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Influencer marketing (also influence marketing) is a form of marketing in which focus is placed on influential people rather than the target market as a whole on social media. It identifies the individuals who have influence over potential customers, and orients marketing activities around these influencers.^[1]

Influencer content may be framed as testimonial advertising where they play the role of a potential buyer themselves, or they may be third parties. These third parties exist either in the supply chain (retailers, manufacturers, etc.) or may be so-called value-added influencers (such as journalists, academics, industry analysts, and professional advisers).^[2]

Regulation

In the United States, influence marketing is treated by the Federal Trade Commission as a form of paid endorsement, governed under the rules for native advertising; the agency applies established truth-in-advertising standards to such advertising and establishes requirements for disclosure on the part of endorsers (influencers).^[3][4]

Other countries' media-regulatory bodies, such as Australia's, have created guidelines around influencer marketing following the decision of the FTC.^[5] In the United Kingdom a voluntary agreement was announced in January 2019 between the country's Competition and Markets Authority and high-profile social media influencers to ensure that they comply with consumer law.^[6] Most countries have not created a regulatory framework for influencer marketing.

Influence

Most discussion on the generic topic of social influence centres on compliance and persuasion in a social environment.^[7] In the context of influencer marketing, influence is less about argument and coercion to a particular point of view and more about loose interactions between various parties in a community. Influence is often equated to advocacy, but may also be negative, and is thus related to concepts of promoters and detractors.^[8][9]

The idea of a "two-step flow of communication" was introduced in "The People's Choice" (Paul Lazarsfeld, Bernard Berelson, and Hazel Gaudet, a 1940 study on the decision making process of voters). This idea was further developed in "Personal Influence" (Lazarsfeld, Elihu Katz 1955)^[10] and "The Effects of Mass Communication" (Joseph Klapper 1960)^[11].

Payment

Influencer marketing tends to be broken into two sub-practices: earned influencer marketing and paid influencer marketing. Earned marketing stems from unpaid or preexisting relationships with influencers or third party content that is promoted by the influencer to further their own personal social growth. Paid influencer marketing campaigns can take the form of sponsorship, pre-roll advertising or testimonial messaging and can appear at any point in the content. Influencer compensation can be based on a flat rate fee per piece of content, earned as affiliate income resulting from sales or click-throughs generated by the influencer's content, or might be a combination of the two where influencers are paid a fee as well as earning affiliate income from their content. Budgets vary widely and are usually based on audience reach.^[12] Most influencers are paid upfront before a marketing campaign while others are paid after the execution of the marketing campaign.^[13]

Some influencers accept gifted products or services as compensation in exchange for posting. However, these gifts are subject to IRS rules & regulations and in many cases their value is considered taxable income.

On social media

As a company's brands evolve in terms of marketing, the cost in relation to the possible benefits (i.e., purchase) it can receive is very important. The airing a television spot has a high cost, conversely, working with an influencer has a negligible cost. If an influencer has 200,000 followers on their social media site, and a company gives them a product specifically as a marketing tool, which they are to expose to their audience, the company's financial outlay, by comparison, would be negligible. The company will have spent less (the cost of the product), but exposed their product to a more focused group of followers (and therefore potential purchasers) of the public figure.

As more people use the internet, more are making purchases online. This forces some companies to invest more resources in their general advertising - on the internet, and on social networks in particular. Marketing through social networks allows for an instantaneous purchase process; a person can see the item and typically be connected to an online retailer immediately. This decrease between lag time - from seeing the promoted item and being redirected to the product - is more effective for spontaneous purchases.^[14]

Many influencers' social media presence is on both Instagram and Twitter. The rise in popularity of video content means a growing number of influencers can also be found on YouTube.

Web services can be used to trawl social media sites for users who exert influence in their respective communities. The social influencer marketing firm then asks those influencers to try products or services and discuss them on their respective social networks. Clients can then observe an enhanced digital dashboard, with metrics that measure the dissemination of brand mentions across numerous web platforms.

At least 70 companies offer online influence measurement. Advocates of this online-only approach claim that online activity reflects (or pre-empts) the trends in offline transactions. For example, Razorfish released one of the first social influencer marketing reports, titled Fluent.^[15] The report discusses many theories surrounding social marketing, including the importance of the push/pull dynamic and online consumer empowerment, authenticity and importance of buzz marketing.

