What small businesses need to know about leveraging influencer marketing to expand their reach and profits

• Viral Nation is one of the largest influencer marketing agencies in the industry.
• Joe Gagliese and Mathew Micheli founded the company in 2014, and Gagliese said it overall has grown 300% each year on average.
• Gagliese talked to Business Insider about how small businesses can leverage influencer marketing to expand their reach.
• For any small business, examining audience demographics is essential, and large influencers may not be as effective as one would think, he said.
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Joe Gagliese and Mathew Micheli founded the influencer marketing agency Viral Nation in September 2014. They started the company as an influencer talent agency and worked to connect influencers with brands that wanted to market their products on social media.

As the company grew, they expanded it to a full-service marketing agency. They now work in over 30 countries and do everything from connecting brands and influencers to the content production itself.

"When we started the company, no one was using influencers in the way they use them today," Gagliese said.

Now one of the largest agencies in the industry, Viral Nation has worked on campaigns with Twitch, Stella Artois, BudLight, and Mash.com, and with celebrities Zane Hijazi, Jeannie Mai, and Lonzo Ball, to name a few. Since its inception, the company overall has experienced an average annual growth rate of 300%, according to Gagliese.

In 2019, Viral Nation won "Best Large Influencer Marketing Agency" at the Influencer Marketing Awards and was named one of the fastest-growing agencies by Adweek.

While large brands have jumped on the boat and typically reserve a budget for influencer marketing, smaller businesses can benefit significantly from it as well - if they play it right.

"Influencers put word-of-mouth on steroids," Gagliese told Business Insider. "When an influencer talks about a brand - especially startup brands that don't already have a lot of recognition - it's just like a third-party validation that something is good."

A 2019 survey conducted by Influencer Marketing Hub, in partnership with Viral Nation and NeoReach, found that businesses make $5.20 for every $1 spent on influencer marketing on average.

"The barrier to entry into influencer marketing is a lot smaller than traditional channels," Gagliese also noted, making it ideal for smaller businesses who are not able to, say, place ads on TV.

And influencer marketing is especially important for business owners who are hoping to reach a younger audience, Gagliese said.

When selecting influencers to partner with, it's important to recognize where their audience is. Many influencers don't have all of their audience in one specific area, Gagliese explained.

But finding hyperlocalized influencers is not impossible.

"Let's say you're Tom's Bake Shop in New York and you want to get into influencer marketing," Gagliese said. "You will be able to find influencers whose audience is, say, 80% New York City, and those would really work for you."

Agencies can help businesses find influencers that fit their niche, or businesses can send their products to influencers without an agency - but the challenge lies in finding influencers whose audience may be interested in their product.

"With the bigger brands, it's like yes: I drink Bud Light, I like Bud Light," Gagliese said of his process of working with influencers. "With the smaller brands, we send influencers the product and say, 'Hey, try this, if you like it, we'll move forward.'"

Once you've found influencers to work with, don't be afraid to ask them questions, said Gagliese: You're paying them. Businesses should ask influencers about their audience; Instagram provides age, gender, and location demographics of their followers.

Let's say you want to partner with a woman influencer to sell swimsuits. "If, for instance, her following is 98% male, it would not be effective to promote women's swimwear through her platform," Gagliese explained.

Beyond demographics, brands should verify the authenticity of an influencer's following. Instagram users can buy fake followers on their accounts, giving the impression that they have a larger reach than they really do.

One sign that an individual's following may not be authentic is few likes and comments on posts compared to the number of followers. There's no hard or fast rule on what constitutes low engagement, but the engagement rate on an average Instagram account is 3%, according to Influencer Marketing Hub. This rate is typically higher for accounts with fewer followers.

Other signs of a falsified following include comment relevancy and growth trajectory: Irrelevant comments may be from a robot. Gagliese also suggested businesses examine the speed at which the influencer grew their following. Random spikes in followers or subscribers may indicate that the account has bought them. Tools like Social Blade give insights into an account's growth rate over time, and HypeAuditor can assess the authenticity of an account's following.

"If you're a startup or a small ecomm[erce] company that isn't localized, influencer marketing can help you a lot," Gagliese said.

For these types of brands, he recommended "creating an army of microinfluencers and working with them to grow the brand."

A microinfluencer is an individual with approximately 10,000 to 100,000 followers. Because of the smaller nature of their audience, they generally have a stronger connection with their followers. What this means for a small business owner is that their followers will likely be more receptive and engaged when they discuss a new product they're using.

A few years ago, it would be possible to do this simply by sending these influencers products. Today, even microinfluencers command over $1,000 for a post.

"You're going to have to pay all of the small influencers you work with," Gagliese emphasized. "But it's really about how do I get them to believe in my product, how do I get them to use what I'm selling in their daily lives."

The final thing small businesses should consider when choosing influencers for their campaign is what platform would be best for promoting their product.

"If I have a product that needs a lot of explanation, I may want to lean more toward YouTube and influencers that typically make longer-form content, whereas if I have a really cool startup that has a subscription process for pets, I'm probably going to lean toward Instagram and pet/dog influencers," Gagliese said.

They should also place just as much focus on their own social media presence.

"One of the biggest byproducts of doing influencer marketing is that the influencers' audiences come and check out your social," Gagliese said. "A lot of these brands neglect this and maintain very rudimentary Instagrams with just pictures of their products."

This is a missed opportunity because, as a brand, your goal is to build an audience of individuals who may be interested in purchasing these products.

"Do cool Instagram stories. Create a personality for your brand. Start doing videos," Gagliese said. "That type of stuff makes influencer marketing so much more effective, especially if you're just starting out or making a push toward Gen Z and millennials."

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