Is Influencer Marketing At A Tipping Point?

December 2, 2020 | blog | By

Listen carefully and you can hear the sound of traditional ad dollars shifting to new digital media channels, including Influencer Marketing. Influencer ad numbers have been picking up steam for the past five years and, amid this year’s nationwide shutdown, the numbers are only accelerating. Consider this from FinancialNewsMedia.com:

“In 2018, a report from Statista said that the popularity of influencer marketing on Instagram is increasing at such a fast pace that the global market is expected to grow from 1.3 billion U.S. dollars in 2018 to nearly twice that amount by 2020. At the same time, the number of brand-sponsored influencer posts on the social media platform is also expected to double, surpassing six billion in 2020. A subsequent Statista report raised the projections, saying that global spending on Instagram influencer marketing reached 5.67 billion U.S dollars and projected that the figure will further grow to 8.08 billion by the end of 2020.”

Let’s frame those projections another way. 20-year-old Addison Rae Easterling, currently the highest-paid influencer on TikTok, made $5 million this year, outearning 39 Fortune 500 CEOs. 16-year-old Charli D’Amelio, currently in second at $4 million, just surpassed 100 million followers. Charli’s big sister Dixie rounded out the bottom three at $2.9 million. Not for running one of the world’s largest corporations with thousands of employees, or inventing the next great thing. These young women built a following making :60 videos of themselves dancing, lip-synching to popular songs, and acting flirty, silly, and trendy.

They are the new celebrities of their generation and they’ve found a way to monetize their audience with serious ad revenue.

Are they worth $12 million a year? They’re followed by 217 million people. Last year’s number one TV show, CBS’s “NCIS,” averaged 15.3.

The numbers might seem impossible to believe were it not for Ryan Kaji, the Texas 8-year-old frontman for “Ryan’s World,” a YouTube channel that started in 2015 literally showing Ryan opening boxed toys and reacting to them. Last year, Ryan Kaji made $26 million as the highest-paid influencer on YouTube. For the record, that’s more than 473 of the Fortune 500 CEOs made last year.

Those are crazy numbers. And yet, they’re just the tip of the influencer iceberg. For that, you’ve got to look to Instagram where some of the highest-paid celebrity influencers like Cristiano Ronaldo, Ariana Grande, Dwayne Johnson, Kylie Jenner, and Selena Gomez regularly earn more than half a million dollars per post with Ronaldo topping out at $776,833 per post. With more than a billion active monthly users, Instagram embraces influencer marketing like few others with dozens of platforms specifically built to connect brands with influencers who have followings from the thousands to the millions.

And just last week, Instagram introduced new creator tools for Influencer Marketing Reels and Instagram Live that will now allow advertisers to post directly from an influencer’s account with their permission.

The big question is: are influencers delivering a good ROI for the brands supporting them? According to Influencer Marketing Hub, for every $1 that brands spend on influencers, they are getting an ROI of $5.78.

Sponsored blog posts alone have proven to yield up to 11x more ROI than standard banner ads.

By comparison, depending on which article you read, TV may or may not beat that ROI. Either way, investing in influencers is working and the commensurate ad spend is on the rise.

Where once, chasing down specific types of “micro-influencers” or those with smaller numbers of followers might not have been cost-effective or worth the risk, today there are dozens of Instagram platforms alone with robust software and analytics that can easily connect brands with hundreds of thousands of influencers with highly engaged audiences who seem ready to buy whatever they’re selling. At least they were.

With social media use growing steadily throughout the pandemic, TikTok has been rocketing up the ranks with now more than 100 million active users in the U.S. Ten years ago when Facebook users started to age, Instagram jumped in as the hot new social media channel for young people. Now Instagram is scrambling to hold on to the younger generations as TikTok is grabbing the young demos by the millions.

“As of third quarter this year, TikTok became the No. 2 non-gaming app by consumer spending, due to its use of a combination of revenue streams, including advertising and sales of virtual gifts used for tipping streamers.” If Instagram has been acting as the category leader, TikTok is firmly embracing the role of challenger brand and users are noticing.

Recently, as a post from CNET pointed out, there’s been an Instagram backlash of sorts with TikTok users “mocking Instagram users for what many perceive as superficial content focused on product promotions and super polished looks.”

Where Instagram has dozens of celebrity “Instagram Stars” hawking everything from makeup to soft drinks, TikTok’s biggest influencers aren’t world-class soccer players, singers, and actors. They’re mostly “social media personalities” who’ve built their followings posting pretty authentic content.

Does that mean Instagram’s influencer revenue will crater? No. But with the growth of TikTok there are interesting opportunities to leverage a world of genuine content.

At the end of the day, it’s all about ad dollars and where they’re going to be allocated. Facebook, then Insta, then Snapchat, then TikTok. Each new social media channel grabbing the mantle from the one before. The young, digital-savvy influencers understand that, for them, social media isn’t simply about putting out genuine content. It’s about building a following, monetizing that audience, then hoping like Hell they can hang on when the next great new platform pops.

DAX HARDAGE is a partner at iluminere, the digital arm of LOOMIS, the country’s leading challenger brand advertising agency and a top Dallas advertising agency for digital, social, mobile and user experience. For more about challenger branding, advertising and marketing, leadership, culture and other inspirations that will drive your success, visit our blog BARK! The Voice of the Underdog and catch up on all of our posts.

For more about LOOMIS, or to discuss how we can help your company succeed, CLICK HERE

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