Influencer marketing: beneficial or not

Influencer marketing is one of the most obscure methods of digital marketing. The biggest challenge lies in tracking their millions of followers and correctly attributing brand success to the influencer’s promotional posts. This in turn means it is difficult to know your cost per click, customer acquisition cost, and thus challenging to justify the hefty amounts that influencers demand. This article tries to assess the ROI of such influencer marketing. Kim Kardashian is known to charge $300,000 - $500,000 for a sponsored Instagram post. When she recently tagged a jewelry brand, Melinda Maria, in her Instagram story, without being paid for it, the brand’s website saw a massive 185% rise in daily transactions. Comparing the revenue figures, Melinda Maria earned revenues of ~$10,000 a day before the Instagram story post, and ~$30,000 the day after. This $20,000 increase looks minimal compared to the influencer charges which are more than 15x this number. Three considerations:

1) Melinda Maria was proactive enough to set up a pre-order facility since the 50 rings it had at that point sold out in a minute. Without that facility, it would’ve probably been a lost opportunity. But she perhaps still lost many customers if either the option wasn’t set up when they visited the site, or if they bought lower priced items or nothing at all, even once the pre-order option was there. If you were paying for the sponsored post, you would invariably be better prepared to handle the traffic and satisfy more customers.

2) Brands must know what stage they are in, when choosing their influencers. A brand making revenues of $10,000 a day, probably cannot afford to pay its monthly revenues to one influencer. However, it is important to note the trend in the boost in sales. Is it a one-day boost or a consistent one? If Melinda Maria starts seeing $30,000 revenues a day consistently, thus earning 3x its current revenues, and sees additional organic growth, then is it really such a bad idea? The short-term vision of this article, in my opinion, is a false way to assess the ROI. It should consider the long-term spike in revenues, but again attributions problems remain and even worsen in the longer-term.

3) Buyers are not silly. They don’t blindly follow one celebrity on something she promotes, even if there is more weight to it since it was not a sponsored post. A simple google search on the jewelry brand reveals many more celebrities vouching for the brand, such as Jennifer Lopez, Julia Roberts and Michelle Obama. Without this backing of an entire social ecosystem, it is a far-fetched expectation to see an exponential increase in customers due to one influencer’s post, even if that influencer may be Kim Kardashian.