Does Influencer Marketing actually work? (An outsider’s experience in the world of marketing - Part II)

Last week I did a post about my experience as an absolute beginner in the wide, wide world of digital marketing. I’ve recently taken over as the CEO of a marketing-tech company so I’ve been trying to get my bearings by looking at the data, interviewing CMOs, brand managers, agencies, etc.  

Note: With these posts, it may seem that I’m trashing all forms of marketing - I’m really not. I’m just trying to step back from the hype and jargon and understand how humans make decisions about which products to buy and how to live their lives. Now, more than ever, we have infinite, instantly available, choices. I’m trying to start a conversation about how we REALLY choose.  

My post last week suggested that maybe, just maybe, the huge amount of cash that we throw at display ads (over $200 billion) has virtually no impact.  

I think I hit a nerve. Immediately I got a ton of comments and DMs from every corner of the industry. A few of them pointed out that I was a newbie and had no idea what I was talking about - fair enough. However, most of them were confirming that, from their personal experience, whatever meagre ROI that they were seeing pre-pandemic had just evaporated. One reader pointed me to a previously published story where P&G turned off their $200 million dollar spend on display ads and saw zero impact on sales. Another shared a story where facebook lied about reach numbers to boost their revenue - ouch!

So the follow up question I got the most was - "Okay, then smartypants, where DO we shift our spend. Is there a channel, a mechanism, or a technology that actually will help me increase sales?"  

Sorry. I wish I had an easy answer for you but I don’t - remember, I’m new here.   

I have, however, been digging into other marketing tactics that folks have used to some success. Content Marketing, for example, seems to have a fairly solid and measurable payoff (more about that later). The other big topic that I looked at was - Social Media Influencer Marketing.

Using famous people to promote your product is nothing new. Pre-internet we had creepy Michael Jackson pushing Coke (the soda), Bill Cosby (equally creepy) hawking Jello, and Orson Wells (drunk, fat, and hilariously) promoting (the virtually undrinkable) Paul Mason wine. But it was really the advent of social media and youtube that kicked things into high gear. 

The modern influencer trend got started in the early- to mid-2010s and has been on a tear ever since - growing at around 50% year over year to its $14B peak today.  

Size of the global Influencer Marketing Source

The term Social Media Influencer is a bit of a catch all that includes A-list movie and music stars as well as a newer category of folks that are primarily famous for just being famous. Consider someone like PewDiePie, who amassed millions of followers and millions of dollars by making wry commentary while playing video games (weird, I know). Then we had Paris Hilton, Kardashians (various), Gwyneth Paltrow, and on and on and on - a seemingly unending (and progressively diminishing) series of digital social butterflies who became media stars, often for the most bizarre of reasons.  

As you can see from the above graph, the money really started flowing as “Influencer Market” became a must-have line in every marketing budget. Initially the holy grail was follower count. As an influencer, the more people followed you on Instagram, the more money you could command from brands that were eager to piggyback on your fame. But, like most things, the profit motive caused some shenanigans and influencers found a way to artificially inflate their follower count. By 2019, it was estimated that 38% of influencers were using fake followers -a fraud that cost the industry $1.3 Billion.

So the focus shifted to include engagement: are people “engaging” with the shared content - are they commenting, liking, sharing, etc. “Engagement Rate” became the gold standard and this seems to be where we are today.

So, I guess it’s fair to ask - does it work? I hate to continually be the bearer of bad news but the answer seems to be: not so much, or at least not in any way that we could measure (sound familiar?)  

Consider the following stat: 75% of marketers currently employ influencer marketing activities, but only 36% consider those efforts effective and 19% actually admit they are ineffective. source.

A lot of this could be blamed on fraud and scandal (the Fyre Festival et al.) but I believe that there is something more elemental going on here. At its foundation - does seeing a famous person holding or using a product increase the likelihood that you’ll buy it?

Think about the relationship the average person has to a top influencer - let’s say CardiB. It’s more of a fan-to-follower thing - a one-to many relationship that’s not reciprocated in any meaningful way. When she poses holding a Reebok tennis shoe I know that she is getting paid to do it - she’s a professional influencer after all. Is that really going to motivate me to buy Reeboks? 

She may be able to muster great “engagement” but I think people are engaging with her and not really the shoe. I can’t find any proof that engagement rate is a reliable proxy for buying behavior.  

"As an industry, we’ve lost sight of the fact that social influencers are inherently inauthentic. Even if they’re true fans of your brand, the content they’re creating isn’t earned; it’s just a modern form of paid advertising and content creation." - Forbes

Obviously, this sort of thing works in some sectors better than others - I might identify with this or that media star and want to emulate them by buying the same swag. Maybe I’ll buy the same makeup as Taylor Swift because I like the way her face looks. The same is true for luxury goods, travel, lifestyle, fitness, etc. - sectors where the product reflect on the sort of person you are (or would like to be). But does this sort of motivation extend to the other 99% of products. Am I really going to buy this brand of car tire, butter, or diapers because Kanye is seen standing next to them?  

So we’re back to the conclusions of our previous post on display ads. Sure, a lot of people have seen the post but the amount of actual commercial behavior that’s been driven by it is in the realm of (to borrow a from a commenter) a “magic metric” that can’t be actually quantified. You need to just trust that it’s working and - please, please, please - keep spending.  

Next week I’m going to write about more recent developments in the Influencer Marketing space such as the stratification of “mega”, “macro”, “micro” and finally “nano” influencers. This “long tail'' progressively encompassed a larger number of influencers, each with a progressively smaller audience.  

It’s an interesting trend. Marketers have seemed to wake up to the fact that the success of an influencer campaign is in direct proportion how authentic the relationship is between the influencer and the thing they are promoting. So finding influencers that are more niche and who have a real connection to the product that predates and supersedes the promotion drives better results. Next week, we’ll talk about how this trend scales into the long tail of less- or non-famous people - regular people like you and me who have expertise in more specific areas. 

Thanks to all of you for your insightful comments last week. Please keep it up - I love hearing from you. Especially those of you who, like me, are trying to understand marketing from a more pragmatic standpoint.