Why are Brands Obsessed with Influencers When the ROI Isn’t Always There?

This article is part of an on-going Martech Record series examining the opportunities, risks and resources required for affiliate marketers in the influencer category. For additional analysis and advice for affiliate marketers please read All you Need to Know about Influencer Marketing but Were Afraid to Ask, Can I Manage my Influencer Marketing Program with my Affiliate Solution?,  and how Making Influencer Marketing Accountable is Your Big Opportunity. 

If you are interested in learning more about influencer marketing platforms our 2023 Influencer Market Presence Index ranks Influencer Marketing Platforms based on a survey of affiliate marketers,  and our Martech Matrix is an overview of which platform is right based on your needs.

Influencer marketing continues to be a go to strategy for brands, many of which are obsessed with influencers - who they believe help them reach new audiences and increase brand awareness. The use of influencers as a marketing tool has become so popular that the industry was worth an estimated $16B in 2022 with 18,900 firms offering or specializing in Influencer Marketing services (Influencer Marketing Hub). Due to this growth, the market can start to feel oversaturated. And with growth comes possible negative impacts on the quality of influencer partnerships and content. As such, the ROI of influencer marketing remains uncertain, leading some companies to question if it's worth investing in.

How Influencer Marketing Became So Popular

Influencer marketing involves partnering with individuals who have a targeted, often large, following on social media platforms. These influencers can range from celebrities to bloggers and vloggers, and most of them will concentrate their social media content around a particular niche or category (for example, camping) to develop their following and establish themselves as leaders or authority figures in that category. 

The rise of influencer marketing is largely due to the increasing popularity of social media, especially as new platforms, especially Instagram, and now TikTok, came to prominence. Because the average person is more likely to trust a recommendation from a friend or a trusted figure than a traditional advertisement (75% of people don’t trust paid advertising), brands invest in influencers to capitalize on this phenomenon. 

Brands partner with relevant influencers to promote their brand to the influencer’s followers. Brands’ goals can range from simple awareness (e.g., how many people saw the brand’s content), to “engagement” (e.g., how many people liked a post or how many followers commented on the content), all the way to actual orders or sales resulting from the influencer’s promotion. 

Even with goals as those defined in the above example, the ROI of influencer marketing can be difficult to measure. One of the main challenges is that unless the influencer campaign is using direct methods (like a trackable URL, for example), it's difficult to track how much of an impact the influencer promotion really has on the brand's sales. Brands may see a spike in engagement or grow their social media followers after an influencer collaboration, or higher visits to their home page, but it's difficult to determine if these metrics translate to more revenues in the long run. However, because some brands set the objective as awareness or engagement, the results they see against those goals may be worth it - it all depends on the brand’s objectives.

But with many brands cutting their marketing budgets in the current economic environment, it may no longer be enough to simply get eyeballs on a short video by an influencer, unless there is a direct tie to a sales bump.