Online activity can be a core part of offline decision-making, as consumers research products and review sites.^[16]

Critics of this online-only approach argue that only researching online sources misses critical influential individuals and inputs.^[2] They note that much influential exchange of information occurs in the offline world, and is not captured in online media. Indeed, the majority of consumer exchanges occur face-to-face, not in an online environment, as evidenced by Carl.^[17] He notes that "an overwhelming majority of word-of-mouth (WOM) episodes (nearly 80%) ... occur in face-to-face interpersonal settings, while online WOM accounted for only seven to ten percent of the reported (WOM) episodes."

Carl concludes that "The majority of the WOM action still seems to be happening in the offline world. These findings are especially provocative since they emerge at a time when more and more organizations are paying attention to how their brands are discussed online and recent academic research has focused on online WOM. Thus it is important for organizations to keep both online and offline conversations on their radar screen."

Keller Fay announced in 2007 that "While experts have previously estimated that 80% of marketing-relevant word of mouth takes place 'offline' (i.e., face-to-face or via telephone), the new results indicate that this figure is even higher – 92%."^[18][19]

More recently, Nate Elliott at Forrester observed that "the huge majority of users influence each other face to face rather than through social online channels like blogs and social networks."^[20]

With any marketing strategy, risks are involved, and there have been reports of brands dropping their influencers because of the controversies that surround them. One such influencer is YouTuber PewDiePie, whose use of antisemitic and racist comments lead to canceled deals from Disney and widespread backlash.^[21][22][23]

Applications

Some marketers use influencer marketing to establish credibility in the market, others to create social conversations around their brand, and others to drive online or in-store sales of their products. The influencer marketer can also take to marketing diversified products and services leveraging, leveraging upon the credibility earned over time. The value which influencer marketing creates can be measured in several ways. Some marketers measure earned media value, others track impressions, and others track cost per action.^[2]

Influencer marketing derives its value from three sources:

• Social reach: influencers are able to reach millions of consumers through their social channels and blogs.


• Original content: influencers produce original, and often effective, marketing content for the brand.


• Consumer trust: influencers maintain strong relationships with their audience, who have a certain level of trust in the influencer's opinions.

Methods of marketing

Influencer marketing, in a commercial context, comprises four main activities:

• Identifying influencers, and ranking them in order of importance


• Marketing to influencers, to increase awareness of the firm within the influencer community


• Marketing through influencers, using them to increase market awareness of the firm among target markets


• Marketing with influencers, turning them into advocates of the firm

Influencer marketing is continuously improved by constant evaluation done simultaneously with the four main activities.

Influencer marketing is not synonymous with word of mouth marketing (WOM), but influence may be communicated this way. WOM is a central to the mechanics of influencer marketing.

There is no consensus on what an "influencer" is. One writer defines them as "a range of third parties who exercise influence over the organization and its potential customers".^[24] Another defines an influencer as a "third party who significantly shapes the customer's purchasing decision, but may never be accountable for it."^[2] Another says influencers are "activists, are well-connected, have impact, have active minds, and are trendsetters",^[19] though this set of attributes is aligned specifically to consumer markets.

Exactly what is included in influencer marketing depends on the context (retail or B2B) and the medium of influence transmission (online or offline, or both), as company's are increasingly eager to identify and work with influencers.

Business is working harder and paying more to pursue people who are trying to watch and listen less to its messages. Targeting influencers is seen as a method of increasing the reach of marketing messages, in order to counteract the growing tendency of prospective customers to ignore marketing.^[19]

Identifying influencers

The first step in influencer marketing is to identify influencers. They are specific to discrete market segments, and are used as conduits to the entire target segment. While there are lists of generic influencers (such as the Time 100), they have limited use in marketing programmes targeted at specific segments.^[25]

Market research techniques can be used to identify influencers, using pre-defined criteria to determine the extent and type of influence.^[19]

• 
  Activists: influencers get involved with their communities, political movements, charities and so on.


• Connected: influencers have large social networks.


• Authoritative: influencers are looked up to and are trusted by others.


• Active minds: influencers have multiple and diverse interests.


• 
  Trendsetters: influencers tend to be early adopters (or leavers) in markets.

In a study of what traits are associated with the top influencers, one researcher found four archetypes of influencers.^[26]

• Educators – thrive on helpfulness and insightfulness


• Coaches – thrive on helpfulness and engagement


• Entertainers – thrive on engagement and inspiration


• 
  Charismatics – thrive on insightfulness and inspiration

Malcolm Gladwell^[27] notes that “the success of any kind of social epidemic is heavily dependent on the involvement of people with a particular and rare set of social gifts”, and identified three types of influencer, who are responsible for the "generation, communication and adoption" of messages.:

• Connectors


• Mavens


• Salesmen

Connectors network across a variety of people, and thus have a wide reach. They are essential for word of mouth communication.^[28]

Mavens look to consume information and share it with others, and are extremely insightful with regards to trends.^[28]

Salesmen are "charismatic persuaders". Their source of influence leans toward the tendency of others to attempt to imitate their behaviour.

