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Since 2016 the influencer marketing industry has nearly quadrupled in size and value. But is this marketing trend turned $6.5 billion industry the right fit for your business? Here are the pros and cons of adding influencer marketing to your small business marketing mix.
Is Influencer Marketing the New Way to Grow Your Small Business?
Small businesses need effective marketing strategies more than ever as many continue to cope with COVID-19 reopening regulations. Luckily, the rise of smart devices, social media, and more have created opportunities for businesses to engage in new digital marketing tactics.
Influencer marketing campaigns are a new strategy that has proven to help businesses grow in a number of ways. From small businesses aiming to increase brand awareness, to established corporations looking to reach new audiences, the influencer marketing strategy allows companies to employ social media marketing and real people to share information and build lasting relationships with their client base.
Here is all you need to know about bringing influencer marketing to your business.
What is Influencer Marketing?
Influencer marketing is an online marketing strategy that allows businesses to increase brand awareness and promote products or services through partnerships with popular social media users and bloggers, also known as “influencers.” Influencers typically have a large and loyal audience that actively engages with the content they post on media platforms such as Twitter, Facebook, Instagram, or LinkedIn. When partnering with these individuals to create influencer campaigns, brands can access a variety of different audiences to build their reputation and increase sales.
There are several kinds of influencers, including but not limited to: brand advocates, micro-influencers, and macro-influencers or celebrities. Depending on which type of influencer they partner with a business can achieve a different result, so choosing the right influencers is essential. For example, influencers with a large follower base can promote products to a vast amount of people, whereas influencers with a smaller following often cater to a more niche and loyal audience.
Types of Influencers
- Brand Advocates. Although these influencers are not paid, and may not have a large following, they are still quite useful for increasing brand awareness. Brand advocates are usually real users of a company’s product and will post about their experiences without monetary or VIP incentives. As they are typically everyday consumers, they may not have any expertise in the industry, and will not have a formal business partnership with a brand.
The Pros: Brand advocates are usually trustworthy and loyal to a brand. Because they are not paid to promote products and services, they often post because they have genuinely enjoyed their experience, resulting in consumers trusting their opinions.
The Cons: Brand advocates may not be influential enough to drive engagement with a brand. They often do not have knowledge about topics that relevant to a company’s particular industry. If a brand advocate doesn’t have credibility in the field they are promoting or have sway with their followers, they may not bring in many new customers.
An Example: In 2013, Starbucks conducted an advocate marketing campaign called “Tweet-A-Coffee.” The company allowed customers to buy a $5 gift card for their friends through Twitter, where they would Tweet the @tweetacoffee handle along with the card recipient’s own handle. Additionally, the first 100,000 people who joined the program also received a $5 gift card themselves, creating a greater incentive for brand advocates to participate. The campaign generated close to $180,000 in sales. Furthermore, Starbucks was able to identify loyal brand advocates and potential customers among participants.
- Micro-Influencers. These influencers have an average of around 1000 to 50,000 social media followers, engaging with nearly 25% of them. Their following usually consists of a niche audience, as they typically focus on specific topics or product types. Some micro-influencers may have accounts or blogs centered around health and fitness, beauty, and even technology, creating posts that review or promote products that are relevant to their field.
The Pros: Micro-influencers often have more active and engaged followers, as they focus on specific topics for a niche audience. They also charge lower rates for posting sponsored content, meaning that a business can partner with multiple micro-influencers as opposed to one larger or macro-influencer.
The Cons: As they have a smaller following, micro-influencers may not reach as large of an audience as macro-influencers and celebrities. Furthermore, they do not always have the same name recognition and popularity as someone like Kim Kardashian or Cristiano Ronaldo, so they may not inspire the same impact on driving consumer actions and brand reception.
An Example: Beauty micro-influencer Lena Aleew uses her Instagram page to showcase unique makeup looks using a variety of products. Different brands send her samples of their cosmetics, which she then posts photos and videos of her trying out. Because makeup users and fans comprise a large portion of Aleew’s follower base, they will often be viewing her page to find new and effective products, as she is a credible resource within the industry.
