The Growing Influence of Influencer Marketing

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Amisha Gandhi, head of influencer marketing at the software giant SAP, wanted to inject more value into the company’s Leonardo Live event centered on digital innovation and transformation. She invited five top influencers to participate in the two-day conference, which took place earlier this summer in Frankfurt, Germany, and attracted 1,500 attendees, including C-level and senior digital executives.

The influencers, all expert in areas such as machine learning, the Internet of Things, and big data/digital analytics, led breakout sessions and formed mini-groups featuring CMOs and CIOs discussing how they’re digitally transforming their brands. The quintet was also available to answer queries from SAP’s customers about the company’s products and services.

“What we get from influencers is inspirational, aspirational, and a valid point of view,” Gandhi says. “We’re giving our customers information they won’t get at any other event. To meet these experts is different from talking with product vendors; customers get exposure to different expertise and different knowledge.”

The influencers sparked 50 percent of all social media conversation associated with Leonardo Live, Gandhi says. But the conversations didn’t end there. SAP’s marketing team repurposed content from the influencers’ remarks at the conference across other marketing channels, including online videos and as part of an ebook focusing on digital innovation.

“It shows the power of influencer marketing in terms of extending the marketing message beyond an event and having content that can be used for field sales and have a longer shelf life,” Gandhi says. “Influencer marketing is not about reaching everybody, but about reaching your buyers in a way that’s more personal.”

As evidenced at SAP, influencer marketing — where brands work with key individuals who have clout with a specific market or community — is rapidly ascending to the top of the marketing stack and commanding more budget. Fifty-five percent of marketers plan to spend more next year on influencer marketing, according to a study released by Brian Solis, principal analyst at Altimeter, a Prophet company, in conjunction with TopRank Marketing and Traackr.

The study, titled “Influence 2.0: The Future of Influencer Marketing,” is based on the responses of 102 brand strategists and marketers. It found that while 5 percent of companies are currently integrating influencer marketing across all marketing activities, 57 percent said they planned to do so within the next three years.

The surge in influencer marketing is being fueled by several factors, primarily the explosive use of social media channels, enabling brands to meet people where they interact online, such as Facebook or Instagram. By deploying influencer marketing campaigns, brands can also spread their messages without having to worry about ad-blocking technologies online. Perhaps most important, the discipline provides an avenue for more authentic brand messaging, versus traditional online ads.

“The world is heading in a direction where consumers expect personalization,” Solis says. “Influencer marketing should be a service of marketing teams working externally with the right influencers in the right context and internally with customer-facing teams, to integrate the customer journey across every touchpoint. That is the answer.”

As the market grows, however, more questions emerge, such as how to properly disclose the nature of the relationship with an influencer so brands don’t run afoul of regulations (see “FTC Sharpens Focus on Influencer Marketing,” below).

Marketers also need to consider various pricing models when engaging influencers. A lot depends on the extent of the relationship and the marketing exercise. In many instances, particularly in the B-to-C space, influencer marketing is shaping up as “pay for play.” Among the various payment methods are cost per acquisition (CPA), in which influencers are compensated based on the number of sales or subscription sign-ups they drive, and pay per post, for which influencers are paid a flat rate for creating and publishing a piece of content.

“A lot of people are naive when they get into influencer marketing,” admits Holly Pavlika, SVP of marketing and content at Collective Bias, which works on influencer marketing programs with more than 135 advertisers across several CPG categories. “They don’t realize how much work it is and how sensitively companies need to reach out to social influencers. It’s all about building relationships, which have to be two-sided, and allowing influencers to be creative so the content can be authentic despite being sponsored.”

Pavlika advises brand marketers budgeting for influencer marketing to address these important questions:

  1. Does the influencer’s market niche and voice fit the brand’s overall messaging and story?
  2. How long has the influencer been creating content? Is the influencer considered an expert in his/her niche community? Does he/she have experience working with brands?
  3. Is the influencer part of the brand’s target audience?
  4. Has the influencer’s content performed well in the past? Are audiences engaged by it?
  5. What are the measures of success? Store traffic? Sales lift? Buzz and/or awareness?

