What’s the return on investment of influencer marketing?
With over a third of marketers unable to calculate if their influencer activity is driving sales, brands need to clear up this murky sector of digital marketing in order to achieve real return on investment.
In fact, 38% of marketers say they are unable to tell whether influencer activity actually drives sales while 86% are unsure how influencers calculate their fees, according to a survey of 200 marketers conducted by Rakuten Marketing.
This lack of clarity means the potential for fraud is high. In August, influencer marketing agency Mediakix revealed it had conducted an investigation that lured four brands into deals with fake Instagram accounts, populated with stock photography and followed by users bought for $3-$8 per 1,000. The brands offered the fake influencers money, free products or both.
These findings fail to shock Michelle Stoodley, head of digital marketing at Benefit, who believes they accurately sum up the current state of play in influencer marketing.
“No one really quite knows what the best route to measure the impact of influencer marketing is,” she says.
“It’s probably the only thing in digital marketing that exploded before there’s been any real benchmark for success. It kind of goes against a lot of what digital marketing is normally about, which is numbers, data and tracking.”
Brand first, sales second
When it comes to analysing the impact of influencer marketing, the Rakuten Marketing research shows marketers typically look at improving brand reach, site traffic and brand awareness, before they consider the impact on sales.
Head of strategic partnerships at Time Inc, Lillian Betty, believes this is exactly how brands should approach their influencer strategy.
“It would be a mistake for any business to commoditise any partnership or campaign that has an influencer at the heart of it as it’s more than just shifting product. It’s about brand identity, keeping the right sort of company and ensuring your brand is being shown in its best light with the best partner,” she adds.
Influencer marketing is probably the part of the digital marketing world that has the least amount of measurement and reliability, so to put all your eggs in one basket would be quite risky.
Michelle Stoodley, Benefit
Over the past year brands have spent more than $1bn (£776.7m) on Instagram influencers according to Mediakik, which tracked the number of sponsored posts on the platform. It expects this figure to double by 2019.
Marketers are willing to pay more than £67,000 per video post with a YouTube influencer, rising to £75,000 for a single Facebook post by a celebrity influencer, according Rakuten Marketing’s research. Brands are also prepared to splash out £53,000 per Snapchat post by a big name influencer.
Far from looking to rein in their spending, 23% of marketers plan to increase their influencer spending by 30-50% over the next year.
This figure could rise further still if influencers are prepared to become more transparent. Half of marketers surveyed said they would invest more in influencers if their contribution to sales was transparent and reportable.
A further 47% confirmed they would pay more if they could see the influencer’s impact across the wider consumer purchasing journey, while 28% would be happy to increase their spend if payments were linked to sales.
If you pay a single influencer like Joe Wicks or Zoella it’s no different than paying a celeb to do a TV ad and quite often the public know they’ve been paid.
Andy Thompson, Iceland
In a bid to add clarity to the payment structure a cost per content model has been adopted by indaHash, a tech platform which connects brands to mid-tier influencers with 1,000 to 100,000 followers.
Brands put out a detailed brief onto the platform and are matched via algorithm to influencers, who then send back the image or video they have created for approval. Payment is made per piece of content, which brands can then use offline, on social, digital out-of-home or as part of their programmatic strategy.
“Brands need a lot of content for their consumers to absorb, so it’s about creating content that is fit for purpose and our influencers are used to creating content for social media platforms,” explains indaHash UK business director, David Saunders.
As the influencer sector becomes more established, however, prices across the board are rising in line with demand. The Rakuten Marketing data shows 19% of marketers have seen influencers increase their prices by 30-50% over the past year.
This tallies with the experience of beauty brand Benefit, which up until the start of this year did not pay influencers. Focused on building brand love, the strategy centred on forging one-on-one relationships with influencers through shared experiences and sending out new products in creative ways to catch their attention.
“Most influencers are a lot more savvy and as a lot are going down the paid route it’s something we’ve had to explore this year, but we’ve tried to do it in a way that is very considered.”
Stoodley admits that while sales would be the dream ROI for influencer marketing, the brand only really sees a massive uplift in sales when its products are featured by big hitters like beauty vlogger Zoella. That means that the focus is more on brand awareness and ensuring Benefit has a bigger share of voice than its competitors.
The brand’s loyal fanbase comes in via its ‘Friends with Benefit’ programme, which is open to micro-influencers with a social following of between 2,000 to 5,000. Once approved these brand fans gain access to a portal on the website where they can log in for exclusive content including product and event news.
Exploring the micro tier
Last year frozen food retailer Iceland ditched celebrities in favour of real people, tapping into a dedicated community of micro-influencers in a bid to change consumer perceptions. The decision was based on the company’s own research, which found that real mums trust messages from other mums above experts and brands.
“If you choose influencers who are like the man on the street then people are more likely to listen to them and be influenced by them and then hopefully go on and purchase,” says head of social communications, Andy Thompson.
“So while ROI is difficult, and I completely get that, you need is to have longer-term relationships.”
At the heart of the strategy was a year-long partnership with vlogging site Channel Mum, whose influencers created exclusive content featuring Iceland products.
On average mums within the Channel Mum community watched two minutes of branded content per video. On Facebook the videos hit a 55% retention rate, rising to 59% on YouTube.
According to a blind survey conducted by Channel Mum, Iceland’s approval ratings jumped from 10% to 80% after mums’ viewed vlogger-created content, a 72% increase above the agreed digital KPIs.
The retailer has since signed a 12-month exclusive deal with Channel Mum to support the latest phase of its ‘Power of Frozen’ campaign, comprising 54 vlogger-created videos and 50 shorter-form 30-second videos for Facebook and Instagram.
Thompson explains that the Channel Mum partnership is part of a wider, multi-tiered strategy starting with a TV ad campaign showing real families having their first experience of Iceland food. This is then followed up with exclusive video content created by the Channel Mum community.
Beneath this activity the marketing team identifies a number of foodie bloggers via social listening that resonate with its target audience, who are then taken to showcase events to learn more about Iceland products. The strategy is then topped off with paid social.
Thompson explains that having an integrated strategy enabled Iceland to hit a variety of customers with a consistent message anchored on the authenticity of micro-influencers.
“If you pay a single influencer like Joe Wicks or Zoella it’s no different than paying a celeb to do a TV ad and quite often the public know they’ve been paid, so they’re not massively into it,” Thompson adds.
“With Channel Mum we can work with 50 paid influencers on the roster from different walks of life – some are single mums, they are all from different ethic backgrounds and they have trust from their own audiences.”
Like Iceland, Benefit’s Stoodley believes brands should be focused on forging long-term relationships with influencers, finding people who are aligned to the brand ethos and whose content you could envisage working well on your site.
However, despite the obvious potential for exposure and engagement, putting all your spending into influencers is never a good idea.
“Influencer marketing is probably the part of the digital marketing world that has the least amount of measurement and reliability, so to put all your eggs in one basket would be quite risky,” says Stoodley.
“Also who knows where this part of the industry is going as brands start to pay influencers more and more? It can only go so far. So I think influencers should be a key part of every digital marketing strategy, but it shouldn’t be the only part.”
Adapted from an original article in Marketing Week