Currently, most material on influencers focuses on consumer markets, rather than business-to-business influencers. A key distinction is that most of the focus in consumer markets is on consumer influencers themselves, primarily because word of mouth communication is prevalent in consumer environments.^[2] In business marketing, influencers are people who affect a sale, but are typically removed from the actual purchase decision. Consultants, analysts, journalists, academics, regulators, and standards bodies are examples of business influencers.

Not all business influencers are equal. Some have more influence than others, and some mechanism of ranking is required, to distinguish between key influencers and less impactful people. One model for ranking business influencers looks at various criteria:^{[citation needed]}

• 
  Market reach – the number of people an individual has the ability to connect with


• Independence – whether an influencer has a vested interest in promoting a particular point of view


• Frequency of Impact – the number of opportunities an individual has to influence buying decisions


• Expertise – how much of a subject matter expert is the influencer


• Persuasiveness – the degree of consequence in ignoring an influencer's advice


• Thoroughness of role – the extent to which influence is exerted across the decision lifecycle

Various companies worldwide have developed their own proprietary methodologies for identifying and targeting influencers for a market (or market sector).

Influencers can also be defined by their number of followers. "Top-influencers", influencers with large followings, become celebrities and generate a strong reach. However, "micro-influencers" are more available to their audiences, create more focused, retainable and attainable content, and in the long run generate higher engagement rates.^[29]

Ethical implications

Under United States law,^[4] those who endorse products or service, and/or provide testimonials for products or services, are obligated to disclose brand information to their target audience and follow other relevant guidelines. However, that doesn't stop some content providers, and the like, from being deceptive about their opinion to ensure they make money. This often makes them subject to backlash from consumers who spend money on products that fail to uphold their intended purpose.

In 2014, YouTube beauty guru Nicole Guerriero was criticized in a series of hateful comments on her Instagram page.^[30] Fans were outraged after purchasing Bellami hair extensions and believing that the company that sponsored Guerriero was misleading consumers into thinking their hair extensions were of the same quality of those sent in PR packages to promote on YouTube and Instagram by influencers. This prompted Guerriero to upload a video on YouTube addressing people's concerns with the product.

A large influencer sponsor in 2018 across all social media platforms has been the brand Zaful, a clothing company based in China. The company promises cheap discounted clothing along with free shipping. Many complaints have been made by consumers on YouTube, Instagram, Facebook, and Twitter. Consumers claim that the company uses images of clothing from other brands, deceiving people into purchasing items that are not as shown.^[31] Poor quality and shipping issues are often cited. The company also falls under the category of "fast fashion", where sweatshops are used to create clothing to ensure it can be sold to consumers for a low price.

Kim Kardashian in a podcast interview with Ashley Graham

In November 2018, YouTube makeup artist James Charles announced he would be releasing an eyeshadow palette in collaboration with Morphe. Weeks before the release, he uploaded a video swatching the colours. A YouTuber named Kuckian then released a video calling the swatches a scam,^[32] and calling out Charles for editing the video in a such a way that misleads consumers, not giving them a fair idea of what the pigment truly looks like on skin. Reactions to the video were mixed, with some people coming to Charles' defense calling Kuckian a liar, and others sending hateful tweets to Charles directly.

In an interview with Ashley Graham, Kim Kardashian admitted to being offered one million dollars to post an image of herself on Instagram wearing clothing from a brand she did not name.^[33] Kardashian explained that she had turned down the deal because this brand tends to steal ideas from her husband's clothing line, Yeezy. She also claimed the company was notorious for making money from her and her sisters' red carpet and everyday looks.

Influencer controversy

YouTuber Logan Paul

Brand deals are likely to break, and sponsors are just as likely to pull out of backings, if an influencer is under scrutiny.^[34] Making money is the primary goal, and if a brand risks being tarnished at the hands of controversy, businesses are quick to pull the plug. High-profile actors, influencers, YouTubers and others in the field of entertainment have lost brand deals based on inappropriate comments, poor judgement, and a lack of knowledge.^[35]

In 2017, highest ranked YouTuber in the world PewDiePie was also under fire for using the n-word during one of his videogame live streams. Since then, YouTube has dropped AdSense from his videos, a source of income, and they cancelled the second season of his YouTube Red show. Disney, a sponsor, also parted ways with the YouTuber.

