I work for an e-commerce beauty company that has built its success on revenue-driven influencer marketing. In the beginning of the brand’s life five years ago, one of my colleagues suggested to the CEO that we try selling our products through YouTubers. From that suggestion, we’ve scaled our influencer marketing team to a level that generates millions of dollars in sales every month. However, this success of this marketing strategy is no secret, and has steadily become increasingly saturated.
To give a bit of perspective, in 2015 there were just 190 influencer marketing focused platforms and agencies — a number that has since quadrupled over the course of less than five years. What was a $1.7 billion industry in 2016 (1) is projected to become a $15 billion dollar industry by year 2022 (2). That’s because it works — brands estimate an average of $5.20 earned media value for every $1 spent on influencer marketing (1).
Mass amounts of businesses learning about this technique of leveraging social media influencers has created some friction for brands like the one that I work for, which has depended on this strategy for so long. In fact, one study reports that 86% of brands say they plan to allot a portion of their budget to influencer marketing, up from 37% in 2017 (1). For the first year since its inception, my company did not see growth month over month this year until Q4. We have attributed this to influencers’ rates going up, and engagement of some of our top influencers going down. In order to return to a profitable place, we needed to be strategic, and take our years of knowledge in influencer marketing and put it to work. Because we were such early adopters of this strategy, we had a lot of prior experience to learn from, putting us at an advantage over other companies who may not really know what they are doing. This failure to “do their homework” has contributed to 25% of brands reporting a loss in their approach to influencer marketing.
As in any facet of a marketing strategy, it is important to be vigilant and agile when it comes to influencer marketing. Although the saturation in the industry has created some problems for brands, those with strategic and data-driven approaches have been able to make it work, and will continue to do so as they pivot with the changes. It’s predicted that we will start to see a rise in micro and even CGI influencers in the near future (3). However, the popularity of social media and the effectiveness of influencers promises that influencer marketing is not going anywhere.