Influencer Marketing: Budgets Growing but so is Confusion

Natasha Sholl By Natasha Sholl | 19 Mar 2019

The influencer explosion is a boon for digital marketers and an opportunity to directly reach a consumer. Or…is it? How can retailers measure effectiveness, and what do shoppers really think?

Whether you’re in digital marketing, an online retailer or a consumer (or anywhere that’s not under a rock) you will know about the exponential growth of influencer marketing. But the boom in the area also means that its sudden growth has come without proper regulation or transparency. This makes it a somewhat confusing area for both social media users and brands alike.

Recent research by Rakuten Marketing has revealed that 54 percent of Australian consumers are using influencers to discover new brands and products and 31 percent are engaging with influencers on a daily basis. “Traditionally, influencers have been viewed by brands to have limited function as a tool for discovery and building brand awareness, sitting at the top of sales funnel strategies without a direct link to purchase,” says JJ Eastwood, Managing Director of Rakuten Marketing Asia-Pacific. “The role of the influencer has shifted to be much more multifaceted in terms of the effect on consumer purchase decisions. Eighty-five percent of consumers indicate they have been inspired to purchase something based on the recommendation of an influencer. The three main ways their choices are influenced are by discovery, insight and recommendations.”

Discovery is still a key reason to use influencers, with the research finding that Australian consumers rely on them to discover new brands or products on a weekly (40 percent) or monthly (29 percent) basis. “Our research showed that the role of the influencer has extended beyond discovery to one more ingrained in driving activity throughout the entire consumer journey,” says Eastwood. “Results found that 73 percent of consumers have purchased something via a link recommended by an influencer and 75 percent of consumers have made influencer-inspired purchases of up to $500.”

More than half of Australian consumers surveyed said they engage with influencers on a daily basis – with 31 percent engaging multiple times a day and 23 percent engaging once per day. Rakuten Marketing’s research shows that Instagram is currently the most popular place for Australian consumers to engage with influencers (68 percent), followed closely by YouTube (64 percent) and Facebook (59 percent). Engagement with influencers drops considerably looking at other platforms, with Snapchat garnering 25 percent, Twitter at 24 percent, Pinterest at 17 percent and blog sites at 16 percent. Recorded video and pictures are engaged with the most frequently, with written content and live stream video the next most popular content formats.

“Increased online spending habits in conjunction with more time spent on social media interacting with influencers, opens up a huge opportunity for e-commerce business’ to access the online consumer via influencers,” Eastwood says. “If done right, influencer marketing can bring huge amounts of value to brands, particularly those in the e-commerce space.” But then, the question remains: how do you ‘do it right’ if you’re not sure exactly what you’re doing!

Given this shift and the relative speed at which the consumer purchase journey has changed, 45 percent of Australian marketers are showing a demand for viewability into the impact of influencer activity across the wider consumer purchasing journey with 34 percent wanting more transparency around the engagement strategy of influencers. In fact, despite the high spend, only 29 percent of marketers completely understand how influencer feeds are calculated and 13 percent express little to no understanding. “Our research found that marketers are growing increasingly concerned with the measurement and transparency of influencer campaigns,” says Eastwood.

According to the marketers surveyed, the luxury fashion sector will allocate the largest percentage of their budget (52 percent) towards influencer marketing over the next year, with travel (44 percent) and retail (40 percent) verticals following. “Despite this high spend, the research indicated that measuring impact was a common issue, with marketers expressing a lack of understanding as to how influencer fees are calculated and a lack of transparency being provided by influencers regarding campaign performance,” Eastwood tells us. “To combat this, attribution and insights platforms give marketers a holistic view of campaign performance across various channels and platforms, to determine what is working and what isn’t, and where they should be investing.”

So how can brands effectively strategise when it comes to influencer marketing? “There are a number of ways brands miss the mark with influencer marketing,” says Eastwood. “For one, it is imperative that brands do their research before partnering with influencers to make sure their values, mission and brand image align. Forty-two percent of consumers indicate they would unfollow an influencer if they posted content that doesn’t align with their core values, personal opinions or ethics.”

Another factor where brands can go wrong is frequency and scale. “Forty-two percent of consumers indicated they would unfollow an influencer if they posted too much sponsored content. It’s important to get the balance right, there’s a fine line between too little and too much,” Eastwood explains.

“Lastly, brands should disclose relationships with influencers to create transparency and ensure authenticity,” Eastwood adds. “Twenty-eight percent of consumers indicated they would unfollow an influencer if they didn’t disclose their paid brand relationships and 43 percent of consumers trust the influencer to give an honest view of the product or service and appreciate that he/she has disclosed their relationship.”

So, now what? “Based on these findings, marketers should be focusing on developing a better understanding of how fees are calculated and garnering a greater insight into the performance of their influencer marketing campaigns,” explains Eastwood. “Online retailers should look at partnering with businesses that have robust tracking tools to drive and manage influencer campaigns.”

“Traditionally, budgets for influencer campaigns have been held by brand or PR teams. Online retailers should focus on running influencer activity via the affiliate channel alongside branding campaign to provide greater transparency and performance insights with more accurate tracking of traffic, clicks and sales,” he adds.

Never miss our best stories. Sign up for Power Retail’s free weekly newsletter and find our daily stories on FacebookTwitter, and LinkedIn.