- Macro-Influencers and Celebrities. These influencers are the most well-known and have the largest audiences, with their number of followers ranging between 100,000 to several million. They are often celebrities, so they may charge a larger rate for the content they post. Macro-influencers can often create very high-quality content because they have access to the best creative resources and tools. They also are the most experienced in marketing campaigns; working with brands is often their full-time job, so they aim to maintain the highest level of professionalism.
The Pros: Macro-influencers have large audiences and a high level of name recognition, so brands may only need to partner with one or a few individuals to increase awareness and increase sales. As macro-influencers are fewer and far between, many times it is easier to identify and find them rather than sorting through the vast array of micro-influencer profiles.
The Cons: Partnering with macro-influencers is the most expensive form of influencer marketing, as rates can go as high as several thousand dollars per post. Macro-influencers may already be partnered with competitor brands or have promoted products that are not in line with a brand image. In addition, many are concerned about their own personal image and will demand that the content they create adheres to that. Although they are reaching a larger audience, it may not be the right audience, so engagement rates will not be as high as those who focus on a niche community like many micro-influencers do.
An Example: Online poker service PokerStars partnered with comedian Kevin Hart and athlete Usain Bolt to create a sponsored video post on Instagram. The video shows Hart and Bolt competing to eat spicy chicken wings. Through this campaign, the brand surprised audiences with an hilarious duo, identifying PokerStars as a pop culture conscious brand. The post amassed over 130,000 likes and close to two million views, generating a major increase in brand awareness.
What are the Costs of Influencer Marketing?
The general formula for social media influencer compensation is the following:
$100 x 10,000 followers + extras = total rate
This means that for every 10,000 followers, each influencer will charge roughly $100. For example, a macro-influencer or celebrity with one million followers can charge $10,000 or more for a post. But, a micro-influencer with only 13,000 followers could have a rate that is less than $200 per post, enabling businesses create marketing campaigns with many different micro-influencers. Below are a few examples of micro-influencer rates across different digital and social media platforms:
Sponsored blog posts:
- 96% charge $1,000 or less per post
- 87% charge $500 or less per post
- 96% charge $500 or less
- 90% charge $250 or less
- 96% charge $200 or less
- 90% charge $150 or less
Not all influencers require monetary compensation for each piece of content they post. Some will accept VIP incentives such as free products or discounts as payment for their services, while others will work on commission, receiving payment based on the sales that their posts generate. Depending on a brand’s marketing budget, these alternate methods of payment may be a more logical choice.
How to Start Your Influencer Marketing Program
There are many ways that businesses can connect with influencers and begin partnerships. One of the ways is through communicating with the brand’s existing audience. Consistent and loyal customers may use social networks and be members of an industry’s online community. Businesses can call their customers or reach out via email to survey who they follow on social media, which platforms they tend to use, and the kinds of content they enjoy seeing the most.
Another method of finding influencers is by researching competitors. Businesses can look at other companies within the industry to see which influencers they typically use for their own campaigns. Then, they can find these influencers’ competitors that have similar target audiences and partner with them.
A third method of creating new partnerships with influencers is by using a tool or a third-party service. These sites will connect businesses with influencers that are available and seeking long-term partnerships. They will also organize influencer profiles by name, industry, fan base size, social media channels and more. Below is a list of reputable databases and search engines that provide a broad selection of influencers:
In addition to starting direct relationships with influencers, businesses can enter co-marketing partnerships with other brands. Co-marketing partnerships enable companies to work with brands that are in the same industry to gain exposure for both parties. Brands can co-create content, collaborate on market research and analysis, write for industry publications, and more. This provides a more cost-effective way of networking and creating brand awareness, similar to the role of an influencer.
Influencer marketing may not be the right tool for all businesses, but it certainly has a proven rate of success. Many companies that partner with influencers see a large return on investment; they experience increases in overall brand awareness, greater amounts of site hits, and higher rates of purchase. Below are a few useful statistics to keep in mind:
- 89% of marketers say that the ROI from influencer marketing is comparable or higher to traditional marketing efforts
- 49% of consumers depend on influencer recommendations
- Businesses generate an average of $5.20 for every $1.00 invested in influencer marketing
- 70% of teenage YouTube subscribers trust the opinions of influencers over regular celebrities