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Influencer marketing allows businesses to engage with leads and potential customers through well-known leaders or popular figures online and on social media.
With the growth of influencer marketing on wide-reaching sites, this type of marketing is making a huge impact not only on budgets, but also on overall business strategies to ensure gains in traffic and revenue this year – if marketers use it correctly.
The Impact of Influencer Marketing in 2017:
Higher Marketing Budgets
The significance of influencer marketing is evident by how marketers choose to spend their budget in 2017. According to the State of Influencer Marketing 2017 report by Linqia, budgets for influencer marketing are on track to double this year because the vast majority of marketers (94 percent) thought this marketing is effective. These budgets will likely go toward sending products to influencers for endorsements and paying them to feature or promote the brand in posts.
Awareness of FTC guidelines
To ensure consumers understand that the posts they see influencers display on social media are sponsored, the U.S. Federal Trade Commission established guides on endorsements. However, not all influencers or marketers have a full understanding of these guidelines.
A Lightspeed GMI and Research Now survey showed about 60 percent of influencers in the U.S. said they were aware of or comprehend the guidelines set by the FTC for sponsored posts in 2016. Marketers knew even less about guidelines as just 11 percent said they were aware or understood and 56 percent of marketers said they were not aware of or familiar with FTC guidelines.
The Linqia study suggested a higher number of marketers had a better understanding than the Lightspeed GMI and Research Now study, with Linqia reporting 55 percent of marketers knew the most current FTC guidelines. In addition, 88 percent said they made it mandatory for influencers to disclose that their posts were sponsored.
With more visibility of what influencer marketing is and what it entails for promotions of products and services, there will likely be a greater awareness of FTC guidelines this year.
Tougher Enforcement of FTC Regulations
The lack of guideline awareness among both influencers and marketers presents potential risks as the FTC begins to crack down on sponsored posts that do not follow these rules. In April, the FTC sent more than 90 letters to marketers and influencers -- including celebrities and athletes -- about the need to disclose their social media endorsements and brand relationships. The FTC’s action came after combing over posts on Instagram that did not clearly state the post was sponsored by a brand.
More Caution When Using Influencer Marketing
Although influencer marketing is powerful, marketers must use this tool wisely and use the example of the failed Fyre Festival as a cautionary tale. Wired reported on the disaster of the Fyre Festival, a music festival billed as a luxury destination site and premiere event taking place on a supposedly private island in the Bahamas. To promote the Fyre Festival, co-founder Billy McFarland paid influencers on Instagram huge sums of money for each post.
The festival turned out to fall short of its lofty promises of private jets, high-end food and music entertainment. Consumers who felt duped by organizers blamed the influencers who promoted the festival. In addition, only one influencer indicated that the post was actually sponsored content by using “#ad,” going against FTC guidelines.
Greater Need for Influencer Marketing Automation
Since influencers are taking up a larger chunk of inbound marketing budgets for many marketers this year, automation is more of a necessity to keep up. The State of Influencer Marketing study indicated a little over 1 in 10 marketers used a software as a service (SaaS) platform to automatically reach out to influencers and report on metrics.
Automating these functions are likely to streamline operations similarly to how marketers handle relationships directly with customers, but influencer marketing may have a bigger end result because of the popularity of influencers and their ability to reach a larger audience with just one post.
Focused Attention on Return on Investment (ROI)
With some influencers earning thousands per post, brands should ensure their ROI is higher than the cost of tapping them to promote their businesses. The Linqia study revealed 78 percent of marketers said their No. 1 challenge for 2017 was how they will determine ROI. To properly record and report outcomes, marketers will have to review their current analytics tools and key performance metrics for search engine optimization (SEO) and other inbound marketing techniques.
Metrics that help calculate ROI and whether certain sponsored posts drove revenue more than hurt will most likely include cost per click (CPC) and cost per engagement (CPE), allowing companies to pinpoint the posts that resulted in higher numbers of traffic and how endorsements compare to their other inbound marketing tools.
Now that you understand the impact of influencer marketing, implement it into your social media strategy now. With the basic knowledge of influencer marketing, you'll be on your way to bringing new leads to your company!
Published on May 22, 2017