The Evolution and Future of Influencer Marketing

1. In your experience what does the current spend of media going for traditional, digital, and influencers?

The current spending in the overall advertisement digital industry is peaking towards 1 Lakh Crores by 2024 end as a complete industry size. Out of this total, TV advertisement’s market share is at 40% and Digital advertisement’s market share is at 35% digital.

However, we are now at a stage where digital will surpass TV’ ad spends by the end of this year. 

Out of the total digital spending, a mere 4-5% budget allocation is done in Influencer marketing pegging the industry size at around 800 to 900 crores 2022-2023.

It is expected that its market size will increase to around 2,300 crores by 2024 end and is projected to reach between 2,700 to 2,800 crores by 2025-26, aggregating at a 25% CAGR. These are figures as per various independent researches conducted by Agencies. 

This represents the current state of the industry. As digital's share in ad revenues continues to increase, the influencer marketing share is expected to rise as well.

In most of the small scale FMCG & Ecommerce brands we are observing today, brand managers are allocating 90% of their efforts towards influencers to spread word of mouth and relying less on performance marketing and other forms of advertising.

This shift is becoming more profound among smaller brands, and it will be interesting to see what percentage of their total spend these brands will continue to spend on Influencers as they will scale up.

2. How has the industry evolved in the last 3 to 5 years? What are the latest trends? Where do you foresee the industry in the next 3 to 5 years?

Influencer marketing has come a long way since 2014-15 when Influencer agencies and Influencers had to convince brands to consider brand endorsements. At that time, the challenge was that brands questioned the influencer's lack of Influential power.

They preferred relying on larger-than-life celebrities’ face value rather than the influencer's. However, in certain higher-end categories like FMCGs and automobiles, brands began to see the return on investment (ROI), and the dynamic started to shift rapidly. 

The trend caught on like wildfire because it was a new and trending medium.

The ROI was particularly impressive in India, as influencer marketing's cost per impressions (CPMs), cost per view (CPV) and cost per engagements (CPEs) were significantly lower compared to other advertising platforms.

Influencers charged relatively small amounts for endorsements or integrations.

Over the last 3 to 5 years, we have witnessed a significant shift in this dynamic. Some influencers have risen to the level of macro influencers, and they now charge rates comparable to celebrities.

However, in terms of ROI and sales generated, they are still more cost-effective compared to other industries and countries. 

Now, looking ahead to the next 3 to 5 years, the trend is expected to shift back towards niche and micro-influencers.

Brands are realizing that these influencers offer a valuable connection with their audience, creating trust. This is where the real value will be unlocked because the industry is currently riding on the success of breakout influencers. 

Another major shift on the horizon is that influencers will start to be seen as a direct revenue generator rather than just a branding investment. Currently, many marketers view influencer marketing as a branding exercise, and the key performance indicators (KPIs) are often misaligned.

This will change as influencers start to account for a proper percentage of media spend. When this happens, brands will naturally ask, "What ROI are we getting?" This shift will bring social commerce into play, with niche and micro-influencers delivering significant ROI. 

Social commerce is the next big trend we foresee in the next 3 to 5 years, gaining significant traction. Additionally, we anticipate the rise of creator-led brands, which ties into the larger trend of influencers becoming business leaders in their own right.

3. Some of the influencers have sort of become celebrities and some celebrities have become influencers. Don’t you think this is ironical & defeats the purpose of influencer marketing in the first place?

I believe that influencers have indeed transformed into celebrities, and today they serve as trendsetters. It's true, as I mentioned earlier, that certain influencers have essentially become celebrities in their own right.

They've built substantial followings that rival those of traditional celebrities, and they often have even more loyal audiences because their followers can relate to them on a deeper level. 

If we look back at the 1980s and 90s, we see two distinct categories of followers. One group idolises celebrities born into the industry, while the other group has immense respect for actors who started from scratch.

However, the latter group typically took many years of hits, hard work, and industry support to reach mass popularity. In contrast, these influencers have achieved celebrity status in a remarkably shorter span of time, often within just 3 to 5 years.

The pandemic played a significant role in increasing their reach and influence. 

It's true that these influencers started with niche audiences and have now become mainstream celebrities. This doesn't mean they will lose their appeal, but rather, they are entering a new category alongside traditional celebrities as celebrity influencers.

This shift raises questions about the original purpose of influencer marketing. 

While it may seem like this transformation contradicts the initial idea of influencer marketing, it's important to acknowledge the hard work and dedication these individuals have put into their craft.

They deserve recognition for their achievements. However, it does mean that they are now being viewed as celebrity endorsements by media brands.

Nevertheless, the core definition of what an influencer is has not changed. I believe that the industry will eventually come to a consensus, perhaps after this year, about who the real influencers are and treat them accordingly.

These influencers also serve as ambassadors for the industry, highlighting its potential and significance.

4. There have been a lot of concerns around morality, safety & legal aspects. As we have seen in influencers for crypto. What are your thoughts on this?

There have been numerous concerns regarding morality, safety, and legal aspects, particularly in the realm of Finance and Health. Well, it's important to recognize that any industry at its nascent stage faces such challenges. 

Currently, we are witnessing organisations like ASCI (Advertising Security Council of India), the RBI (Reserve Bank of India), and the finance ministry acknowledging these concerns and beginning to provide directives and guidelines regarding content integration and best practices.

We foresee more departments also kicking in their own individual guidelines regarding the same. 

Achieving this level of regulation couldn't have happened overnight, especially considering the unique nature of this industry. These legal and ethical considerations have arisen partly because influencers are often ordinary individuals.

