Recession: What does this mean for the influencer industry
The world is in a state of turmoil at the moment and with the ever fluctuating influencer industry will no doubt take a hit.
As millions around the world start to feel the effects of crashing markets, high interest rates, rising costs of living and weekly unemployment numbers continue to bring bad news, it’s clear that the COVID-19 pandemic has had ,and continues to have, a negative effect on the global economy — the U.S. real gross domestic product (GDP) decreased 4.8 percent in the first quarter of 2020.
The marketing and advertising industry is bracing itself for a slowdown, with analysts steadily adjusting ad spending forecasts. Different components of marketing and partnership plans may be impacted differently by these changes in spending, but marketers will be closely examining all of their spendings throughout the year to determine what drives the most value.
Influencer marketing in the age of recession
Influencer marketing has surged in popularity over the past half-decade, and investment was expected to hit $15 billion this year, according to pre-pandemic forecasts. Even with this level of interest, influencer programs are likely to face scrutiny amid shrinking budgets. To ensure their survival, partnership managers will need to fully grasp the ROI of their influencer programs and leverage them to the fullest, ensuring that they can reach engaged, receptive, attentive audiences, in this moment and beyond.
To better understand what survival looks like, let’s examine two distinct brand scenarios that enterprises are experiencing at this moment, how these different circumstances are likely to impact their influencer strategies, and what they can do to get the most out of influencers going forward.
With social media and YouTube usage on the rise, there are clear opportunities for influencer partnerships to deliver value. The question these brands have to answer is how they can continue to win investment for influencer programs as overall marketing budgets tighten. The answer is in evaluating influencer partnerships as an acquisition channel, not a branding channel.
Solution: Make every dollar accountable
Brands that are upholding pay-per-post or fixed fee partnership terms can still prioritise influencer activations that can be evaluated on a direct-response basis, by unique links, QR/promo codes, and landing pages. In doing this, partnership managers can account for the return on each dollar going into the influencer channel, removing any risk and ambiguity.
Understanding ROI is essential to winning organisational buy-in and growing investment, and many operationally mature influencer programs were already heading this direction before the pandemic. Now, this strategy is critical to the survival of all influencer marketing programs.
Another option is for brands to consider building out performance-based influencer partnerships, only spending money when you make it. In this time of uncertainty, influencers may be willing to shift their terms, moving from a fixed-fee model to one based around performance, in order to keep their own partnerships intact however it is very dependent on the talent that is selected.
Amazon’s play for short-term savings is shortsighted, and the strategy would be equally ill-considered for any brand that slashes commissions to its influencer program. Brands should be making all of their decisions around the goal of ensuring their partnership programs survive — and even flourish — during this global moment.
Influencer partnerships are long-term relationships, so it’s better to operate with smaller budgets rather than cancel these programs outright. After all, these are partnerships with individual people who get hurt when their contracts are zeroed out.
Partnerships provide an incredibly powerful growth channel when they’re supported. In operationally mature partnership programs, partners are more than just hired guns brought on to drive brand awareness and deliver promotional offers. They’re an extension of the brand itself. Steadfast partnerships can secure new audiences, enhance customer loyalty, and multiply customer lifetime value — benefits that withstand market upturns and downturns.
Brands that have active, well-established influencer partnerships have an advantage in this moment because they can leverage the deep connection to the influencer’s audience, as well as the influencer’s familiarity with the brand to maintain a flow of content. Consumers look to influencers as a voice of authority at all times, so brands that can leverage those relationships can still influence and engage consumers will succeed, according to Black.
Invest in influencer partnerships now for future success
No matter the situation, the bottom line remains the same: it’s more important than ever to invest in influencer programs. The channel was already moving towards an attributable model, and the unfortunate events of this pandemic are accelerating that evolution. Feeding an influencer program with resources and support, while simultaneously turning it into an acquisition channel will pay long-term dividends for brands.