The Instagramming and unboxing mass of inspirational lifestyle gurus known as influencers are only becoming increasingly central to the marketing strategies of fashion and luxury brands in 2018.
There are still frustrations, as brands figure out how to track the results of campaigns and sponsored posts, including conversions and the value in engagement. But as data tools become more sophisticated and platforms start to share more insight with both brands and influencers, brand strategies are maturing. The good news: As the space has become more established, power has shifted in favor of the brands, who have gotten smarter than to spend hundreds of thousands of dollars on an Instagram post from an influencer with a lot of followers.
“As influencer marketing continues to mature, it’s becoming more and more measurable,” said Mike Froggatt, director of intelligence at L2. “Brands are relying less on cherry-picking from a list of influencers with big follower counts, and throwing money at them to see what does and doesn’t stick, and starting to utilize more data to find the right fit and actual benefits.”
As brands continue to funnel money into this space (according to L2 research, the influencer marketing industry is estimated to exceed $2 billion in contract value by 2019), expect to see brands righting the power imbalance, and platforms like Instagram and Snapchat building tools to get a piece of the pie. What’s more, there will be a rise of the influencer roster — a group of social media personalities a brand keeps on rotation, in order to create more transparency and drive clearer results in the murky influencer marketing space.
The roster is the influencer “holy grail”
Brands have been burned by dropping a lot of money on one-off influencer partnerships that made little impact. The real value, brands are finding, is in recruiting a strong group of influencers — micro-influencers up to supermodel-caliber influencers, depending on budget size — who are repeatedly called on for long-term campaigns, event promotions and sponsored posts. The more recognizable the group’s association becomes with a brand, the better.
“That’s the holy grail: relying on a stable of influencers that have a closer relationship with the brand,” said Froggatt. “It benefits everyone to have a long-term relationship, not a series of one-offs.”
Froggatt pointed to Victoria’s Secret Angels as the most distinguishable influencer roster, but smaller brands can take advantage of this setup, as well. Microinfluencer Cyndii Yu frequently works with athletic apparel startup Alala, both appearing on the brand’s account and posting photos of herself in the brand’s gear.
“We work with a lot of NYC-based influencers, and that’s how we connect with people the most. We do a fair number of immersive events to get to know them better, like inviting them to take classes with us, where we connect with them one-on-one,” said Danise Lee, the founder of luxury women’s activewear brand Alala. “Everyone gets bombarded with so many product requests, it helps us stand out when they have a face to put to the brand. We spend a lot of time developing those relationships.”
This strategy requires brands to play the long game and carefully vet the influencers they want to recruit on their teams. But the more time is spent on making sure the influencer is right with the brand, the higher lift in engagement and sales they’ll see down the line. Overall, brands might end up devoting more marketing dollars to influencer relationships, but they won’t be flushing a bulk spend on one influencer for one Instagram.
“Total spend might go up, but individual spend will go down,” said Gil Eyal, the CEO of HyprBrands, a platform that serves as an influencer directory for brands. “The audience wants to see that the influencer really likes the product and is using it in the long-term. So the brands that will win are the ones creating their own influencer rosters and activating those rosters again and again. Especially in the crowded world of micro-influencers, you want to build an ongoing relationship so you’re not starting over every time.”
Brands are laying out clear expectations before paying up
Measuring the success of an influencer campaign or post will become less murky as brands establish what they want out of their influencer partnerships at the beginning — and work to actually track measurements.
“Blindly following the number of followers an influencer has is over. Brands are focusing on the kind of return they’re going to get,” said Eyal. “We’re shifting from an economy of likes and shares, to cost-per-click and conversion.”
According to Eyal, Amazon is testing a tactic that only pays an influencer once they drive a certain number of purchases through affiliate links, not before. Eyal predicts more big brands will head in that direction. Smaller brands are managing expectations around the value of raising awareness with influencers, even if that doesn’t lead to sales.
Nadia McCarthy Kahane, the CEO of online jewelry retailer Stone & Strand, said that a partnership with two Instagram influencers paid off in brand awareness, but didn’t drive sales. That’s harder for a big brand with levels of executives to explain a budget to, but smaller brands are taking advantage of more nimble collaborations.
“If we measured success of the collection on response, it had a great reception,” said McCarthy Kahane. “We were looking to raise awareness, get feedback from these followers. It hasn’t done super well from a sales perspective.”
From the influencer perspective, knowing a brand’s intentions off the bat helps them comb through and find the best fits for partnerships.
“For micro-influencers especially, it all comes down to picking and choosing the right partnerships,” said Froggatt. “On the plus side, they have an actual live feedback loop with their audience, who knows them and will give their feedback. So if a partnership doesn’t work, they’ll know that right away. They can read the tea leaves of their audiences much better than a group of brand marketers sitting around, figuring out the next hottest thing.”
Platforms will be pulling more strings
As spend on the influencer marketing space continues to rise, the platforms that house these partnerships — like Instagram, YouTube and Snapchat — will look for ways to get a cut.
“It’s important to note that platforms are not neutral players in this space, and they are looking to innovate and make money from it,” said Froggatt. “I think we’ll see more platform strategies around this.”
Instagram inserted itself in the middle of paid posts when it gave brands and influencers the option last year to denote that an Instagram had been part of a paid partnership, with a geotag. That tag wasn’t just a disclosure mechanism: Posts using that paid partnership tag also pulled up data around engagement and click-throughs that both brands and influencers could access.
That can be valuable, as brands are still searching for the best data management tools for influencer marketing. But it also means that influencer marketing could end up costing more for the brands.
“Influencer marketing has grown a lot, but brands still haven’t fully jumped in with both feet,” said Evan Asano, the CEO of the influencer marketing agency Mediakix. “Brands are going to end up putting a lot more money into this space, in more creative ways.”