They aren't necessarily trained media veterans like those in traditional or digital media. Large media corporations typically have their compliance teams, media buying teams, global heads, and legal departments to scrutinise content and ensure ethical and legal standards are met. 

In contrast, many influencers operate independently or with a small team, and they may lack comprehensive legal support. Consequently, the responsibility for upholding legality and morality largely falls on the agencies within this ecosystem.

These agencies play a crucial role in training influencers about what is right and wrong. They act as a buffer, safeguarding the interests of consumers, brands, and the audience alike. 

Initiatives to address these concerns should ideally begin within the agencies themselves. Additionally, it's essential for brands to invest in tools and technologies to verify and vet influencer profiles.

Several parameters need to be considered, such as the influencer's history, the age of the profile, and whether the content aligns with the style and substance of major influencers.

Brands should actively look for these red flags, and tools and agencies can be instrumental in helping them identify potential issues.

5. How is the current ecosystem functioning? Is it fair to the money paid to influencers? And What is the role taken up by agencies & brands for the same?

The current ecosystem can be broken down into 2 to 3 models. First, we have talent management agencies that engage with influencers and handle negotiations with brands.

In this scenario, the goal of these agencies is to ensure that influencers receive fair compensation for their content and the value they bring to brands, including profile growth and related services. 

In the second case, brands reach out directly to agencies, which then collaborate with influencers or their management agencies. This is the prevailing structure in the influencer marketing landscape. 

In this evolving ecosystem, numerous stakeholders and parties can be involved in the planning and execution of influencer campaigns. Often, the presence of multiple parties can inflate the overall costs, including commissions paid to intermediaries.

However, the majority of influencers are paid relatively low amounts compared to the results and reach they generate. 

It's important to note that when we hear about influencers earning substantial sums, it typically pertains to breakout celebrity influencers. These individuals charge premium rates for their services.

However, there is also a significant number of niche and micro-influencers who struggle to even break even in terms of the time and effort invested in content creation. 

In today's influencer landscape, visibility often requires creating content daily and dedicating 8 to 9 hours per day to producing 2 to 3 pieces of content. It has essentially become a full-time job for many.

Unfortunately, a considerable portion of online players may not even make substantial earnings, sometimes not even reaching 20,000 or 50,000 rupees. As a result, success is becoming increasingly elusive for many in the industry. 

To conclude, while top influencers may command high fees, the majority of influencers are not paid commensurate with their efforts and impact. The industry needs to address these disparities and ensure fair compensation for all influencers.

6. It is commonly understood that it is difficult to predict the ROI of Influencers. How do you tackle that? 

It's commonly understood that predicting the ROI of an influencer can be challenging. Currently, influencer marketing is primarily used as a brand-building exercise rather than a center for ROI measurement.

However, brands have begun to ask questions about the effectiveness of these campaigns. 

As a response to this, we anticipate the emergence of various tracking systems and tools, similar to what we've seen in affiliate marketing. In the future, we'll witness more deals that focus on hard key performance indicators (KPIs), such as retail engagement.

While views and engagement are essential metrics today, the trend is shifting toward metrics like the number of clicks generated, website traffic quality, and the percentage of sales and conversions attributable to influencer efforts. These are the questions that will come to the forefront.

To support this shift, the ecosystem must evolve. A robust content-to-commerce infrastructure needs to be established. Tracking systems must be put in place to measure the impact accurately.

Furthermore, influencers should be incentivized based on the content's ROI.

Currently, many influencers do not participate in deals tied to sales or conversions, but we are starting to see celebrities and big influencers making investments in brands and actively promoting them. This is a precursor to the changing landscape of the industry. 

Additionally, influencers will realize that they can create their own creator-led brands. While influencers may not possess the complete business know-how, they will partner with brands that have industry expertise to develop products that cater to their unique audience's needs and problems. This shift is already starting to gain momentum. 

To facilitate this transition, tools and platforms will play a crucial role. One such platform under development is within our organization. We aim to provide ROI-centric data, including an analysis of the hard KPIs that influencers value.

Our tool will assess the quality of traffic and the audience's impact on driving results. This data-driven approach will be pivotal in shaping the future of influencer marketing.

7. Can you tell us more about Influencer Marketing Tool?

Certainly, I'd be happy to provide more information about the influencer marketing tool we're developing. Our tool is powered by AI and machine learning, and our primary goal is to create the most extensive influencer database available.

This database will serve as a discovery platform where brands and agencies can find the right influencers for their campaigns. 

Users can input their campaign brief, including their brand values and campaign objectives. Our tool will then curate a personalized list of influencers based on a thorough analysis of various data points.

This analysis relies on a mathematical model that assesses influencer profiles, content, engagement metrics, audience demographics, and how well they align with the campaign brief. In essence, it's a data-driven approach to influencer discovery. 

Our aim is to introduce a level of scientific precision to influencer management and media planning. We believe that the success of any influencer marketing campaign depends on proper media planning.

By providing insights and data-driven recommendations, we hope to demonstrate that achieving hard KPIs through influencer marketing is not only possible but also highly effective. 

In addition to influencer discovery and planning, our platform will facilitate campaign execution, enabling brands and agencies to conduct large-scale influencer campaigns with just a fraction of the time and resources typically required.

It will generate tracking links and provide detailed insights so that brands can monitor campaign performance, assess traffic quality, and gain valuable insights into the campaign's impact. 

We're aiming to deliver a level of analytics and insights that we believe will be industry-leading, ultimately raising awareness about the value and potential of influencer marketing.