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This article was originally posted on The Social Times, AdWeek’s social media blog.
Influencer marketing is taking off: rapid growth, fast adoption, hundreds of millions invested, new influencers and brands jumping into the market, new channels emerging, and dedicated agencies are springing up.
Yet with all this explosive growth, an influencer’s numbers are hard to verify, there is a lack of consistent and reliable metrics, and determining the cost for influencer endorsements is still a black box. These are indicative not of a bubble but of a boom and the accompanying chaos and disruptive change that accompanies a sea change in the industry.
For influencer marketing to become as pervasive, valued, and accepted as other forms of advertising and online marketing, a more transparent and automated marketplace needs to emerge. The ecosystem that grew around the Google Adwords/Adsense platform is an example of what can occur when an automated, transparent market for advertisers is established.
Building a marketplace to automate and scale influencer marketing is the Holy Grail. With the industry still in its infancy, several developments first need to occur. At a structural level, the industry needs to move from a service-oriented solution to a technology-oriented solution.
Today, hand-holding is important, but as the industry matures, technology will play a greater role in building a centralized platform where brands and influencers can meet. A centralized marketplace will require three core elements: greater scale, transparency and metrics, and automated campaign management.
Scale is crucial. Greater deal flow is needed for a platform to evolve. Companies are still dipping their toes in the space. Most advertising dollars still go to traditional advertising. But this is changing quickly. Total spend on digital advertising is set to surpass TV ad spend in 2018. Social media advertising is one of the fastest growing digital strategies and influencer marketing is a key driver of this growth.
Results of recent influencer marketing studies show:
- Marketing-induced consumer-to-consumer word of mouth generates more than twice the sales of paid advertising. (McKinsey)
- Customers who were acquired through word-of-mouth have a 37 percent higher retention rate. (McKinsey)
- On average, marketers who implemented an Influencer Marketing program in 2014 received $6.85 in earned media value for every $1.00 of paid media. (Burst Media)
- Marketers felt the biggest issue is scale with 59 percent intending to increase their influencer marketing budgets. (Tidal Labs)
Higher deal flow will lead to the development of a platform where a centralized marketplace can emerge. A platform allows advertisers to search all influencers by relevant attributes; it encourages advertisers and influencers to converge in one place and removes the friction and overhead of a services approach.
Today advertisers need to jump through several hoops to reach the influencers of choice. If they are doing the outreach themselves, they need to email or contact influencers on social media and hope for the best. If they are using an agency, their access is limited by the agency’s network of influencers, and those individuals may not be the best fit for the advertiser’s needs.
Transparency and Metrics
Another big step is developing a standardized pricing model and means to measure the value and impact of an influencer. There are very few benchmarks that attempt to measure the value of an influencer. Currently, the industry is secretive and lacks transparency.
As we move from a services model to one driven by technology this will change. The tools to analyze each influencer’s relevance and influence will be part of the platform allowing advertisers and influencers to establish fair pricing. A centralized platform will also increase competition, weighing demand against supply and letting the market determine fair pricing.
Launching a campaign from the ground up is incredibly costly and time-consuming. Big brands often have teams of people working on the campaigns full-time. To open the market to organizations of all sizes and decrease the overhead of launching campaigns technology infrastructure needs to be developed to manage and track campaigns: automating everything from outreach, to pitching, to creative development, to tracking the posts, to paying the influencers.
Overhead costs are holding the industry back and cut into the ROI of influencer marketing. Streamlining this process will reduce overhead, increase ROI, and make campaigns attractive to smaller organizations. All this adds up to increased deal flow and greater scale
The Power of a Platform
Influencer marketing is in its early days but its power to persuade and demonstrable ROI will assure its rapid growth. Developing a platform that brings all the parties together has the potential to greatly increase deal flow, allow for transparency in pricing, develop reliable analytics, and provide campaign management automation.
A centralized marketplace will only increase the momentum that influencer marketing is enjoying. As a platform increase in scale, it creates an ecosystem, providing opportunities for entrepreneurs to plug-in to the action, for talent to broaden their offerings, and for advertisers to invest in and explore new channels and means of connecting with their customers.