Much has been made of the recent U.S. Federal Trade Commission letter, dispatched to 90 celebrities and brand partners, clarifying the guidelines on endorsing products through social media and throwing a new spotlight on a huge–and rapidly growing–tactic in consumer engagement—influencer outreach.
This is certainly not a new issue in Europe—undisclosed influencer relationships with brands have been a concern for some time and even led to a prominent investigation in the U.K. by highly respected current affairs series “Dispatches.” Over the last five years, household names, celebrities, and soap stars have been pulled into the controversy and some newspapers have made it front-page news.
$2 Billion And Growing
If you’re new to the numbers, here’s how big the influencer market is. Despite the interest in Europe, globally, influencer outreach is still considered a relatively new tactic, but, by the end of 2016, it was already a $2 billion money-maker. It’s a growing gravy train that anyone with a phone and basic grasp of filters, cats, and food photography can master, and the rewards can be high. When Entrepreneur.com recently looked at 10,000 random posts with #AD attached, it discovered that half of those posts weren’t actually sponsored at all—hopeful influencers were attempting to elevate their social currency by suggesting they were being paid to post.
Already 2017 looks set to smash that 2016 $2 billion number, according to HYPR Influencer Marketing Index. January alone saw 83,000 sponsored posts from influencers, with 20,000 brands using influencers on Instagram, equating to four sponsored posts, per brand, per week.
Too Many Brands, Too Few Celebrities
This poses a problem for celebrities, their agents, and the brands that employ them. Why? Because there are more brands than there are celebrity social media platforms, and the selling power of any influencer is based on the authentic connection between themselves and their audience. In other words, authenticity, plus credibility, plus relevance, equals sales, and like it or not, the sponsored hashtag works at breaking that connection.
However, the occasional sponsored post from a household-name actor or musician isn’t going to have any lasting negative impact on audience relationship. This is the real world. We understand everyone has to earn their money somehow. If you need to thank a vodka company for your holiday once in a while, well OK, just make things clear in your post and move on. But that’s not the issue. The issue is that it isn’t just a vodka company you have to thank. The people who gave you your shoes, your car, your beachside villa, your sports equipment, your music studio … they all need a mention. They even have you in a spreadsheet explaining when, where, and in what format they would like that mention.
Renewed scrutiny of whether or not you’re being paid to “endorse” something comes with more scrutiny from fans who can start to see that 90% of your life is sponsored. Authenticity comes under question. Credibility falls. Relevancy fails as followers fall away and brands move on. It was fun while it lasted.
Rethinking The Model
Of course, nothing could be further from the truth. Hashtags or not, celebrity value will always remain priority for brands, so the new challenge is to rethink the one-tier celebrity approach and share sponsored messaging across a two or even three-tier model. Done correctly, this ensures a cohesive brand message through multi-media conversations and social media storytelling. But if celebrity endorsement already reaches the audience on a global scale, who else can help drive brands forward and help shoulder the responsibility for sponsored posts? Well, there’s one group, in particular, which looks set to take advantage of this new structure. An influencer group with smaller, more engaged audiences that, as a result, can leverage huge levels of brand engagement—the micro-influencer.
Until very recently, the best performing post of all time on Instagram was Coca-Cola ambassador Selena Gomez, sipping from a Coca-Cola bottle (have a look at the image, she’s even dressed in Coca-Cola colours). It’s brilliant, and it’s enjoyed 7 million likes and rising. But despite the high fives all round at Coca-Cola HQ, the difficulty comes in using that data to see how many of those 7 million fans actually went out and bought a bottle of Coke. Brand awareness? Huge. Actual sales? Who knows? Better engagement metrics are to be gained from the next tier down, the micro-influencers, who have fewer fans but a much more engaged fan base. Essentially, if these guys endorse a product, it gets sold.
The proof is in the pudding. HYPR states that micro-influencers with an audience of fewer than 100,000 made up 63% of the influencer population in the last quarter of 2016 (Selena adds nearly 200,000 fans to her 121 million strong channel every day, by way of comparison). By the end of January, that number had jumped to 90%.
But, as attractive as this may sound, micro-influencers can’t do the job alone. Brands need scale as well as engagement, and so the new model to emerge is a combination of traditional influence (big-name celebrities to you and me) working alongside micro-influencers to ensure brand reach and brand message work in tandem. Sponsored content can be shared, timelines become less cluttered, authenticity comes under less scrutiny, and the micro-influencer takes a new role in the never-ending battle for brand position and voice.