Wednesday, July 05, 2017

Brands Turn to China’s Digital Influencers to Increase Sales

The use of key opinion leaders (KOLs), or influencers, is a leading way for companies in China to advertise their goods.  KOL endorsement is now the primary driver outside of Baidu search, and sales and brand awareness for companies such as Bulgari, Burberry, and Jaeger-LeCoultre have increased due to their KOL strategy.  Due to the high effectiveness, KOLs command high fees and perks (i.e., $731K for a 30 second video promoting Jaeger LeCoultre, wedding sponsored by De Beers, birthday party thrown by Michael Kors, etc.).  The KOL economy was estimated at $9 billion by CBNData in 2015 which is equivalent to more than gross box-office receipts in 2015.  Consultancy Analysis projects revenues will reach approximately $15 billion next year.

The KOLs mentioned in the article have over 80 million followers each and it makes sense that they expect such high fees.  I assume these companies can track what is attributable to the KOL strategy and that the total new sales exceed the costs.  With millions of followers, even just acquiring a small portion would justify the KOL fees.

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