Millennials are a tough market to nail down and marketers have been collectively scratching their heads since the demographic became economically independent, digging for a catch-all strategy for the phone-obsessed, advertisement-sceptical whippersnappers.
Digital and social influencers may be the answer to this question, however. Social influence theory has been around since the 1700s, but the modern interpretation of the strategy uses non-celebrities – divided into micro, middle, and macro levels – who share a product on social media in an implicit manner, bypassing the millennial distrust of traditional advertising.
In a world of manufactured clout and internet fame, influencers are growing more and more in unregulated power, meaning the blooming avenue for influencer marketing does come with its risks and limitations.
Cases of rising tensions between marketers and influencers have been growing for a while, so a question remains: where does the power lie? How influential is social media? How much power do influencers really have?
Influence Pays
Paying influencers depends wholly on their following. A micro-influencer – who has 10,000 followers – is typically paid anywhere from £100-500 per post. Macro influencers of 100K+ followers, on the other hand, can ask for figures around £1,000. Kylie Jenner, who has 120M followers on Instagram, has been known to quote a price of £750,000 for a sponsored post!
Despite that eye-watering figure, having Jenner on your side pays. The entrepreneur’s economic power can be seen in her apparent decimation of Snapchat’s stock with one errant tweet, where she said the following:
sooo does anyone else not open Snapchat anymore? Or is it just me… ugh this is so sad.
— Kylie Jenner (@KylieJenner) February 21, 2018
Jenner, who cultivated most of her fame on the platform, ended up facilitating a market move that wiped $1 billion worth of stock from Snapchat, six per cent of its total value. That, in its purest form, was influencer power beyond anything a marketing agency, or even a corporation, could foresee or cause.
Or Was It All A Coincidence…
A lot has been made of Jenner’s impact on Snapchat’s blip, but the narrative that she impacted Snapchat alone may be wide of the mark. The saga proved how influential she is on social media, but not necessarily her impact on the stock exchange.
Snapchat’s stock returned to normal by February 22nd. Plus, its stock was already forecasted for a decline regardless. What was originally seen as a high watermark of influencer impact may have been a coincidence, but Jenner’s power in terms of gains cannot be understated.
Back in August, Jenner posted four Snapchat stories of her wearing a dress by a small clothing label called Johansen. The consequence: an overnight $4 million boost to revenue for the label.
Generally, as Jenner shows, influencers pay. However, this isn’t true across the board as it is markedly clear that the Kardashians/Jenners are outliers. For the majority of influencers, marketers can estimate ROI from influencer marketing, but cannot guarantee it in raw figures.
Why is this? Well, marketers cannot guarantee what their ROI is exactly, as influencer marketing is renowned for being difficult to track. With other types of marketing, it’s easy to calculate a cost and return, but finding exact figures can be complicated with influencers as there are so many interconnecting factors at play.
Investment Returned?
By and large, influencer marketing is estimated to return $7.65 per dollar spent, but the point remains: it’s difficult for businesses to know their ROI exactly.
Despite this, marketing agencies are increasing the amount of funds towards influencers. Mobile Marketer states that 92 per cent of marketers said they plan to increase budgets for Instagram influencer programs, while, according to v3b, 79 per cent of marketers said they have trouble determining the exact ROI. Effectively, marketers are banking on a strategy of firing from the hip.
Businesses have no way to accurately measure the success of a relationship with influencers, instead relying on rough estimates and guesswork. Dealing in abstracts means strained business relationships, especially when influencers have the upper hand.
Trouble In Paradise
A marketer being left in the dark leaves influencers in more power, as seen by a recent court case with actor and influencer Luka Sabbat, who was sued by Snapchat for not promoting its Spectacles feature enough.
Despite being paid roughly $60,000 to make four unique posts on Instagram about Spectacles, Sabbat failed to live up to the deal, leading to him being sued.
This is one of many cases drip-feeding through the court systems, resulting from marketers being unable to see their ROI and influencers failing to live up to commitments.
The Shift To Micro-Influencers
Micro-influencers are becoming the way forward for influencer marketing, as larger personalities tend to come with additional baggage. Micro-influencers have a smaller following, smaller costs and, generally, a much better ROI in terms of percentages.
According to Expertcity, 82 per cent of purchasers take recommendations from their favourite micro-influencers. Influencers needn’t be reserved for the dizzy heights and problematic business procedures of Hollywood.
A micro-influencer tends to have a more committed following, meaning when they advertise a product, their audience has a greater chance of believing their message. Typically, according to PerformanceIn, micro-influencers, with a following up to 100k, have been known to drive eight-times more engagement than celebrities do.
Larger influencers are beginning to scupper due to the low per cent of ROI and the high-risk associated with costs, lack of communication, and general apathy to commitments.
So, Is Influencer Marketing Going Downhill?
Influencer marketing is still the go-to for effective advertisement, but larger influencers are starting to butt heads with marketers-at-large. While ROI is normally guaranteed, the relative transparency and smaller risk of micro-influencers is becoming more attractive to marketers as it’s a fairer transaction.
Generally, the power lies with influencers, but marketers do have options. Social influence psychology is a powerful tool, whether someone has 10,000 followers or 100 million. If firms take their eyes off the impressive numbers of macro influencers, micro may be the way of the future.
Want to stay ahead of the influencer curve and learn which influencers will guarantee a ROI? Then brush-up on our digital marketing case studies; we offer comprehensive advice on how to bank on influencer marketing the smart way.