Why brands are still betting big on influencers

• Influencer-led marketing has been the hottest trend this year and has grown at an unprecedented rate.
• Budgets for digital media have grown from less than 5% to over 50%, in some cases this year.
• The most obvious question is, what’s causing the budgets to swell at such a high rate? Apaksh Gupta, CEO, One Impression answers.

Just five years ago, could you possibly imagine that by creating digital engaging content on social media, you could get famous? More so, make a great livelihood out of creating content? Look around and you will realise that content creators aren’t just making great money but some of them have turned into millionaires in a really short amount of time. To many, these creators are living the dream life with just about everything that a person could ask including fame, money, travel or lifestyle.

The question is, where is all this money coming from? For those of you who are active on social media, you might know the right answer. Let me guess, the largest of brands from across the world including the likes of Nike, Coca Cola, Unilever are heavily investing a large part of their marketing dollars into this new way of reaching and engaging customers -- influencers. Influencer-led marketing has been the hottest trend this year and has grown at an unprecedented rate.

With millions of content creators around the world, brands are creating and distributing user generated content at scale in extremely creative yet cost effective ways. While influencer partnerships started in a small way just about 5 years ago with no dedicated budgets for influencer campaigns, brands have been quick to realise the ROI the channel is driving for them.

Brands across FMCG, Retail, Ecommerce, Internet, Gaming, Automobile and more are aggressively increasing their spends on influencer partnerships. Budgets have grown from less than 5% of the digital spends just about three years ago to over 50% in some cases this year. Marketers have started incorporating dedicated spends on influencers in their yearly marketing plans. The most obvious question is, what’s causing the budgets to swell at such a high rate?

While the answer lies in the details, it’s also imperative to look at the broader picture. Between 2014 and 2019, internet penetration has drastically increased, smartphone prices have exponentially decreased and camera quality is at an all time high. All this has given rise to a whole new generation of content creators globally, talking about diverse topics ranging from beauty, mental health and fitness to food, fashion and lifestyle.

Technology advancement has also given way for large amounts of content to be created in both national as well as regional languages along with the birth of new formats such as short videos taking over the world in a frenzy, making it easier than ever for anyone around the world to become a quality content creator.. All these trends put together are opening up the massive world of influencer led marketing.

In 2019, brands across categories continue to invest budgets ranging from just about $50,000 annually leading up to $5 Million and more on influencers. A major chunk of the money is spent between influencers on Instagram and YouTube worldwide but new age platforms such as TikTok are also quickly catching up. Aspirational and experiential categories such as beauty and gaming are considerably more bullish on their influencer marketing spends with over 25% of their digital budgets being invested into the channel.

Another huge trend that has recently emerged is how brands have started looking at long term partnerships with key influencers rather than one off campaigns bringing more money and stability into the ecosystem. Many new age brands around the world have proved the mettle of the channel with millions of dollars in revenues, only backed by influencer advocacy on social platforms. Recently, we even saw a billion dollar plus takeover of the Kylie Jenner led beauty brand, Kylie Cosmetics showcasing how influencers are driving commerce.

Some critics continue to question the longevity and effectiveness of the channel, but if you analyse the data, influencer marketing has just begun to build momentum. We clearly foresee innovation in models of brand partnerships, more content formats, newer social platforms and better content tools helping more people around the world create great content. All this will only lead to more social engagement and more brands jumping in a stronger way with larger part of their annual spends going into influencers in a more structured and effective manner. The future for influencers seems long and strong.

- By Apaksh Gupta, CEO, One Impression