Influencer Marketing - the next big Thing?

I recently read a post on Adweek about why Influencer Marketing is the next big thing. Some of the points the author Misha Talavera (co-founder of the startup Neoreach, an Influencer Marketing service for brands) made, were the following: 

1. It’s Powerful: Influencer marketing presents a glaring opportunity for brands to leverage the power of word-of-mouth at scale through personalities that consumers already follow and admire.

2. It’s Social: People expect brands to talk with them rather than at them. They no longer expect brands to sell to them, but to entertain and inform them. In this new paradigm, influencers are a force to be reckoned with. 

3. It’s Sexy: When 50 influencers posted an Instagram picture of themselves wearing the same Lord & Taylor dress, on the same day, they told the Instagram fashion niche that the dress was a must-have article to be in the in-crowd. The dress sold out the following weekend.

Working with influencers and tastemakers will communicate to the market that your brand may very well be the next big thing. In addition, you can repurpose the content they create to impress your existing customers.

4. It’s An Arbitrage: There is a massive supply of influencers, but few marketers running influencer campaigns, meaning that the cost of buying an influencer promotion is below its real value (as measured by your ROI).

5. Consumers Are Tired Of Paid Ads: With all of the advertising interrupting them, it’s no surprise that people love products like AdBlock, Netflix, and Spotify Premium that take ads out of traditionally ad-saturated media experiences.

6. It Helps Your SEO: On top of building your brand and improving your sales numbers, influencer marketing also helps your search engine ranking.

I've worked with influencers at two startups, Chuisy and Freeletics, over the last few years. We found that this new form of online marketing indeed still is an arbitrage. Especially younger influencers often are not aware of the value of their massive audience and charge low prices for the reach they provide. However, we also experienced some significant limitations that have to be considered. 

If you have several influencers posting for you (e.g. if an agency sells you a package and just adds up their audiences to charge more), the actual reach is hard to estimate. Most social media users follow a long list of similar influencer accounts why you have a significant overlap in the audiences. Have people seeing your content several times isn't generally a problem, but tracking KPIs like reach or CPM is a challenge. 

Tracking also is a challenge if you are on platforms where links cannot be placed yet, like Instagram or Snapchat. That's why some companies consider influencer campaigns rather as a measure for awareness and accept not knowing about CTR or similar KPIs. 

Furthermore, we where sometimes surprised how imprecise information about  the audience of influencers where. Targeting audiences of a certain age or location is then extremely difficult if you are working on platform with no precise targeting tools. 

One last aspect, which is more a qualitative one:  We found that influencer marketing often lacks authenticity if product endorsement/placement doesn't happen in the context of a long term relationship between influencer and brand. Influencers who constantly post new products (especially if it's about subscription services or other items for long-term consumption) cannot authentically demonstrate brand loyalty. You want your product mentioned over a longer period and among a limited set of products, an influencer is recommending.

I think it generally helps to understand that influencer marketing is not just about the added total number of followers reached. A more appropriate formula is: Influence = Audience Reach (# of followers) x Brand Affinity (expertise and credibility) x Strength of Relationship with Followers. To be fair, most of these limitations are being worked on and companies like Neoreach contribute greatly to the innovation process. 

          BDMI Graph On Influencers

Podcasts are coming back!

Podcasts, one of the oldest and historically least sexy digital content channels, may become the new hot digital marketing channel. According to AdAge, the new found success can be mainly attributed to the success of “Serial”, a podcast centered around a crime drama, advertisers are quickly jumping on this new trend. Podcasts have historically been relegated to the bottom of digital publisher’s properties given its long form content and lack of visual media – two major weaknesses in the current digital media marketplace.

However, podcasts also have some unique strengths. Podcast audiences are usually well-educated and tech saavy, making them the coveted influencer/early adopter segment that advertisers spend millions to reach. In addition, podcast advertising can best be compared to native advertising where the podcast teams both create as well as deliver the marketing messages within the podcast itself. This lack of differentiation between the editorial and advertising content makes what can be considered native podcast advertising up to 5 times more effective. Given that the advertising can be highly customized, direct response advertisers like Warby Parker have been using podcasts to better track ad performance.

