Influencer marketing can unlock new pathways for brands to interact with their target audience.
Influencer marketing has become a multibillion dollar industry, with some marketers putting hundreds of thousands into the online personalities to drive massive results. Consumers have become wary of brands, now relying more heavily on influencers to make their next purchase. How can marketers add influencers into their marketing mix to drive massive growth as seen in the cosmetics industry?
Influencer marketing spending on the rise
Spending on influencer marketing in the United States has grown exponentially during the 2020s. In 2019, spending on influencer marketing reached $2.42 billion, growing to $2.9 billion in 2020. This figure increased by one billion to $3.9 billion in 2021, with estimates predicting that in 2024, influencer budgets would have increased to $7.14 billion.
In its 2024 Influencer Marketing Benchmark Report, the Influencer Marketing Hub found that the influencer economy was expected to balloon to $24 billion by the end of 2024. The survey, which was conducted among 3,000 people, of which 41.9 percent worked at marketing agencies and 22.3 percent considered themselves brand representatives and 5 percent working at PR-agencies, revealed that influencer marketing firmly rooted itself in the world of marketing.
A majority of respondents (59.4 percent) noted they expected to increase their influencer marketing budgets over the course of 2024. A minority, representing 9.3 percent, planned to decrease their influencer marketing budgets. When selecting influencers, those in charge favored working with nano influencers, representing 44 percent, followed by 26 percent who liked working with micro influencers, 17 percent favored macro-influencers and a minority of 13 percent opted for celebrities.
One might argue that there’s a selection bias based on the available budget, as a majority of the respondents only had access to less than $10,000 for influencer campaigns, representing 47.4 percent over the 2024 period. 8.3 percent of respondents stated planning to spend between $100k to $500k on influencer advertising. Despite the majority of marketers allocating a modest budget, a notable 14.5 percent would spend over $500k on influencer marketing over 2024.
All in on Instagram
Influencer campaigns run across multiple channels, but according to an Insider Intelligence report by eMarketer, most of the budget available flows to Instagram. In 2024, spending by US marketers on Instagram was expected to grow to $2.21 billion, an increase from the $1.95 billion the year prior. TikTok was also catching up. In 2023, advertisers spent $989.6 million on influencers in 2023. This number grew sharply to $1.25 billion in 2024. YouTube surpassed the $1 billion mark in 2024, coming from $962 million in 2023. Facebook, despite its tainted reputation, is still seeing large interest from marketers, who increased their budget from $869 million in 2023 to $1 billion in 2024.
Across Instagram, sponsored Instagram feed posts are used the most by US creators to promote paid content. Instagram feed posts made up 98.4 percent of all sponsored content, followed by Instagram Stories, which accounted for 98.1 percent. Instagram Reels saw high pick-up, representing 98 percent of all sponsored content.
On YouTube, the Shorts format outperformed YouTube videos, representing 62.6 percent and 58.9 percent respectively. While the difference might be marginal, it’s interesting to see that Shorts has seen such rapid growth since its introduction. As to why it has seen such adoption isn’t clarified by eMarketer, but one might argue the short form content allows for quick promotion and serves a complementary role to full length video content.
Snapchat left behind
Interestingly enough, and which comes as a surprise to those working in the field, Snapchat is virtually non-existent. In 2023, influencers only attracted $40.5 million, with the number only slightly increasing to $41.0 million in 2024. The reasons as to why Snap is unable to connect brands and influencers are multifaceted.
In a November 2023 eMarketer podcast, columnist for eMarketer Jasmine Enberg, commented that Snap has to roll-out better tools across Snapchat to foster collaboration between brands and creators. This is especially important for smaller creators, who are more dependent on brand deals, she added. The failure of Snapchat to capture the attention of brands and keep influencers on board is not a new phenomenon.
Already in February 2017, Digiday reported that Snapchat failed to keep influencers on the platform. A lot of the problems seem to boil down to poor measuring features and the way Snapchat treats its content creators. Riihimaki told Digiday she has no idea how many followers she has and where they are coming from. This is especially important for creators who want to secure brand deals within their respective categories.
Graphic designer, Cyrene Quiamco, who is an avid user of the platform, commented that Snapchat treats every creator as an influencer. While this promotes creativity among creators, creating an equal playing field, simultaneously, not all users want to create content. There should be a clear consumer creator distinction on the platform. This was in stark contrast to Snap’s primary competitors such as YouTube who were heavily investing in the creator economy, bringing exclusive tools to heavy platform users.
Consumers trust influencers
An important consideration to lean into influencer marketing is the high trust they are able to generate among their audience. In May 2022, a survey from Oracle and Brent Leary, partner, CRM Essentials, found that 37 percent of U.S consumers aged 18 to 80, preferred social media influencers over brands, with Gen Z being two times more receptive to influencer recommendations than Boomers.
Influencers were also a strong gateway for brands to create product awareness. The survey found that 28 percent of consumers discover new products and brands through influencers, with Gen Z discovering 32 percent of products and brands through influencers. Television advertising had taken a backseat, with only 13 percent of respondents saying they discover new goods and services through traditional TV campaigns.
