Virtually every other week, another “influencer marketing platform” hits the market. From managed campaigns, companies, marketplaces, analytics tools, influencer customer-relationship management and more, influencer marketing is growing exponentially.
There is good reason to believe that influencer marketing is the fastest-growing marketing channel this year.
84% of marketers surveyed by eMarketer said they planned to launch an influencer campaign within 12 months.
We’re only halfway through 2016 and we’ve already seen three acquisitions in the space.
The Google trends graph for “influencer marketing” is a perfect hockey stick.
As the market booms, hordes of companies are trying to catch the wave. While competition benefits everyone in the long run, in the short run, it can cause severe issues. Some of the major problems marketers currently face are:
- Little transparency over influencer pricing and vendor commission fees.
- Lack of standardized metrics to track return on investment.
- Managed campaign companies running campaigns manually disguised as technology “platforms.”
- Large price markups from vendors.
- Too many options to choose from leading to analysis paralysis.
In the past month, I’ve taken dozens of calls with executives from brands, banks and venture-capital firms, all of whom are trying to wrap their heads around the influencer marketing landscape. This post will help shed light on the influencer marketing landscape and upcoming developments.
The ownership and software spectrum
Companies in the influencer marketing space can be placed on a spectrum going from providing you with less to more ownership over the influencer relationships and from less to more software. The spectrum spans three groups (note: Some companies may be part of multiple groups):
- Managed campaigns: These are companies that run full-service campaigns for you. They act as a middleman between you and influencers, although they mostly do not have exclusivity with influencers. They have no proprietary technology and bill you a flat fee for the campaign, from which they take a cut.
- Marketplaces: These companies have a network of influencers that can be hired through their online portals. They have some proprietary technology and bill you a commission on each influencer payment.
- Software as a Service: These companies provide software for you to manage your own influencer relationships and programs. You own the influencer relationships. They charge a software license.
I am consciously leaving out public relations, advertising and marketing agencies, despite the fact that these agencies increasingly control the influencer marketing budgets. I do not consider them as influencer marketing companies, but rather agencies with an influencer division. Many of these agencies work with managed campaigns, marketplaces and SaaS companies, so I consider them buyers, not vendors.
The other group that is left out in this spectrum is talent agencies, such as United Talent Agency and Creative Artists Agency. These agencies have exclusive contracts with influencers and take a cut from every payment going to their influencers. Although some of these agencies are starting to operate like managed campaign companies, they are mostly talent management companies rather than marketing ones.
Let’s look at each influencer marketing company category in more depth.
These companies sell full-service influencer marketing campaigns.
They manage the influencer relationships, campaign coordination and influencer payments. They charge a flat-fee for the campaigns and offer little to no transparency into their commission or how the budget is spent. Examples include MCNs like Maker Studios and FullScreen and companies like Niche and MediaKix.
It is common for managed campaign companies to brand themselves as “influencer marketing platforms.” In reality, they sell campaigns and run them on spreadsheets. Also, managed campaign companies build an iron curtain between you and the influencers and earn their revenues by taking an undisclosed cut off of your spend. However, keep in mind that you can contact and work with most influencers directly.
If you choose to work with a managed campaign company, I advise you to request performance guarantees (eCPM [enhanced cost per thousand impressions], CPV [cost per view], CPE [cost per engagement]) and approval rights on influencers and posts.
- Effective for one-off campaigns.
- Less management required from you.
- Good if you have no experience working with influencers.
- Lack of transparent pricing.
- Little to no technology used to identify influencers, vet influencers and track results.
- You do not have a direct relationship with the influencers.
- Markups are high, sometimes climbing up to 70 percent of your spend.
Marketplaces facilitate transactions between you and influencers.
They have a network of influencers signed up on their online portal, and allow you to contract these influencers by paying them a commission fee for each influencer payment. Examples include IZEA, TapInfluence and Reelio.
Although you can directly communicate with influencers via the online portal, marketplaces require you to relinquish your rights to working directly with influencers without paying the marketplace commission. However, keep in mind that influencers almost never have exclusive contracts with marketplaces and can be contracted directly.
Marketplaces are useful if you are looking for a quick influencer blast. They are designed to facilitate short-term influencer deals quickly and effectively. However, if you are aiming to design a long-term influencer marketing strategy, marketplaces fall short. Marketplaces do not enable you to establish your own long-term influencer relationships, collaborate across your organization or run more elaborate strategies than just a pay-per-post campaign.
- You can communicate directly with influencers.
- Ability to use an escrow for payments.
- Quick way to run a time-sensitive campaign.
- Platform transaction fees means significant lost budget.
- You do not own the influencer relationships.
- Marketplaces have a limited number of influencers signed up, all of whom are hired by the brands signed up on the marketplace. This dilutes influencer channels and pushes prices up.
Influencer marketing SaaS companies are designed to help buyers run their own influencer programs and manage their own influencer relationships.
Over the past two years, an increasing number of brands and agencies have chosen to bring their influencer marketing in-house. These include Red Bull, Horizon Media, Edelman and more. The benefits are clear. Building an internal team to run your influencer programs means more authentic influencer relationships, transparent pricing and a proprietary structure, yielding better content and better returns.
However, running campaigns in-house is hard. According to a report published by eMarketer, 75 percent of influencer marketers struggle to “find the right influencer,” and 25 percent have a hard time automating their campaigns management. That is not surprising: Most companies running influencer marketing in-house still use Google to find influencers and spreadsheets to manage their relationships.
The SaaS companies focus on building software for brands and agencies to run their own influencer programs. Some SaaS platforms provide one application, while others provide an end-to-end solution. Specifically we can break up the different applications of SaaS platforms into the following categories:
- Influencer discovery: Finding, vetting and connecting with influencers.
- Campaign management: Creating campaigns, approving posts, signing contracts, issuing payments, etc.
- Performance tracking: Tracking campaign performance and measuring ROI.
- Influencer relationship management: Tracking, nurturing, and sharing your influencer relationships.
- You must train staff and set up a system to run programs in-house.
- You need to develop and nurture your influencer relationships.
- 100 percent of your spend goes to influencers.
- Direct, personal influencer relationships yield more authenticity, higher-quality content and better prices.
- Building internal expertise and strong influencer relationships now will give you a competitive advantage in the future.
The influencer marketing landscape is evolving at a breakneck pace, making it challenging to navigate for both buyers and sellers. Over the next few years, I expect these two evolutions to occur:
An influencer marketing acquisition spree is near: We’ve already seen three acquisitions of managed campaign companies in the first half of 2016 (The Amplify, HelloSociety and Roostr). This trend is likely to continue as the space heats up and the big media and advertising firms want to get a piece of the action.
Brands and agencies will pull their influencer marketing in-house and go direct to influencers: Currently, most brands and agencies spend their influencer marketing dollars with managed campaign vendors because it is the easiest thing to do. However, the more experienced buyers are realizing the benefits of launching their own in-house influencer marketing programs. By building their own expertise and relationships today, these buyers will ultimately earn the greatest ROI.
Featured image courtesy of Shutterstock.