Scaling advertising measurement through podcasts can be difficult however. Since there is no click involved, podcasts must rely on more inconclusive measurements such as downloads. However, publishers are quickly pivoting to provide advertisers the metrics they need to make podcasts a viable advertising channel. Apple is currently in talks with Nielsen to institute industry-wide standards of measurement, similar to Nielsen ratings in TV. It is interesting to note the negative correlation with advertising effectiveness and measurement. Often the most effective channels, especially like PR and influencer WOM, whether in person or through social media, can often be the most difficult for advertisers to track back to the source. 

Native Advertising Projected for Large Growth

Emarketer, a leading market research firm, released its most recent projections for native advertising spending in 2015.  According to the firm, marketers will spend nearly $4.3 billion on native advertising alone in 2015, which is a 34% increase over the comparable 2014 figure.  This value is expected to grow all the way to $8.8 billion by 2018, which would represent a near 27% compound annual growth rate.

Major marketers including Ford, GE and HP all conveyed to Emarketer their enthusiasm for native advertising and their intent to significantly increase their ad spend devoted to this format.  In particular, marketers said that this shift of resources is driven by a growing feeling that traditional banner and search ads are not particularly effective tools, and that customers have grown accustomed to looking past those ads.  As a frequent consumer of digital marketing, I tend to agree that the old forms of display advertising are not very effective.  I see 100's of those ads per day, but it is near impossible for me to tell you who are the advertisers "reaching" me via that medium.  Where I differ with the brands is on the effectiveness of native advertising. Personally, I am not a large consumer of native content, but I believe that it can be a much more natural and seamless integration of brand messaging to consumers.  What is uncertain is whether or not it represents a good investment.  Clearly the marketers are of the mind that is an effective marketing tool, and thus the shift of ad dollars.

One last piece that is particularly interesting around this issue is that native advertising is no longer exclusively the domain of new media outlets.  Venerable publications like The New York Times and Wall Street Journal have begun to create departments that are focused on native advertising, which represents a meaningful departure from their traditional policies of keeping content separate from publication economics.  It will be interesting to see if this blurring of the lines of content and advertising is handled effectively by these publications, or if there is some hit to the legitimacy of their traditional content.  In many ways publishers are forced to adapt themselves in order to meet the demands of the marketplace, and in this case it is clear that the market is demanding native advertising.  In the next few years it will be interesting to see if old publishers are able to effectively integrate this new format into their businesses.

Brands Create Authenticity with New Content Partners

AdAge is reporting that brands have stepped up their efforts to create engaging content with two specific strategic partners; publishers and independent content creators.

For example, Victorinox is partnering with both Wired Magazine and the Instagram-celebrity couple @withhearts and @bethanymarieco to outfit the duo with Victorinox products while they trek among various mountain destinations throughout the world. While providing comp'd swag to influencers is nothing new for brands, Victorinox and Wired Magazine plan to repurpose the content from the pair's own social media channels to the publisher's various content platforms as well as the brand's.

This approach is somewhat novel given that brands are building up their own media properties by supplying them with premium content while relying on publishers, who continue to expand their footprint, to push branded content as well. However, both the brands and publishers realize they lack the all-important "authenticity" factor which makes partnerships with digital influencers so important in this new media equation. All of these efforts ladder back to the growing reality that consumers' eyeballs are increasingly fragmented and brands can't rely on just one channel to break through the clutter.

Publishers such as InStyle are also experimenting with emerging social media channels such as Snapchat to break through to consumers. InStyle has been building up its Snapchat following all year but releasing exclusive content in expectation of marketing a Holiday gift guide through the channel for 20 different advertisers. This tactic will probably prove successful since Snapchat is still a relatively innovative platform for brands and consumers are more open to following brands/publishers and consuming their content.

All of these tactics all boil down to the same marketing truth: Consumers are increasingly expecting the unexpected when it comes to advertising - innovative content and context is not only successful, it is becoming mandatory.