What is Influencer Marketing: How and Why It Works

Influencer marketing is making headlines around the globe. Everyone wants to know the secret ingredient for working with influencers and reaching a target audience. So, where do we start?

You've probably heard about the Oprah effect. Oprah Winfrey, a famous American talk show host, created a powerful personal brand. When something was endorsed in her show, the sales were soaring through the roof.

Well, it's been over 30 years since the show first aired on TV. Since then, the internet and social media have facilitated a tremendous shift in society. The truth is the Oprah effect is no longer unique to the famous TV talk show.

As Adweek aptly put it, "Everyone's an influencer." According to MediaKix estimations, there are up to 42 million influencers out there (and the number is still growing). So, the increasing popularity of influencer marketing is not surprising.

One might say that influencers and marketers are a marriage made in heaven. Just think about this for a moment. Marketers are expected to find the most effective ways to promote products or services. Influencers, who are either celebrities or opinion leaders in some fields, can inspire others and affect their decisions.

So, if we put aside all the lengthy definitions, it boils down to the following:

Psychological biases are one of the reasons why influencer marketing works. It is not a secret that humans are social creatures who look for ways to connect with their peers and feel pressure to conform.

For example, when choosing between two films with the same rating, we are more likely to watch the one that has a higher number of votes or, in other words, has been endorsed by more people. This is an example of a so-called 'social proof', a psychological bias that implies trust in other people. Similarly, we follow influencers because we believe that they are good in some area, so we find their recommendations credible too.

Contrary to brand ambassadors who work with brands for several months or years, influencers (or content creators) usually partner with companies on a few campaigns and do not sign long-term contracts. A brand has an opportunity to connect with the ambassador's audience regularly and on a personal level, but a short-term partnership with an influencer gives companies access to new audiences and a wider reach.

Before the social media era, celebrities were running the show. In 1984, Nike signed a deal with Michael Jordan and launched the Nike Air Jordan brand that has been named one of the most successful celebrity campaigns. But thanks to social media, to become an influencer and build a community, you do not need to be a world-known celebrity anymore.

Depending on how many followers an influencer has, they can be divided into four categories. These categories are sometimes referred to as tiers:

• Nano influencers (1,000 – 10,000 followers)
• Micro influencers (10,000 – 100,000 followers)
• Macro influencers (100,000 – 1,000,000 followers)
• Mega influencers (over 1 million followers)

Although nano and micro influencers are becoming increasingly popular with brands, the success of these collaborations will vary across companies. Whereas working with micro influencers might be beneficial for small and medium brands, large corporations will not feel palpable effects due to limited scaling opportunities.

There is an undeniable benefit for working with micro influencers: they connect with their followers on a more personal level than mega influencers (hence, higher engagement rates) and can help companies reach a niche market or a specific audience. For example, while a Hollywood celebrity like Antonio Banderas has 83% of followership older than 25 years old (as of September 2021), a teenager with viral and entertaining TikTok videos will be a better choice for engaging with a younger audience.

Each brand is unique, but they all face the same problem: traditional advertising is becoming less relevant. Meanwhile, the return on investment (ROI) of an influencer marketing campaign is 11 times higher than of traditional methods. Quite a difference, right? So, it is not surprising that 90% of brands believe that influencer marketing is effective.

There are statistics that support the business need for influencer marketing:

• 75% of organizations plan to allocate a budget for influencer marketing in 2021.
• 61% of social media users are likely to trust recommendations from friends, family members or influencers.
• 71% of marketers agree that the quality of traffic from influencer marketing is higher compared to other sources.
• 763.51 million people were using ad blockers as of the beginning of 2020 and the number is growing. 48% of users installed an ad blocker because they find ads annoying.

When it comes to influencer marketing benefits, they can be summarized in three categories: increased brand awareness, reach, trust and authority.

In early 2021 HypeFactory partnered with one of the world's largest retail stores to create a strong link between the brand's name and concepts such as family and home. Several lifestyle and family Instagram influencers were involved in the campaign. They encouraged their followers to share their family recipes in stories, comments and posts. The resulting reach exceeded the expectations by 31% and amounted to 3,500,000 users.

By partnering with influencers, brands can reach new audiences and focus on niche markets. If a company sells products or services for small children, the campaign usually targets parents and works with influencers who create content about parenting. For example, the "Kaspersky Safe Kids" campaign was targeting conscious parents of 7-12-year-old kids, primarily women. The main goal was to introduce the parental control service "Kaspersky Safe Kids" to new users. The overall reach exceeded 3,100,000.

