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Tips and Tricks

The Economics of Influencer Marketing

The Economics of Influencer Marketing

by Nick Lamothe

A month ago


Influencers, Creators, Ambasassors. Call them what you want, but the ever-growing population of social content creators (across the full spectrum of audience size) is - and will continue to be - a leading destination for new and increasing marketing budget allocation. READ: You should be spending some money on influencers!


But as shoppers grow weary of disingenuous brand <> creator relationships, social product recommendations become overwhelming in volume, organic content is deprioritized by the platforms in favor of advertising units (and let’s not forget about the impending banishment of TikTok in America and the demise of Twitter…), there is an increasing need to prove the value and return for running creator campaigns.


TLDR: If you are paying creators on the promise of driving immediate and attributable sales, you are going to fail.


Let’s get into it. 


And let’s start with the basic and obvious: there was a time when a product “organically” being used by A-list celebrities, and appearing in magazines, TV news and talk shows or social media, meant a likely meaningful spike in traffic and sales. There are hundreds of examples, but my favorite is from a 2019 episode of How I Built This, on which the founder of Aiden and Anais told of a truly organic moment Kate Middleton walked out of the hospital with Price George for the first time wrapped in one of A&A’s muslin clothes, and within a few hours their site had crashed and sales went through the roof.


This is what everyone is trying to recapture.


And this is what will lead to the demise of the marketing manager who leads the charge into influencer marketing.


The fact is, while those stories paint a picture of huge growth opportunities, the unpredictability and changing consumer habits make it less and less likely to conjure up. 


HOWEVER - if you’re looking to build the business case for a creator campaign, here is a way to make sure you’re ready to maximize the opportunity, and justify the cost. Break the program down into 2 main buckets: content creation and distribution. That is what we are really talking about here. Sourcing content that will resonate with a select audience, and getting the content in front of that audience in more than one way. 


Let’s take them piece by piece.


Content Creation

Gone are the days of orchestrating a few high-priced photo shoots per year, on a remote location, to come away with a camera roll that includes a dozen photos that will ACTUALLY be used, with all of the brand polish, re-touching, beautiful filtering and cropping. Much to the chagrin of brand managers everywhere, there is an equal or greater need for more organic and authentic feeling content. 


And LOTS of it. 


Content to fuel paid media channels that all require different messaging, specs, and styles. Content to spice up PDPs, and make our emails feel more relatable. Content for organic social channels that by their very nature should lean heavier on user-generated and socially curated content.


Some of this can be manufactured with iPhone videos at a brand shoot. But the cost of using high-end or even more budget friendly professional shooters to dumb down their content turns the economics upside down and prevents real scale, particularly when you realize how much testing needs to be done in paid channels to find winning pieces of content. 


Leveraging creators - even those with small audiences - to crank out Reels, Shorts, Tik Toks, photos and longer form videos can save you a ton of money on a cost-per-piece basis and speeds up the time from brief to delivery significantly. In my experience, it is not uncommon to spend 5-figures on a photoshoot (cost of shooters, studio, production equipment, models, props, etc.) and come away with fewer than 10 pieces of content that will be used across channels. We’re talking $1,000 + per photo or video snippet, without even taking into account employee hours planning and executing the shoot.


A good piece of creator-made content that can easily be more effective can easily cost less than $300. Quite the savings. Even leveraging a marketplace like Billo allows brands to hire creators for as low as $100 per piece of content. 


Content Distribution

While the content creation cost savings is easy to calculate and justify, the value in distribution is more difficult, but equally as important. 


Where many influencer campaigns fall short is asking the creator to make a single piece of content and post it to their social platform(s) in exchange for product and a fee. Because the aforementioned algorithmic weighting of paid content over organic, and the likely small audience of creators you’d be working with, this is not an advisable use of the content as a stand-alone proposition.


Instead, take the content and use it across paid and owned channels. Suggestions:

  • Build ad groups or campaigns in paid social from your brand accounts that leverage UGC. 
  • Create montage-style video ads for YouTube or even Connected TV that stitch together several UGC snippets
  • Setup whitelisting and spark ads on IG and Tik Tok, respectively, to promote and boost the content as ads run from the creators handles, in partnership with your brand
  • Pay the creator to boost their post themselves
  • Use the content on product pages to show an alternative and more relatable use of the product than models and stylized photography
  • Test UGC-based email messages against brand content
  • Build landing pages that ae UGC-heavy as destinations from paid ads that feature creator-content; even test it as a landing page for brand content ads
  • Feature the content on your own brand social platforms

Bottom line: test this content in as many places as possible along the customer journey. You have a great opportunity to increase conversion rate on site, improve paid media efficiency and effectiveness, and by leveraging on your own handles your CPMs of the content when compared to only have the creators post will drop drastically.


To recap:

  • Sourcing creator content can significantly decrease your costs per piece of content compared to traditional branded content
  • At scale, creator programs can produce a lot more volume of content than your internal team
  • Expecting an instant and attributable ROI from influencers posting about your brand will yield a low likelihood of success
  • Leveraging creator content across paid and owned channels will lower CPMs of the content and open the door for some winning tests that drive up conversion rate and paid media ROAS
  • Featuring the content across your site and retention channels can add a layer of authenticity that boosts brand love and sales

Yes, you still need to find creators that align with your brand and audience.

Yes, you can still put up content guardrails in the briefing process

Yes, your brand-generated content still has a use, and your brand managers are still valuable.

Yes, you will need to invest in some tools and time to refine this process and master the creator ecosystem in a way that works for you.


But yes, it will be worth it.

___________

Nick Lamothe is an eCommerce and digital growth leader with over a decade working in the apparel and footwear category, across various stages of business maturity and growth. Connect with him on LinkedIn!

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