- The average price for a sponsored post on social media is expected to drop between 15% and 25% in the near term, according to a new report from the influencer-marketing firm Izea.
- The global economy is signaling that it's heading for a recession, which has historically driven down sponsored content rates in the influencer-marketing industry.
- During the last recession, the average cost of a sponsored post fell by 62.7% between 2008 and 2010, according to Izea's data.
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The average price for a sponsored post on social media is expected to drop between 15% and 25% in the near term as companies and marketers respond to economic fallout from the coronavirus outbreak, according to a new report from the influencer-marketing firm Izea.
The global economy is signaling that it's heading for a recession, which has historically driven down rates in the influencer-marketing industry.
"We're at an interesting point where brands are in a limbo area where they're kind of waiting to see what happens before they start spending their budgets as normal," said Anish Dalal, CEO of the influencer-marketing agency Sapphire Apps. "Highly funded startups are much more cautious than a corporate client for us because they're really waiting to see what happens. They have to worry about what might happen to a future funding round."
During the last recession, the average cost of a sponsored post fell by 62.7% between 2008 and 2010, according to Izea's data. The influencer-marketing industry was much smaller at that point, and its losses had a limited impact on the advertising industry as a whole.
The influencer industry has since ballooned, growing from a $500 million industry in 2015 to a $8 billion category last year, according to analysis from the influencer-marketing firm Mediakix.
As the industry has grown, rates for sponsored content have increased dramatically. A sponsored post on Instagram that cost an average of $134 in 2015 jumped to $1,643 in 2019, according to a 2019 report from Izea. The average price of a sponsored YouTube video rose from $420 to $6,700 during the same period.
Engagement on sponsored posts is spiking, even as advertisers cut campaigns
Izea's prediction that rates for sponsored content will drop in the near term comes at a time when ad impressions and engagement on influencer posts are spiking. Individuals who are socially isolated due to the coronavirus outbreak appear to be spending more time online, according to data from marketers.
Izea notes that social-media traffic is up in its report, but suggests that broader fallout from a slumping economy will cut into sponsored content rates going forward.
Some travel advertisers have already cut budgets and brick-and-mortar retailers are refocusing on e-commerce. (Some tech companies that sell productivity tools for remote work have increased their investment in influencer campaigns, however.)
"Despite increased social media usage, expect the price per post on all social platforms to fall dramatically in the short term, and that may continue depending on the length of coronavirus impact," Izea wrote in its report.
Influencers have already begun adjusting their monetization strategies this month as brands cancel or postpone campaigns and travel, and event-based opportunities disappear. Some creators are focusing on longer-term bets like selling merchandise directly to consumers. Other influencers are leaning into alternative revenue streams like teaching online classes on topics like fashion that they normally create content around.
"I think focusing on the long term, and setting adjusted and realistic goals every day to keep you focused and not distracted by short-term blues, helps me a ton," Instagram influencer Christina Vidal told Business Insider.
For more information on the economic impact of the coronavirus outbreak on the influencer marketing industry, read these Business Insider Prime posts:
- Instagram and YouTube stars are shifting strategies as some influencer-marketing sectors hit a 'standstill,' focusing on income streams like directly selling products and online coaching: We spoke to several influencers and industry experts about the impact of the coronavirus on the industry and what new strategies they are applying.
- Influencer marketers say sponsored Instagram posts have had views, likes, and comments sharply increase the past 2 weeks: As the coronavirus outbreak increases social isolation, influencer marketers are seeing greater user engagement on apps like TikTok and Instagram.
- Coronavirus is 'impacting all talent' on Instagram as brands cancel influencer-marketing deals and paid events get put on hold: We spoke to several bloggers, travel influencers, and industry experts about the impact of the coronavirus on the influencer industry.