A significant part of influencer marketing’s appeal is that it combines PR and marketing, says Lee Odden, CEO of TopRank Marketing, whose clients include Dell, Oracle, and SAP.

“If brands collaborate on content with influencers, the company has a valuable asset that can be promoted to the influencer’s audience and repurposed as a brand marketing asset,” he says. “It’s just like any other marketing asset, but has the added value of a third-party endorsement and distribution.”

Microsoft worked with 12 influencers for its new #FutureByMe campaign, designed to reach students as they head off to college. The campaign includes several videos featuring “YouTubers,” or YouTube celebrities, discussing a wide range of topics relevant to students, such as studying abroad or grappling with self-confidence issues.

Throughout the videos the influencers use Microsoft Surface devices as they share their stories. However, the Surface isn’t the focal point; rather, it’s how the influencers took different paths throughout college and life.

“It’s a lighter touch,” says Jeff Rubenstein, a lead on Microsoft’s influencer relations team, which is part of Microsoft Communications. “The product is clearly there, and is likely to be demonstrated and shared, as opposed to hitting people over the head with a ‘marketing message’ that people are going to tune out.”

Cathy Planchard, president of All Told, a division of the PR firm Allison+Partners, says the key to a successful influencer marketing program is selecting influencers very carefully.

“Identification is the homework that has to happen,” says Planchard, whose agency works with Kimpton Hotels, Quaker, and Tropicana, among others, on their influencer marketing activities. “A lot of people start with the campaign idea and try to back into the influencers. We do the opposite, first making sure the voice matches the brand.”

She adds that brands ignore influencer marketing at their own peril. “IM is a word-of-mouth strategy,” she says. “Any company that is not evolving to include it is missing where the landscape is headed.”




FTC Sharpens Focus on Influencer Marketing

The surge in influencer marketing among both brands and organizations is drawing closer scrutiny from the Federal Trade Commission, which regulates advertising and marketing.

In April, the FTC staff sent out more than 90 letters reminding influencers and marketers that influencers should “clearly and conspicuously” disclose their relationships to brands when promoting or endorsing products through social media. It marked the first time that FTC staff has reached out directly to warn social media influencers.

According to the FTC, its letters were sent in response to a sample of Instagram posts making endorsements or referencing brands. Some of the letters addressed particular disclosures that were not sufficiently clear, such as “#sp,” “thanks [Brand],” or “#partner.”

“Where an Instagram post seems very natural, and it feels personal rather than commercial, that’s all the more reason to disclose that the influencer is being compensated,” says Mamie Kresses, an attorney in the FTC’s Advertising Practices Division.

Some brands need to get up to speed: Forty-five percent of marketers say they are not familiar with the FTC’s most recent disclosure guidelines, according to the “State of Influencer Marketing 2017,” a report released late last year by the influencer marketing firm Linqia.

The report, based on the responses of 170 marketers across a variety of sectors, including CPG, media, and retail, also found that 12 percent of marketers admit to not complying with the FTC guidelines.

“Brands that don’t require disclosure [among influencers] will suffer the most over the long term,” says Amy Mudge, a partner at the Washington, D.C.-based law firm Venable LLP, who specializes in consumer protection and antitrust. “The biggest threat to brands is a lack of consumer trust. That’s why marketers have to make sure their influencers are disclosing the connections” to the company.

The FTC’s Endorsement Guides, which apply to both marketers and endorsers, say that if there is a “material connection” between an endorser and an advertiser, the relationship must be fully disclosed. A material connection could be a business or family relationship, monetary payment, or the gift of a free product.

Kresses recommends marketers bake the “endorser” guidelines into the company’s DNA and regularly educate influencers who are working with the company about the rules of the road.

“Now that’s it’s possible to advertise across so many social media platforms — and consumers can’t necessarily discern what’s an ad and what’s not — there’s a bigger responsibility on marketers for disclosure,” Kresses says. “We’re not dictating the formula; just make clear that there is a connection between the marketer and influencer and communicate it where the consumer is likely to see it.”
— M.S.

Matthew Schwartz
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