Broken down by channel, the survey found that YouTube enjoyed the highest popularity, with 21 percent of consumers following influencers on the platform. This doesn’t mean that YouTube is dominant among all age groups. Among Gen Z respondents, 25 percent favored TikTok, followed by 23 percent favoring YouTube and 22 percent choosing Instagram. Social media influencers enjoyed far less traction with Boomers, with only 5 percent following influencers on TikTok, 15 percent YouTube and 23 percent saying Facebook was the platform of their choice.
Partner at CRM Essentials, Brent Leary, commented that Millenials and Gen Z extend their relationships across platforms. A major change compared to their parents. This drastically changes the trust dynamic, which trickles down to all facets of life. From learning, shopping to relationship building, Leary added. The study showed that brands need to rethink how they interact with their target audience, going beyond the tried and tested channels of days past.
Influencing purchase behavior
These results were reinforced in a November 2022 survey publication by Pew Research among 6,034 U.S. adults, the researchers found that through the emergence of social media influencers, buying decisions are, for lack of a better word, influenced. A total of 40 percent of respondents followed influencers or content creators on social media. 30 percent of the respondents said they have made a purchase based on a recommendation made by an influencer or content creator through a social media post.
Women are most receptive to social media influencers, with 36 percent of women indicating they have made purchases based on a recommendation from an online personality. This is in contrast to 21 percent of male respondents. When divided by age group, the majority of 18 to 29 year olds (72 percent) followed influencers or content creators on social media. 41 percent of those aged within this demographic have made a purchase based on a recommendation by either an influencer or social media content creator. Their older counterparts, especially the 65 and over demographic, rarely followed social media personalities.
Zooming in on the 18 to 29 year old bracket, a large majority of women follow influencers and social media content creators, accounting for 77 percent within this demographic. A lot of men also follow influencers, but represent a smaller group with 67 percent. With the strong presence of influencers in women’s social media feeds, this immediately translates into purchasing behavior, with 50 percent of women stating they’ve made a purchase through a recommendation made by an online personality.
These results are in line with findings from CRM Essentials, who conducted a survey related to the topic just a few months earlier. Hence, it won’t come as a surprise that visual heavy products like make-up have caught the attention of cosmetics companies who’ve seen impressive results by partnering up with social media influencers.
In 2023, Matter Communications found that consumers trust influencers when making new purchases. The survey, set out among 1,000 U.S. consumers, found that 69 percent of respondents are likely to trust a friend, family member or influencer when receiving a product or service recommendation over communication from a brand.
Respondents said they trust influencers because they are relatable personalities, they are experts in their field, have fun personalities and display aspirational characteristics. Only a small subsection, 11 percent, preferred celebrity influencers. Matter Communications noted that this was a significant decline from the 2020 survey, where between 17 to 22 percent still trusted celebrities for their next purchase.
Building relationships with influencers
Trust is an important factor for brands to explore deals with influencers. However, while the influencers themselves might ooze trust, this doesn’t mean this is automatically caked in during a campaign. A lot of influencer marketing success relies on a core understanding of the influencer’s audience and the metrics that measure campaign effectiveness.
In April 2019, Professor at the Institut Supérieur de Gestion in Paris, France, Alice Audrezet and professor at IESEG School of Management in Paris, France, Gwarlann de Kerviler, outlined how brands could successfully build relationships with influencers. The heightened interest by brands in influencers was rising as consumers started to distrust companies en masse, with influencers being a creative way to move past the walls customers had put around themselves. But a lot still went wrong as marketers ventured into the influencer jungle.
Both noted that marketers see influencers as an extension to their low-cost social media campaigns. The influencer is just a cog in the marketing wheel to drive additional sales through increased product awareness. Selection of influencers follows the same thought process. They are selected based on audience size and selected on a per campaign basis. A set of metrics is predefined and the performance of the influencer is assessed along those lines. If the influencer’s content doesn’t meet the KPI’s, marketers move onto the next.
Admittedly, while this is an oversimplification, there’s a lot of truth behind the process. During the early days of influencer marketing, it was difficult to assess which influencer was genuine and whether it would be a good fit for the brand and the message. This was especially true for digital goods and services, as they provide little tangible material to drive the message home. In hindsight, storytelling would’ve been the better approach for certain product categories.
However, a lot has changed since the early days. Audrezet and de Kerviler pointed out that influencers have since then professionalized their operations, treating companies more like partners than one-off deals. Marion, who is a lifestyle influencer and at the time boasting 129,000 followers on Instagram, highlighted that she carefully scans incoming emails. She looks at the salutation and observes how well the sender is with her content.
Marketers therefore should take great care when selecting and approaching influencers, treating them like ambassadors for the brand. Audrezet and de Kerviler point out British fashion retailer Asos, who put influencers front and center of its brand strategy. These online personalities represent a wide range of target audiences. Influencers who collaborate with Asos are called ‘insiders’ signaling their importance to the fashion retailer.
