Why Peer-to-Peer Marketing Does More Than Celebrity Endorsements

The New York Times once declared that nothing sells like celebrity, but that article was written in 2008. Celebrity endorsements don't pack the same punch they used to.

The New York Times once declared that nothing sells like celebrity, but that article was written in 2008. Celebrity endorsements don’t pack the same punch they used to.

As cool as they are, celebrities can’t totally convince people that they actually like the products they endorse. That’s why their ads are being replaced by influencer marketing from bloggers or YouTube personalities who have gained authority in a specific industry.

A survey from Collective Bias reveals that non-celebrity influencers are 10 times more likely to drive in-store purchases.

But even influencers can’t foster personal connections with your brand like a friend or family member. A recommendation from a friend is the pinnacle of personalized, genuine marketing.

Celebrity endorsements: the why and how

In 2011, a team of neuroscientists found that when a celebrity endorses a product, whatever emotions people feel toward the celebrity transfer to the product. Academic research around business and marketing also supports the idea.

So when someone sees this Nike commercial with LeBron James, they think, “Everyone knows LeBron is a hard-working superstar and a great guy to boot, so the Nike must be the brand for that kind of person.”

Why celebrity endorsements stopped working

Despite that powerful psychological process, celebrity marketing is on the decline. In 2004, celebrities appeared in nearly 20 percent of all American ads. By 2012, that number dropped to 9 percent.

What happened? It all comes back to authenticity. Customers now say brands need to be authentic to cut through the noise and make an impact on them. Former Buick marketer Craig Bierley put it best when he said, “I’m not sure anyone really believed that Tiger Woods drove a Buick.”

Increased consumption has increased celebrities’ exposure and tanked the believability of their endorsements. People always implicitly knew celebrities were getting paid to promote products, but social media and Internet coverage have shown us how uninterested many of them are in those products.

The demand for authenticity has paved the way for people without any prior level of fame to become hugely valuable influencers for all kinds of products. They lack the wide reach of celebrities but form deeper bonds with their audiences, making them more powerful drivers of purchase decisions.

It’s a simple process: Influencers establish themselves as experts in a given industry, then review the relevant products on blogs or in videos they make. Makeup reviewer Michelle Phan is the quintessential example.

Today’s customers trust regular people like Phan because their endorsements appear to be driven by genuine expertise, and not just money. A survey of 1,470 women found that 86 percent of them wanted product recommendations from real people and that 58 percent turn to YouTube reviewers to get them.

The trend is especially pronounced in the younger generations. Research shows that millennials demand authentic marketing more than anyone.

Kick authenticity up a notch

While influencer marketing delivers an authentic experience, it’s not perfect. With influencers getting paid more, the channel is starting to look more like celebrity marketing. Even ignoring that, however relatable influencers are, they’re still not someone customers actually know.

Enter peer-to-peer marketing, which is the most authentic-feeling marketing channel because it taps into the organic conversations about products people have every day.

Peer-to-peer channels fulfill the three key characteristics of influencer marketing better than influencers:

  • Expertise: Advocates tell you the value they got from the product, so the friends they share referrals with can feel confident the product is worth trying.
  • Real conversations: When a friend recommends a product or shares a referral, they can have a conversation about it more easily than a fan and an influencer can.
  • Originality: No one has a script or makes a video when they recommend a product to a friend. It’s just a normal conversation.

Another advantage of peer-to-peer is that many of the most popular influencer marketers get paid to endorse products. As more customers become aware of that, it could ruin the sense of impartiality that influencers hang their hats on. Meanwhile, the rewards in peer-to-peer programs are clearly laid out and understood by both parties. There’s no worrying about ulterior motives.

Peer-to-peer: stepping into the shoes of endorsements

Celebrity endorsements are on the decline, but the rich and famous are so recognizable that they’ll always have a place in marketing. Same with influencers: Their unique ability to build trusted brands around products means they’re here to stay.

But at the end of the day, nothing feels more authentic than talking to a friend and hearing what they think of their latest purchase. Referral leans on the relationships between families, which means that it’s the best channel for building a personal connection between your customers and your brand.

Matt Roche is the CEO of referral marketing platform Extole.

Image courtesy of Shutterstock.