The Influencer Marketing Trend Brands Shouldn’t Ignore
Article pulled out from forbes.com
After years of struggling to find its place, influencer marketing is now a proven strategy embraced by brands and agencies across the industry. It’s the current darling of the marketing world with more than 60% of brands having implemented influencer marketing in their 2016 marketing strategy, according to a survey conducted by Chute, a content marketing platform. The number is predicted to jump to 75% by the end of 2017.
But over the past 12 months there has been a shift within the industry: influencer rates are starting to skyrocket.
Influencers, including Instagrammers, bloggers, celebrities, and YouTube stars, are increasing their prices significantly. One lifestyle blogger charged $1,500 for a blog post and social shares in 2015. This same influencer, with only a slight increase in total reach, now charges $5,000 for the same deliverables.
And while it’s smart for influencers to know and demand their full value, many are beginning to price themselves out of work. Two top-tier lifestyle Instagrammers, each with a total reach of around one million followers, charge $15,000 and $20,000 respectively for one post. For most brands, there’s no way they’ll see the kind of ROI needed to justify that kind of investment. Yes, the big brands can play ball at those price points, but there are only so many willing to go to bat. The higher the prices go, the fewer the brands that will risk the investment.
“There may be a backlash, with brands getting turned off and cutting back on influencer marketing,” said Peter Storck, senior VP of research and analytics at CrowdTap, a marketing platform. “We can’t and don’t work with influencers whose prices get too high for our clients’ programs to result in strong, positive ROI.”
Obviously high demand results in increased costs. And no one is arguing that influencers shouldn’t be paid market value for the specialized content they’re creating and sharing. The issue is when that value becomes inflated.
“We consider our overall reach (website and social platforms) as well as the manpower it takes to curate, create and push content,” shares Amy Zawacki, one of the founders of Wedding Chicks and a wedding lifestyle influencer with a total reach in the millions. “Influencers may get a little big for their britches and demand higher prices based on a small sample of ad buys. There’s really no sustaining this model if there’s a desire to build long-term relationships with brands,” she concludes.
Some top-tier influencers, ones with high reach or celebrity billing, have started following in the footsteps of traditional celebrities and hiring agents. Several influencer-focused agencies have popped up and traditional talent agencies have added influencer divisions. This, too, has played a role in the rising rates. When there’s an agency taking a 10% to 30% cut of the fee, the market price needs to increase.
All of these factors are threatening to push the influencer marketing world to its breaking point. What can the industry do to fix this impending situation?
1. Better Research And Identification Influencers
Brands need to truly understand the ROI of an influencer marketing partnership. It’s rare that a $50,000 investment in a single Instagram post will pay off for a brand or business. How many packages of tea or tubes of mascara do you have to sell for the campaign to be a success?
Ultimately, the $50,000 Instagram post is the Super Bowl ad of influencer marketing and with that comes a certain amount of risk. For every Go Daddy success story, there’s a Pets.com tale of failure.
Brands need to pay close attention during the influencer identification phase of a campaign and make sure they’re not paying an inflated rate. Total reach is important but it’s not the only way to measure an influencer’s effectiveness. Engagement and quality of content is just as significant—and the metrics that smart marketers are using.
“Rising rates will raise skepticism, but a degree of caution is important for smart marketers who want to produce quality influencer campaigns that reach goals and stay on budget,” says Rachael Cihlar, director of influencer marketing strategy at TapInfluence, an influencer marketing platform. “Marketers will truly have to understand the costs from the influencers’ end to justify rates.”
2. Use Micro-Influencers
The current landscape is prime for new a breed of influencer: the micro-influencer. What this subset of influencers lack in reach, they make up for in engagement. While less costly, they are highly focused on a specific audience and tend to provide better returns. “I think it’s an opportunity for smaller, more niche influencers to rise in the ranks and become the new go-to,” says Cihlar. “They should also be more in touch with their audience as a result.”
Micro-influencers are ideal for location-based campaigns or if a brand is targeting a very specific consumer, like pediatric nurses, moms of kids with gluten-free allergies, or socially conscious teens.
If a CPG brand has a $50,000 budget, it becomes a big decision: one Instagram post or one YouTube video vs. 25 micro-influencers. The reach may be the same, but in many cases, the engagement is exponentially higher for the more niche influencers.
3. Just Say No
The brand-influencer relationship is only going to be successful (and long-lasting) if both parties are honest and forthcoming. If a brand experiences sticker shock from a potential influencer, they should make sure to understand exactly what they’re paying for, whether it’s reach, engagement or notoriety. Or, move on to the next guy. If this keeps up, why wouldn’t influencers continue to raise their rates if somebody is willing to pay them?
Somebody has to cry uncle, and since the brands are pulling the purse strings, they are in more effective position to do so. Paying astronomical influencer prices will not get them the needed ROI, and pretty soon, they won’t be buying into influencer marketing at all, in every sense of the phrase. Perhaps influencers are enjoying the increase in paycheck right now, but it won’t be as fun when the requests stop coming in and brands have moved on. Keeping expectations clear and reasonable from the start will help keep influencer marketing an essential component of a successful digital strategy.