The Wall Street Journal posted an interesting article on Sunday titled: Online Influencers Tell You What to Buy, Advertisers Wonder Who’s Listening. Of course, as one of FinTwit’s biggest self-proclaimed “finfluencers”, I have to give my two cents on the subject.
First off, the word influencer is maximum cringe. I’ve never liked it and my friends know I despise the term. For the boomers who don’t know what influencers are, they’re online personalities who use their high follower counts and social networks to run advertising campaigns to sell products—think Tupperware and Avon before the Internet happened.
In the WSJ article they claimed companies are complaining there are no ways to measure sales from influencer posts or verify how many people see their ads. That’s wrong. There are multiple companies out there that track sales statistics using special links, cookies, and metrics. Amazon’s influencer program does this. On Twitter and Instagram you can pull individual tweet or post metrics. I do it all the time. I did it earlier this year when I [jokingly?] tried to land a deal with Chipotle. I put together metrics that showed 10 tweets where I tagged $CMG and garnered nearly 750,000 impressions. Wasn’t good enough.
What I thought was most interesting about the WSJ article was how much money advertisers are spending on influencers each year. As you can see in the chart above, advertisers are estimated to spend between $4 and $8 billion—billion with a b—this year on influencers. That’s pretty amazing, especially seeing the ramp-up since 2015—thanks Instagram. But this number still pales in comparison to the estimated $624.2 billion companies will spend globally this year on advertising.
On the flip side, according to a report from Cheq, a digital media cybersecurity company, fraudulent activity in the influencer space is causing advertisers $1.3B this year. I repeat $1.3B. Looking for the next billion-dollar idea? I just found it. Figure out how to accurately spot fake influencers who use bots or pay for fake followers. Granted, these losses are mostly consequential damages, so they are harder to quantify. Similar to metrics tracking, I’d be shocked if there isn’t already a software company out there using blockchain or A.I. that can spot fake accounts.
Another interesting statistic from the article is the price paid from advertisers by the number of followers one has. Currently, I have 10,000 Instagram followers, so I would be under the “microinfluencer” status and making $200-$4,000 per post. I have over 110k followers on Twitter which would put me in “mid-tier” status and making $2-10k per post. I’m here to tell you those numbers are complete bullshit. Or maybe they are true and I just suck at marketing (please email me). Or maybe I just don’t care either way. Regardless, paying influencers based on their follower count is idiotic and the absolute worse way to do it. It should be based on engagement rates. Otherwise, you are paying someone to sell your product when in reality they are just talking to a brick wall.
I tried to think of some of the pros and cons of influencer marketing. One pro is that pretty much anyone can make a small sum of money or get free samples of products with even just a tiny following. Sometimes it just takes a simple email to the right person. Influencer marketing is just another form of capitalism. It takes ad revenue away from some of the large tech companies and puts it in the hand of the small business person. You don’t even need a website anymore to collect ad revenue.
Another pro is being able to help promote small companies and quickly scale brands. Without influencer marketing and social media, I’m confident there would be thousands of fewer brands and small businesses. In my opinion, many of them wouldn’t have survived the traditional advertising routes without the help of influencers.
The cons of influencer marketing are obvious. People hate seeing ads. They especially hate seeing them coming from their friends—even more so when they know the ad isn’t authentic. I’ve been called a “sellout” for displaying ads, even though they were authentic. Imagine complaining about seeing 10 ads in 70k tweets. Sad! Maybe if we all turn into walking ads it will destroy social media and we can call it peak influencer.
If you are an aspiring influencer your number one goal should be to look for a different career. Your second goal—if the first one doesn’t work out—is to find something to represent that you actually believe in. You are now a brand and your brand needs to be authentic if you want to run successful ad campaigns.
Imagine being a teenager and seeing these statistics about how much money is out there for the taking—or hearing it from their friends. This is their dream job: becoming a famous influencer instead of working a 9-to-5. Unfortunately, no one is telling them that this life is unrealistic, unsustainable, and an outlier. It’s also overhyped and fake. We all want to be popular; and thanks to social media, it has turned us into a popularity comparison machine. But, as a wise man once said: Comparison is a thief of joy.