Anyone who has watched one or both of the recent dueling Fyre Festival documentaries was undoubtedly struck by one realization: Wow. Influencer marketing is powerful stuff. Of course, in this case, the success of influencers in driving paying attendees to the ill-fated festival isn’t a case study any reputable brand would be in a hurry to replicate. But the power of influencer marketing — particularly behind a reputable product — is undeniable.
Influencer marketing has been picking up steam for years now, and it shows no sign of slowing. By 2022, influencer marketing could reach anywhere between $5 billion and $10 billion. Even if you take the midpoint of that estimate, we’re still looking at a robust five-year compound annual growth rate of 38%.
As many as 65% of brands expect to increase their investment in the powerful channel of influencer marketing, according to research from the World Federation of Advertisers. That’s perhaps not surprising given that another recent study found that brands are seeing an average return of $6.50 on every influencer dollar invested. For some brands, that ROI reportedly reaches higher than $20 to every dollar.
All this growth and optimism around influencer marketing exists despite recently publicized concerns over lack of transparency within the influencer channel. Last year, Unilever CMO Keith Weed famously issued a call for greater transparency in the influencer channels, declaring that Unilever will not work with influencers who buy followers and would prioritize partners who increase transparency and help eliminate bad practices throughout the ecosystem.
Indeed, transparency must be prioritized within any growing channel if brand investment (and subsequent results) are to remain strong. And within a channel like influencer marketing, much of that transparency can be enabled through the right kind of measurement and incentivization programs between brands and their chosen influencers.
Unfortunately, to date, brands have struggled to hold their influencer partners accountable for true business results. The top success metrics employed in influencer campaign in 2018 were engagement (90%) and traffic and clicks (59%), according to BI Intelligence. True business metric impact metrics like conversions and product sales ranked lower on the list, at 54% and 46%, respectively. Meanwhile, the World Federation of Advertisers found that the main goals of brands in boosting their influencer investments included improving brand awareness (86%), reaching new audiences (74%) and improving brand advocacy (69%).
While awareness and audience expansion are noble pursuits, there’s no reason brands today shouldn’t be holding influencer marketing accountable for business results in the same way they do other digital channels. Part of the challenge is that some marketers don’t fully the possibilities for tracking and optimizing this important channel. Let’s dig into three areas where retailers have the opportunity to hold their influencer marketing spends more accountable.
If you’re going to hold a channel accountable for business impact, the obvious key first step is getting the right measurement in place. This means being able to tie specific purchases and activity directly to each influencer.
One of the simplest ways to do this is to provide each influencer with unique tracking codes and URLs for their programs. In doing so, tying activity to results becomes fairly straightforward. Even if your agreement with the influencer isn’t directly tied to conversions, unique tracking codes can help identify engagement and performance in other ways. Unfortunately, as of a year ago, only 29% of influencer campaigns were using trackable URLs. But that’s starting to change.
Unique tracking can also help capture and quantify offline influencer activity as well. For example, influencers who have direct physical contact with prospects, such as fitness specialists who teach classes, can provide QR codes to attendees that bring them to a company’s online store.
As retailers get a better handle on their influencer measurement, they might want to start pivoting away from flat-fee influencer contracts and instead building their relationships around cost-per-action agreements. Such agreements benefit retailers by ensuring they only pay influencers when they drive desirable results. But they can also benefit influencers by better compensating them for their true, long-term contributions to a retailer’s business. In this regard, retailers should strive to:
- Compensate for life-time value: If an influencer is focused on driving signups that lead to long-term revenue for a retailer, retailers can set up payment structures that reward influencers on an ongoing basis for the loyal customers they recruit.
- Structure rewards thoughtfully: The best influencer programs reward influencers at a higher rate for products that drive higher margins, thereby incentivizing influencers to focus their energy in ways that boost the retailer’s overall profitability.
Creating A Data Loop
Finally, with proper measurement and incentive structures in place, retailers should commit to providing influencers with the type of information that can help them improve their efforts. That means not only collecting data on influencer engagement and conversions, but also feeding that information back to influencers so they can understand which of their efforts are moving the needle. Only in this way can influencers be empowered to refine their programs on your behalf.
As retailers invest more in their influencer programs, they also must begin to better understand how this channel ties into their larger marketing efforts. Fortunately, doing so isn’t nearly the insurmountable obstacle that some retailers fear. Success starts with committing to accountability within the influencer channel.
Anshu Khurana is SVP – Partnerships at Partnerize and is responsible for growing relationships with the 335,000+ channel, loyalty, influencer, referral, publisher and brand-to-brand partners connected to the Partnerize platform. Prior to joining Partnerize, she served as SVP, Analytics Solutions for Grapeshot, now an Oracle company. At Grapeshot, she led the business unit responsible for incubating and building new partnerships for the company’s Contextual Intelligence Platform. Previously, Khurana spent four years at Facebook where she focused on building and growing global strategic partnerships for Facebook Advertising and Messenger platforms, driving over $1 billion in revenue on a global basis.