17 Jun Influencer Marketing: Opportunities and challenges

Marketing will remain a popular advertising format among online marketers in 2019 – once again, a majority of companies plan to significantly increase their budget for paid partnerships with social media personalities. At the same time, the influencer market was increasingly controversial last year and some industry experts even went so far as to predict an imminent end to the influencer boom [1]. In today’s blog post, we therefore take a closer look at the state of influencer marketing in Germany and the opportunities and challenges this presents for companies.

What is Influencer Marketing?

Influencer marketing is a form of partnership between companies and people who have a large reach and influence in social media due to their number of followers. Such influencers have built a fan base through their content and interactions that looks up to them and takes their recommendations seriously. It is precisely this authenticity and proximity to the target group that companies take advantage of by having the influencer market their own products in the form of paid content. The main goals are: more authenticity, improved communication with the target group and the generation of content [2]. By 2020, investments in influencer marketing in the German-speaking world are estimated to rise to one billion euros[3] Influencer marketing is therefore not a trend phenomenon, but a million-dollar business – a fact that is becoming increasingly relevant in terms of competition law.

Controversies on advertising labelling

The regulations for advertising via one’s own social media channel have not been sufficiently clarified to date. Since mid-2017, more and more warnings have been reaching German social media giants. Prominent examples include Cathy Hummels and Vreni Frost, who, like many other German influencers, are facing civil law charges as a result of a „wave of warnings“ by the German Association of Social Competition (VsW). According to its own statements, the aim of the private association is „to ensure compliance with the rules of fair competition and to combat unfair competition“ [4].

The processes surrounding the labelling requirements show how opaque the legal situation is in the area of social media and how necessary legal clarification is. Provisional solution of many influencers so far: Every mail is marked as advertising – whether a business partnership exists or not. This is a protective mechanism that does not provide the transparency that consumers and companies actually want.

What does this mean for the future of influencer marketing?

In the legal dispute in Germany a further development is manifesting itself that has been in the offing for some time: Influencer marketing has a credibility problem. Posts and recommendations that are shared via social media are increasingly losing authenticity with consumers. A lack of labeling is criticized by almost all users, but is not the only reason why paid product posts are met with increasing skepticism. For 64% of users, products are simply advertised too frequently in the feeds, and for 74% an influencer loses credibility if cooperation with a brand is perceived as unsuitable for the actual image. [5]

This does not mean, however, that cooperation with digital opinion makers has become obsolete as a marketing instrument. There are still 50% of followers who say they have already purchased a product after it has been recommended by a subscribing influencer. The decisive factor here is how well a company has considered and with which strategy it has selected and managed the influencer cooperation:

Brand and audience fit are the most important criteria for success

Precise planning and research prior to a cooperation are essential for a successful influencer partnership. The two most important selection criteria for a cooperation are the audience fit (how well do the followers correspond to the company’s target group) and the brand fit (how well does the image of the influencer itself fit the brand image). In order for this to succeed, open cooperation is crucial in addition to careful examination. The influencers themselves often know best what interests their community and which content works best. In order for a campaign to be convincing, active participation and cooperation at eye level should therefore be emphasized.

Micro and Nano Influencer

Closely linked to the right „fit“ between the company and influencer is a development that we have already mentioned in our Trends for the online marketing year 2019: Companies are increasingly turning to micro and nano influencers instead of the classic social media stars with 6-digit follower numbers. The cooperation with influencers, which are followed by „only“ 1000 to 50,000 subscribers, is worthwhile for companies from several points of view. The first advantage is the stronger commitment to the small accounts. Nano- and micro-influencers have a high credibility and are close to their own community. This results in a lively exchange with the fans and there is much more licking, commenting and sharing. At the same time, small accounts usually allow for a much more fitting brand and audience fit. Although the target group is small, it is much more specific. Last but not least, cooperations with several small influencers are often much cheaper than a single cooperation with a large account.

Where and for whom is Influencer Marketing particularly worthwhile?

In principle, almost every company with the right communication strategy can successfully use influencer marketing. However, there are some industries for which influencer marketing is particularly suitable. The most popular categories [7] in which social media users follow influencers are

• Food (58%),
• Travel & Holiday (56%),
• Sports and Fitness (45 %)
• Fashion (40 %)
• Make-up (34%)

In these industries, Influencer Marketing is by no means only interesting for large, established companies. Especially for unknown and new brands there is a special potential to increase brand awareness. A study came to the conclusion that an increased brand awareness through influencer is almost twice as strong for previously unknown, „weak“ brands. [7] With regard to the demographics of the target group, influencer marketing has the greatest effect on the younger generation with an affinity for the Internet. The strongest trust in influencers is shown by people between 16-29 years of age. From the age of 30 on, the subjective credibility of influencers decreases continuously. [8] When it comes to choosing the right channel, Instagram and YouTube are clear favourites of the users. Facebook is becoming less and less relevant for interactions with influencers – especially among people under 30 years of age [9].

Conclusion

Influencer Marketing will continue to be an important part of the online marketing repertoire. Despite an increasing number of negative headlines, the current developments in the market are more likely to be characterised by upheaval than crisis. The industry is becoming increasingly professional and users are becoming more demanding with increased expectations of convincing influencer content. For companies that take this step carefully, however, influencer partnerships remain a lucrative marketing tool. More important than ever are authenticity, clear labeling and a carefully screened, custom-fit selection of influencers.

[1] Spiegel Wirtschaft: Warum der Influencer-Hype bald vorbei sein könnte (2018)

[2] BVDW: Influencer Marketing: Mehrheit der Unternehmen zieht Nischen-Influencer den großen Social-Media-Stars vor (2018)

[3] Goldmedia: Influencer Marketing auf dem Weg zum Milliardenmarkt (2018)

[4] http://www.vsw.info/

[5] Campus GroupM: Wavermaker Studie: Influencer 2.0 (2018)

[6] Campus GroupM: siehe [6]

[7] ResearchGate: The Impact of Social Media Influencers on Purchase Intention and the Meadiation Effect of Customer Attitude (2017)

[8] Statista: Umfrage zum Vertrauen in Produktinformationen von Influencern in Deutschland 2018

[9] Campus GroupM: siehe [6]