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Rise Of Influencer Marketing: Creators To Commerce
The ROI from influencer marketing is better or on par with other marketing channels
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While the phrase ‘influencer marketing’ was unheard of a decade ago, it has since become one of the fastest-growing industries in India and across the world. Currently, the global influencer marketing industry, pegged at USD 6 billion in 2020, is expected to grow at a CAGR of 32 per cent to reach USD 24.1 billion by 2025. The Indian influencer marketing industry is also keeping pace. Valued at Rs 900 crore, it is expected to grow at a CAGR of 25 per cent to reach Rs 2,200 crore by 2025.
The shift from relying on celebrity endorsements to employing influencers for product placements has been massive and noticeable in recent years. In 2021, celebrities held only 27 per cent of the market share of marketing campaigns, while influencers had the bigger piece of the pie at 73 per cent. The growth of influencers is also not merely limited to traditionally dominant sectors like food & beverage, personal care, fashion and technology. It is now noticeable among other sectors like BFSI and fintech too.
The Indian Landscape
The Indian social media landscape is home to different categories of influencers, all of whom have a distinct role to play in the marketing funnel. The target audience of each of these categories of influencers varies, as does the cost of engaging them and the engagement rates they bring in. What works for one brand may not work for another, so every company needs to find the right mix of influencer categories to achieve the metrics they desire.
At the top of the chain are celebrities, who are prominent and established personalities in the media, entertainment and sports industries. Then, there are mega influencers with over 1 million followers, macro-influencers with 1,00,000 to 1 million followers, and micro-influencers with 10,000 to 1,00,000 followers. Lastly, we have nano influencers, who are regular, relatable social media users with less than 10,000 followers.
Brands new to influencer marketing may overlook nano-influencers for their small family of followers. But despite having the lowest following, nano influencers report the highest engagement. With an average engagement rate of 7 per cent and an average video view rate of 60 per cent, nano-influencers on social media outperform every other influencer category. They also report an estimated reach of 30 per cent and have the highest average engagement rate on Instagram at 8 per cent.
Micro influences aren’t too far behind either. Reportedly, there is a 30 per cent higher chance of consumers purchasing a product that is recommended by a micro-influencer when compared to a product promoted by a celebrity.
These numbers reveal that micro- and nano-influencers can prove to be powerful distribution channels for brands because they are often relatable and engage with their audience on a more personal level. Aside from their remarkable impact, micro- and nano-influencers are also more affordable for brands to partner with.
How Do They Help?
Influencers do more than just create awareness about a brand. They also impact the mid and bottom of the funnel metrics, which include leads and conversion. The use of various social media features like sharing links to product pages, using influencer-specific discount codes and posting reviews of true use cases have the potential to increase the web traffic for a brand, improve lead generation and drive up sales conversions.
What’s more, through UTM links brands can also track their sales activity and trace the influencer whose efforts led to the sales or lead generation. This empowers companies to identify the influencers who work best for their brands and continue to partner with them.
Influencer marketing is also making waves in the BFSI sector. BFSI brands are collaborating with influencers -- or ‘finfluencers,’ as they are known -- to drive user engagement and take their products to grassroots levels. From the user end of things, people are increasingly relying on finfluencers to understand personal finance, to discover new BFSI service providers and even make important financial decisions.
Some of these finfluencers use storytelling to provide clarity on the products and services they promote, while others may use facts and data. Yet others break down complex BFSI concepts and seamlessly introduce a BFSI product relevant to the context.
Brands have embraced the fact that the value addition through this channel may be significantly higher than what traditional marketing offers. In fact, as per the India Influencer Marketing Report 2021, of the brands that have already partnered with influencers, over 80 per cent are satisfied with the return on investments. And nearly 90 per cent of marketers opine that the ROI from influencer marketing is better or on par with other marketing channels.
Having said that, there needs to be shared responsibility for content creation between the influencer and the brand. Influencer training to ensure adherence to the brand ethos and guidelines becomes extremely important. While measurement and ROI analysis of influencer marketing programme will drive the adoption in future, the impact or success of any regular media campaign is relative and evaluated upon previous benchmarks. Influencer marketing should also be looked in similar light and put to test with a long-term vision and not one-time tactical.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.