What Your Small Business Needs to Know About Influencer Marketing

Online influencers clearly command attention. A case in point is television personality and author Lauren Conrad, who’s partnered with Planet Oak and Kohl’s, among other businesses. She’s also amassed nearly six million followers on Instagram.

What’s been less clear is this: Do companies that engage online influencers earn a return on their investments, whether through greater customer engagement, higher sales, or some other measure? New research shows they do. Several professors at Hong Kong Polytechnic University and the University of Washington found that with all else remaining the same, a 1% increase in influencer marketing spend increases customer engagement by 0.5%.

Firms that engage influencers can leverage the trust influencers earn from their followers, said Robert W. Palmatier, professor of marketing at the University of Washington and Fine F. Leung, assistant professor of marketing with The Hong Kong Polytechnic University. They, along with Flora Gu, also of The Hong Kong Polytechnic University, conducted the study.

Influencers also help business reach audiences that can otherwise be difficult to reach, says Kevin Lee, executive chair of marketing company, Didit. For instance, Gen Z, or those born between 1997 and 2012, tend to be “ad-adverse,” according to a study by global marketing company, CM Group. Nearly half of Gen Zers rely on YouTube for their news.

Effectively working with influencers

When influencers deliver a message, they confer a “halo effect” on the brand, particularly when the fit between the influencer and the business is authentic, Lee noted. “That’s one reason why existing customers as brand ambassador micro-influencers are so powerful,” he added.

After customers, a next step is to research influencer partners who are a great fit with the brand, Lee said. Ideally, their values will align with your business. So, if your business produces natural and organic foods, you’d consider influencers who are committed to healthy eating.

Focusing only on an influencer’s reach, rather than engagement and authenticity can backfire. “Reach numbers are easy to fake and should not be used as a primary metric when selecting influencer partners,” Lee said.

It also helps to keep in mind that each social media channel has its own set of influencers. “Recruit influencers independently based on the platform,” Lee said, noting that different platforms will play different roles in a holistic influencer marketing strategy.

How the platforms vary

A few statistics highlight how the channels can differ. According to Pew Research, 71% of 18- to 29-year-olds use Instagram, while 48% log onto TikTok. In contrast, just 29% of those between 50 and 64 use Instagram, and 14% engage with TikTok.

Another difference is the size of the influencer pool on each platform. Between 20,000 and 40,000 influencers on Instagram have more than one million followers, according to GRIN, which provides a creator management platform. On TikTok, the number of influencers with more than one million followers tops out at 15,000.

Also key is extending the relationship beyond a single post, Lee said. Developing an ongoing relationship helps you leverage your initial investment and lends credibility. You can further build credibility by providing the influencer as much creative latitude as is reasonable, while also offering guidance around the message and objective you’re seeking, he added.

Originality and frequency matter

Your business will gain more traction if you work with influencers who create original posts, rather than posts created by others, according to Palmatier and Leung.

When it comes to influencer effectiveness, the frequency of postings matters. “Our findings reveal that influencers who engage in a medium level of posting activity are preferable,” Palmatier and Leung said. An influencer who engages only minimally is apt to come across as less credible, while one who posts excessively could leave customers feeling like they’re being hit with information overload. “Taking a balanced approach leverages the followers’ shared interests but avoids information clutter,” they add.

One mistake firms often make is to “overshoot in terms of post positivity,” Palmatier and Leung said. To enhance credibility, firms should encourage influencers to include some content that’s critical, even of the firm’s products, in their posts. Doing so signals “that information is authentic and balanced and not just a paid endorsement,” they added.

Managing the risks

While engaging online influencers can boost customer engagement, it’s not a marketing panacea. An influencer may generate content that runs counter to your firm’s official message or image. In addition, while online influencers can help in acquiring new customers, they’re generally not as effective in retaining existing customers, Palmatier and Leung said. “Firms need to acknowledge these potential threats and have proper management strategies in place to realize the benefits and mitigate the dark sides of influencer marketing,” they added.

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