What is Influencer Marketing?
Brands are combining social media marketing with influential, highly-regarded personalities to create explosive, successful online marketing campaigns. These efforts are producing increased customer loyalty and very high conversion rates along with extremely high return on investment (ROI) relative to the marketing expenditures.
For many new to the extreme results of influencer marketing these claims may sound outlandish. But these results are just what the companies that are investing funds into these very successful brand promotion space are seeing every day.
For a working definition, influencer marketing is working with individuals who have broad reach to a large audience, with a market segment that overlaps with the brand’s customer-base. The end result of an influencer marketing campaign is to expand brand reach to the new prospects largely through promotional efforts that utilize that influential personality.
This article discusses how influencer marketing drives ROI for brands.
Types of Influencers
Generally, an influencer is anyone who has a large and loyal following, ideally online, that is responsive to her tastes and recommendations.
The types of influencers include:
- Book authors and columnists
- Popular blog and social media subject matter experts
- Charismatic personalities and celebrities
- Well-connected individuals in business, the arts and entertainment
Additionally, influencers are ranked by their reach potential according to the size of their audiences, how persuasive their influence with their audience is and the breadth and depth of their expertise.
Influencer Marketing Trends
The idea behind using personalities for product promotion is certainly not new. Celebrity endorsement in the US are as old as journalists and business owner support of political candidates.
Today the popularity of blogging and Facebook social media platforms represent the online outlets that more than 62 percent of these influencers use to reach their audiences.
A 2015 study published by Technorati revealed that companies spent $336 million on influence bloggers to increase their brand promotion using personality-based influencer tactics. Such budgets may represent a type of influence training for the brand’s targeted influencers.
Further, 84 percent of marketing professionals stated their intention to move forward with at least some form of influencer marketing campaign this year.
Brands directly market to influential individuals to increase awareness of their products and services. Following conversion of the influencer for that desired market, the brands gain reach to an expanded customer-base utilizing campaigns that rely on accessing the prospects through the influencer and jointly with the influencer.
ROI of these marketing campaigns is assessed through a online web-based analytics tools that evaluate traffic spikes and sales figures and brand familiarity surveys that reveal the bottom-line effectiveness.
As a Profitability Model, Increased ROI
In terms of ROI, the influencer model is extremely effective. It has been referred to as a form of arbitrage, a financial term designating exploiting a market opportunity to make a risk free profit. This can be seen in the ROI figures where 10-fold ROI is becoming more frequently reported by brands that use influencer marketing.
Because it reaches an already existing market through a highly regarded authority, the rate of return in terms of marketing dollars is much higher than traditional advertising campaigns. It has been ranked as the most cost-effective channel for acquiring customers by 25 percent of online marketers.
Reaching customers this way is also highly scalable. Additional markets can be reached by working with new influencers.
Other Benefits of Engaging Influencers
Hand in hand with the increased ROI go other benefits with personality-based customer acquisition including higher conversion rates for online campaigns and increased brand loyalty. These are to be expected given the large overlap of the customer and the influencer interests. The purchase satisfaction is also increased from the supportive sense of community provided through the influencer customer acquisition channel.
Summary and Conclusion
Supporting levels of success never previously imagined, online marketing campaigns are benefiting from the high synergy created by combining blogs and social media with influencer reach to expand their online markets and improve brand recognition and loyalty of new and existing customers.
As a marketing tool to increase sales, influencer engagement creates exceptionally high ROI’s relative to other marketing efforts. We are still in the beginning phases of this exciting new form of marketing, but already it is outperforming other traditional means of advertising.