Making influencer marketing work
Pouring money into influencers and making a good offer to convince a social media personality to decide to work with you is but one part of the equation. A lot more goes into making influencer marketing work for your brand. In a November 2022 Harvard Business Review article, Assistant Professor in Marketing at the Department of Management and Marketing, Hong Kong Polytechnic University, Fine F. Leung and her colleagues found that many brands fail to harness the full potential of influencers when partnering up.
The team analyzed 5,800 influencer marketing posts on the Chinese social media platform Weibo, across 2,412 influencers, working for 861 brands across 22 different product categories. The cost per post ranged between $200 to $100,000 per post. While the analysis might have been conducted on a Chinese social media platform, it reveals interesting findings into the effectiveness of influencer campaigns.
Influencer post effectiveness can vary substantially based on factors such as numbers of followers, posting frequency, follower-brand fit and originality. The posts themselves score best when tipping into positivity and link building. Paradoxically, new product announcements severely reduce the impact of the campaign. This means that while previous surveys have found that consumers can be influenced toward a certain purchase, new products fall flat compared to established products.
The team found that brands who partnered with larger influencers experienced better results. Influencers with larger follower counts are able to reach more audiences and drive higher engagement. Brands who opted to spend the extra dollar on popular influencers, saw 9.2 percent greater ROI. It must be said that brands will have to do their due diligence and scan the account for credibility and fake follower count. Something Estée Lauder is doing when selecting influencers for their campaigns.
This extends to influencer activity. Influencers who fail to post regularly, are unable to generate engagement among their followers, unable to build the trust relationship with their audiences. Trust among consumers is the primary motive for brands to add influencers to their marketing strategies. If this aspect is absent, the campaign is destined to fail. The researchers found that campaign ROI improved by 53.8 percent when selecting influencers that have a frequent post history.
The right message
Follower-Brand fit is equally as important as selecting the right audience. This might seem obvious, but as a marketer it’s easy to be tempted by large numbers and an attractive social presence, selecting an influencer based on these metrics alone. However, as obvious as it might seem, launching an ad for a gaming PC on a interior design channel, will lead to confusion among followers and drive little to no engagement.
The team found that when a poor follower-brand fit is present, ROI will decrease by 7.9 percent. The researchers noted that promotional posts perform better when the influencer has a track record of original content. They drive more engagement with their audience, grab more attention and message expertise and authenticity.
Brands who partnered with these influencers saw better returns, seeing their average ROI increase by 15.5 percent. It’s important to point out that the message itself has to be of a positive nature. The team noted that while this is crucial for success, getting the sentiment right, can be difficult. Especially when messages are framed too positively, they tend to backfire.
Influencer marketing strategy
Influencer marketing has experienced significant growth in recent years, especially on platforms such as Instagram and TikTok. Large companies have seen massive success, with the cosmetics and fashion industry leaning heavily into this novel form of advertising. But, the success of conglomerates across these industries is not the benchmark. Their vast resources allow them to curate and tailor campaigns, casting a wide net across multiple audiences and capturing significant momentum. Momentum that already accelerates the existing momentum.
Marketers who work with smaller budgets however, or don’t have the massive brand reach from the brands they draw their inspiration from, have to carefully curate their influencer marketing efforts. At the foundation lies building long lasting relationships with online personalities and not hoping for a big splash with a one-off campaign that drains all the available budget. Marketers should be aware of the product-influencer fit. A common mistake for many who just start out with influencer marketing.
Metrics are also just as foundational and can make or break influencer marketing for good within an organization. Following the right metrics, across all hierarchical layers of the company, is essential to onboard and engage decision makers within the organization. Once these conditions are met, influencer marketing can be a powerful tool and amplify sales like no other channel has done before.
Variable rates
However, it’s important that brands allocate the required funding to generate sales and boost the content to amplify its effect. Like the team of Leung showed, prices vary wildly. Shopify highlighted in a February 2024 blog post, that rates can vary heavily per channel and per influencer. Influencers on Instagram with an upward of 10,000 followers charged an average rate of $100 per post. These figures grow quickly as the follower count grows.
Micro-influencers on Instagram, who have between 10,000 to 50,000 followers tend to charge $100 to $500 per post. Moving into Macro-influencers, the rates go up to between $5,000 to $10,000 per Instagram post and Mega-influencers have a starting price per post of $10,000. TikTok influencer rates tend to be about 4 times lower compared to Instagram, while YouTube rates increase exponentially when opting for Mega-influencers who have over 1 million followers. Through these accounts a deal can start at $20,000.
Marketers will have to strike a balance between how they spread their budget across multiple channels and influencers. Starting with only nano or micro-influencers might seem the most sensible thing to do when operating on a shoe-string budget, but the odds of turning a strong return on investment are vastly lower than adding Mid-tier influencers into the mix. On the flipside, relying too heavily on one Mega-influencer is risky. The most needs to be timed just right and the message has to strike a chord with the audience.
