation, as influencer marketing has become subject to stricter regulations implemented by the FTC and CAP. This is largely to do with disclosure, and the need to explicitly state whether content is sponsored or has brand involvement. There are also many other complex legal agreements that brands need to consider when working with influencers, such as assignment agreements (which are required if a brand wants to ‘own’ the content that is created, rather than the influencer themselves). Similarly, a licence agreement will also be required if the campaign involves music or any other form of content that is owned by a third party.
These issues are complex and involved, and something that influencer marketing platforms do not always cover. If brands do not have the knowledge or processes to fill in the gaps themselves, campaigns could end up being ineffective or even resulting in legal issues.
The criteria for choosing an influencer marketing agency
There are many more advantages to entirely outsourcing influencer campaigns to an agency. These range from nuanced expertise, as well as immediate access to a vetted network of influencers, and the analysis of campaign data. Overall, using an agency or influencer platform can speed up the entire process, as well as make it easier for brands to forge the right influencer partnerships.
But how do brands choose from the vast amount of agencies out there? First and foremost, this tends to boil down to two factors: budget and end-goal.
Alessandro Bogliari explains: “Brands usually come to us with a budget in mind, and they already know the type of personas they are targeting and what they want to achieve.” he says, “This could be app downloads or ecommerce purchases, or simply brand awareness. Regardless, they usually arrive with certain goals in mind, and what we do is match their budget with a certain ‘package’ – i.e. what we know we can achieve in terms of ROI.”
When it comes to picking an agency, it is also important to consider the types of influencers that agencies typically work with, as well as their alignment with your brand. For example, it could be ineffective to partner with top-tier influencer talent if your brand is looking to target a smaller and specific audience on a niche topic. Nano and micro influencers – i.e. influencers with a smaller following – have grown in popularity in recent years. Nano influencers tend to be more cost-effective – charging less than top-tier influencers – as well as typically generating deeper and more organic levels of engagement.
Sarah Penny of Influencer Intelligence suggests that brands should be wary of going for ‘quick wins’ or agencies that only offer top-tier talent. She states: “There are plenty of solutions out there and it is critical to choose the one that does what you need as an individual organisation – and this is a very subjective decision.”
Another criteria to think about is social channels or trends, as some agencies tend to focus on certain platforms such as Instagram or TikTok, as well as particular industries such as beauty ecommerce. Interestingly, Bogliari notes that he is seeing a wider range of brands investing in influencer marketing, with industries outside of fashion and beauty showing greater interest.
“We are noticing that Gen Z are getting more into personal finance, so we are working with financial institutions on things like banking and insurance. Overall, we tend to focus more on new business models or industries who are less experienced with the influencer marketing field.” he continues, “This tends to create big wins, as a lot of other agencies are fighting for the same type of fashion brands, while we go for industries like pharma, insurance app, toys – all these industries want to get involved in influencer marketing. Maybe they have a small budget and just want to test it out, but once they see success, they start to consider it as an integrated channel in their 360 marketing strategy – not just a one-off activation.”
Who is responsible for influencer marketing, and what will the future look like?
When it comes to the ownership of influencer marketing, it is no longer the case that the activity sits within PR teams, or that compensation for influencers comes in the form of ‘gifting’ or paid-for trips or events. Now, influencer marketing is typically seen as a collaborative effort across marketing and social teams. Or – as is the case for an increasing number of brands – it is executed by a dedicated in-house influencer team, regardless of the model used.
Alessandro Bogliari agrees that the majority of brands now recognise the need for dedicated influencer hires, and the data-focused knowledge needed to execute an effective strategy.
“We are so far away from traditional ‘PR-led’ influencer marketing and the vanity metrics that we no longer believe in. We always start from data – we want to know how influencers have performed in the past.” he explains, “You can have amazing numbers in terms of followers, but this is not the same as average conversions, or data about how an audience has responded to a certain type of message.”
With the potential for influencer marketing now widely recognised, Influencer Intelligence’s Sarah Penny suggests that 2020 and beyond will see more of a focus on balance within the industry, mainly between a data-focused strategy (which disregards subjective criteria) and a human approach, which focuses on authenticity and transparency. She states: “Companies who choose not to use a full-service solution or agency, do need an in-house influencer marketing professional to truly balance the need for data and human choice to be integrated.”
Data is key for any marketing strategy, of course, but the very fact that influencer marketing relies on the authenticity of its stars (and their relationships with real audiences) means that there will always be a subjective criteria to consider. That, in essence, is what makes the strategy so complex yet so effective.
