From Kusha Kapila to Kritika Khurana, and Masoom Minawala, among others, social media platforms have created a new set of celebrities called influencers in the last few years. These influencers are those celebrities who boast large followers on social media and earn a living by promoting brands. Yet, the question that remains unanswered is how influencing are they. “Influencers’ influence on the audience is somewhat challenged now. However, a few continue to command a highly effective following due to their consistency and narrow field of expertise. There are no constraints, and most brands use influencers in one way or another,” Sanjeev Kotnala, brand and marketing consultant, Intradia World, told BrandWagon Online.
Influencer marketing is estimated to be worth $2.8 billion -$3.5 billion in 2028, as per a recent report by Redseer Consulting, a market research firm. The ecosystem currently has about 3.5-4 million influencers who have more than 10,000 followers on their accounts, the report stated. Despite influencer marketing emerging as an effective tool, brands face multiple challenges with the current ecosystem starting from influencer discoverability to opaqueness and influencer fraud, stated the report.
From content to brand – the journey
It all started with the creation of content mainly during the pandemic. Interestingly, the content found its fair share of followers, so much so that brands too latched on them and influencers have become a centrepiece of digital advertisement as UGC (user-generated content) generates 2X more engagement than PGC (content created by professionals, such as marketing agencies, influencers, or brand representatives). It is believed that these celebrities have a direct connection to their followers and the relationship is a crucial tool for advertisers. What’s more the game has evolved with the categorisation of influences into mico or regional besides categories such as financial services, CPG (consumer packaged goods), among others. “Financial influencers are the most potent ones currently, as people invest money based on their advice. Besides this, there are automobile influencers, who can make or break any car brand. When compared with other influencers like movies or fashion influencers, the impact of finance or automobile influencers is huge. Tourism influencers also have a strong soft influence,” Sandeep Goyal, chairman, Rediffusion said.
Moreover, as per the report, brands across multiple consumer sectors leverage influencer marketing for the quality of reach and better ROI (return on investment). While native sectors such as food and beverages, beauty and personal care, and fashion brands are leading, progressive sectors such as fintech, travel, BFSI (Banking and financial services industry), automobile, and consumer electronics are closely following behind. “From luxury to tech and gaming, from lifestyle to niche, brands are going strategic about the influencers they pick. Luxury brands often collaborate with macro-influencers or celebrities. Their motive is clear—to remain top of the mind and maintain an aspirational image. Tech and gaming brands similarly partner with influencers in the tech and gaming sectors. Their goal remains to build their credibility among their tech-savvy audiences. Lifestyle brands tie up with content creators who promote wellness, fitness, and healthy living,” Sahil Chopra, founder and CEO, ICubesWire, noted.
Raking in the moolah!
Typically, a celebrity has two-three ways of earning. In a few cases, she or he may be engaged with a corporation or an advertiser in two key engagement models—a fixed fee and term engagement model or a one-time engagement model. As per the recent Kroll celebrity valuation report, a celebrity will be contracted for a specified term (usually one or two years) for a fixed-fee payment that may be made through an initial signing amount with the balance to be paid upon completion of specified activities. These agreements may also involve a royalty component. These celebrities are called brand ambassadors owing to their long-term association with the endorsed product. Usually, an annual endorsement contract includes the celebrity’s
availability for two to four days (eight hours a day), during which time the advertiser may schedule an event, a photo ad shoot or a video ad shoot depending on the campaign, as per the report. Companies with the requisite budget, targeting the utilisation of a celebrity for multiple campaigns usually block the celebrity for a higher number of days in the contract to get a better cost-per-day deal. There is also an annual floor cost of association, which factors in a minimum number of days, irrespective of the actual utilisation of the celebrity for the brand. “Structuring payment models depends on what the brand is trying to achieve. The terms of engagement with an influencer greatly depend on what kind of campaign they are building, its duration, and what the contribution of creators or influencers will be. A one-time payment makes more sense, for instance, for a festive spike activation. However, a long-term deal might be more suitable for brands who consistently work with creators and influencers over a period of time for multiple touch points,” Tusharr Kumar, COO, Only Much Louder Entertainment, explained
Furthermore, endorsement contracts may also include an in-kind payment. The product being endorsed is supplied to the celebrity for free for a specific term. The report further pointed out that rates charged by celebrities for an annual endorsement engagement significantly differ across product brands, even in the same year. This is mainly because certain products are more attractive to a celebrity, and their fees for endorsements will vary by their inclination to be associated with a certain product. “Alternatively, there’s also the barter model. Micro-influencers, for example, who have very engaged communities, might not have a huge audience or high brand value rub off. But because of their community’s loyalty, a barter deal works well. We see a lot of beauty brands using this model, where the products are the payout,” Kumar noted.
The fraud!
As per the RedSeer report, the number of influencers entering the market makes it challenging to discover the right ones out of the mix. Influencer marketing agencies, platforms, and talent managers also create a challenge in terms of transparency and influencer discovery. Challenges begin at the level of influencer matching and extend all the way to price opacity and communication. Brands also have no foolproof way to track and measure real-time campaign
effectiveness. “In nine out of 10 times, nobody knows, how many followers are fake. Many of the numbers are highly inflated. There is a big racket behind it. In the case of music release within an hour a song gets millions of views where 80-90% are fake. Recently, 80-90% of clicks that Badshah got on a song were fake. There is a huge technology organised mafia behind it,” Goyal explained.
Besides, influencers can only be seen undertaking public promotion, off-late in an effort to strengthen their image. Industry experts opine that charity has to start from influencers’ pockets. Instead of spending their own money, many are telling their followers to donate money. “Views and followers are important, but the level and type of engagement matter most when engaging an influencer. In the new evaluation matrix, an influencer’s public image has become a critical element. No brand wants to be associated with the wrong influencer,” Kotnala added.