Fake influencers

Fake influencers have been around as long as their real counterparts have. All measurements used to determine the veracity of an influencer account can be fabricated. Instagram has shut down third-party sites and apps which provide paid services to individual accounts for buying followers, likes, comments and more.^[36] Despite these shutdowns, self-hosted automation apps such as FollowLiker have continued to operate.^[37]

A marketing agency conducted an experiment to test whether fake influencer accounts can profit. The company created two fictitious accounts - with their presence built up with bought followers and engagement (likes and comments) - and applied to campaigns on popular influencer marketing websites. They published their experiment with a step-by-step explanation of how the accounts were created, and the brands which sponsored them.^[38]

Influencer marketing works so well because of social media. When it comes to ads, many people ignore or fast forward them on TV, and a majority completely bypass them online with tools like AdBlock.^[39]

An analysis of more than 7,000 UK influencers showed that about half the followers of influencers with up to 20,000 followers are "low-quality", due to the inclusion of mass followers, internet bots, and other suspicious accounts. More than 4 of 10 engagements with this group of influencers are "non-authentic".^[40]

A study of UK influencers which looked at almost 700,000 posts from the first half of 2018 found that 12% of UK influencers had bought fake followers.^[40]

Influencer ecosystem

Sources of influencers can be varied. Marketers traditionally target influencers that are easy to identify, such as press, industry analysts and high-profile executives. For most B2C purchases, however, influencers might include people known to the purchaser and the retailer staff. In higher-value business-to-business (B2B) transactions the community of influencers may be wide and varied, and include consultants, government-backed regulators, financiers and user communities.

Forrester analyst Michael Speyer notes that, for small and medium-size businesses, "IT sales are influenced by many parties, including peers, consultants, bloggers, and technology resellers".^[41] He advises that "Vendors need to identify and characterize the influencers in their market. This requires a comprehensive influencer identification program and the establishment of criteria for ranking influencer impact on the decision process."

As well as a variety of influencer sources, influencers can play a variety of roles at different times in a decision process. This idea has been developed in influencer marketing by Brown and Hayes.^[2] They map out how and when particular types of influencer affect the decision process. This then enables marketers to selectively target influencers depending on their individual profile of influence.

Influence process

In order to achieve the purpose of the business clients, influencers should deliver a change in attitude towards the client's brand or product. The change of the attitude from the viewer takes places from the contents that influencer produces. The change itself is believed as a psychological process in human mind. The psychological process can be explained under the RACE model (reach, act, convert and engage). These four steps are designed to help brands engage with their customers throughout the customer lifecycle.^[42]

• Reach: This step is about finding the available influencer and accessing the information distribution channel. An influencer has his or her own expertise, which their followers value. These followers trust recommendations from a third party more often than a brand itself. Endorsements from a related influencer function as a review of the product rather than a simple advertisement, which most followers regard as having little or no credibility. In general, people who follow the influencer share their field of interest. Therefore, they are more likely to purchase the product. Landing on a proper influencer will allow the brand to lock in their target customer group.


• Act: This means encouraging participation by creating a secondary marketing campaign to generate greater awareness to reach a larger scale of target consumers.^[43] It involves encouraging target customers to share their opinions on social media in order to participate in the subject. Taking this idea into practice, influencers usually share their honest review of the product or demonstrate the function of the product in real-life cases in terms of solving a problem or improving a current condition. The influencer should start a discussion that leads target customers' attention onto the subject and present the solution with the product. Target customers engage in the discussion so that they can develop their own understanding of the product's value.


• Convert: In this step, influencers should convert their followers into customers of the product. After forming the understanding of the product, it is time to make a purchase decision. Influencer marketing is believed to be a powerful tool to generate sales since a study by McKinsey showed that "marketing-induced consumer-to-consumer word of mouth generates more than twice the sales of paid advertising." Those that were acquired through word-of-mouth had a 37% higher retention rate.^[44] The trigger is often in the form of a coupon, which is only valid for a short period of time. This pushes the target customer to buy the product right now rather than later. This way, the consumer will not forget about the product, nor lose the desire for it.


• Engage: At this stage, building customer relationship is the key point. Influencers should turn the first-time customer into a loyal customer of the product. A foundational element to unwavering loyalty that is often overlooked is a consumer's loyalty to themselves. Brands seek people that naturally fit their desired persona and let their authentic passion shine through.^[45] In this way, customer loyalty is built through the engagement made by the influencers.

See also

• Alpha user


• Business marketing


• Celebrity branding


• Customer engagement


• Mass communication


• Relationship marketing


• Reputation management


• Testimonial


• Word-of-mouth marketing

References