Influencer marketing has been rapidly maturing over the last ten years as platforms like YouTube, Instagram, Snapchat, and TikTok have amassed billions of users and trillions of views. As brands have realized the efficiency and high return for the channel, the space has ballooned with estimates of upwards of $6.5 billion dollars being spent on influencer marketing in 2019. Yet, despite the clear ROI, the channel is still nascent and early in its lifecycle with many brands, especially those outside of traditional retail, yet to harness the power of influencers.
Brands spent $6.5 billion dollars on Influencer Marketing in 2019.
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Brand Marketing vs. Performance Channel
When it comes to influencer marketing, brands have to decide if they see the channel as part of their brand efforts or as a performance channel. Holistically, a marketing organization has to successfully expose consumers to a brand and convince them to make a transaction: at the CMO level, brand and performance are two sides of the same coin. However, in practice, these teams typically have different imperatives and KPIs. As a result of these differences, many brand teams have fixed annual budgets, whereas performance budgets are more flexible based on meeting goals and efficiency benchmarks. Subsequently, for our clients, influencer marketing is typically managed by a performance team with the understanding that the attribution is not capturing all the value created.
Attribution, Business Model, and Program Maturity
While, in theory, influencers are not reliant on a platform, in practice, influencers carry a large fan base on specific platforms. This could be Instagram, YouTube, Snapchat, or TikTok. Each of these platforms has its own shifting policies around links and promotions. As a result, attribution can be challenging depending on the platform and makes sense for different types of brands. Likewise, most influencers that have a sizable following are able to command sponsorships instead of performance-based commissions. In light of these aspects of the channel, we typically consider influencers as something that a medium maturity partnership program or onwards should consider. This likely means we've onboarded significant partners already, and as a result, the partnership team has been given a flat experimental budget.