Influencers who are experts in some field can help brands increase their authority in this field and the trust level in their products or services. If a reputable fitness blogger with 20+ years of experience whom you follow recommends you some comfortable workout clothes, you are likely to buy it.

For example, to promote a new medication that is prescribed to treat irritable bowel syndrome, HypeFactory launched a campaign with two influencers, nutrition and fitness experts. The influencers used a branded hashtag to mention the drug and share recommendations on how to achieve a healthy lifestyle. As a result, the campaign reached more than 4,000,000 Instagram users and the branded hashtag now captures a collection of posts about nutrition, health and fitness.

Creating a successful influencer marketing campaign is time-consuming. Besides defining the goal and measuring the results, companies also need to work on finding the right influencers, reaching out to them and nurturing a collaboration. This is why many companies prefer working with influencer marketing agencies instead. But if you have enough resources, expertise and connections, it is also possible to create a great campaign in-house.

As mentioned in the previous section, companies use influencer marketing for different purposes such as improving brand awareness, reaching new audiences or gaining trust and authority in some field. When you have a clear and specific direction in mind, it is easier to focus on creating the right message, choosing the right influencers and a social media channel. You will also be able to better determine the budget and have higher chances of achieving buy-in.

Having a specific goal in mind helps your team determine a target audience for the campaign. This, in turn, has a positive impact on your advertising ROI. Depending on your marketing goal, you will either need to understand your current customer base and their needs on a deeper level or create personas and find out what new customers are interested in your offerings. If you can pinpoint the target audience, your search for the right influencer will be more effective. Keep an open mind on other social media channels besides Instagram. For example, TikTok influencer engagement rates can reach up to almost 18%.

When working on the message, keep in mind the authenticity, your audience values and the current agenda. It is important to look at your message through the eyes of your customers. Otherwise, you risk falling flat. For example, in 2017, PepsiCo launched the now infamous ad with Kendall Jenner. Although one of its purposes was to show brand's support for the Black Lives Matter movement, the ad backfired reminding marketers and advertisers that people's feelings and pains are not something to play around with.

After working on the message, you need to agree on the influencers you want to partner with. Communicate your brand guidelines in advance and be clear about your expectations. Before launching the campaign, agree on the payment method and the price. It is also high time to think about how you see this partnership. Weigh the pros and cons of working with these influencers on a long-term versus one-off basis.

Keep your finger on the pulse throughout the campaign. If you constantly monitor the results, you will be able to improve your KPIs by making spot-on changes instead of waiting till the campaign is over. There're at least five ways to measure results in influencer marketing (read more here). Some campaigns have a long-term effect, so it might take a while before you can study the results. After studying the results, consider what could be improved in the future.

A simple Google or social media search will return you a list of trending influencers, but to find the right one, you still need to do a lot of homework. According to the Influencer Marketing 2019 Industry Benchmarks Report, 61% of marketers struggle with identifying the right influencers when creating influencer marketing campaigns in-house instead of through an agency.

Before starting your search for an influencer, you need to focus on four C's.

Deciding on what you will communicate is just a first step. You also need to determine your target audience. Whom are you trying to reach? The search for the right influencer starts with the analysis of their followership. Is the influencer's audience the group of customers on which you want to focus your marketing efforts? Put aside some time to evaluate the audience level of engagement. You do not want to spend thousands of dollars on content that is not driving interactions.

After agreeing on what you would like to communicate and to whom, the next question to ponder is "How should we approach it?". Do you want to use short videos or long video clips? Is an Instagram story or a YouTube live stream more appropriate? Depending on the type of content that fits your message, you can narrow down your search to 1-2 social media channels and then focus on those influencers who have an established presence there. Before reaching out to an influencer, evaluate their content quality: Is it consistent? Does it match your brand's voice?

According to one of the recent studies, 43.4% of social media users follow more than 9 influencers. There is a reason why they decided to follow them in the first place. If their new post starts giving off a completely different vibe, it will probably be a no-goer. When choosing an influencer, make sure that their values align with yours and you are comfortable with using this influencer's voice to deliver your brand message. Brand safety is still one of the top influencer marketing concerns.

Not all numbers speak for themselves. If an influencer has thousands of followers, it is easy to get blindsided. To maximize the results of your campaign, you need to find out how authentic the influencer's audience is. If you have solid data, you can also set a suitable price depending on the insights you get from your analysis. Why would you want to partner with someone who has thousands of followers with only around 30% of real accounts?

Source: HypeAuditor