August 17th 2016
Let's Call Influencer Marketing What It Really Is

Influencer marketing is all the rage right now. But the closer you look, the more it seems many companies don’t understand how to use it effectively, nor do they truly grasp what it means.

Too many marketers are just throwing the term around and scrambling to partner with high-profile bloggers, social media stars, and celebrities. They are rushing into influencer territory without a clear understanding of what really works.

In this article, learn what the term means once and for all, and discover what the future holds for influencer marketing from the following perspectives:

  • Like other recent hot trends (e.g., daily deal sites), paid influencer marketing is bracing for a cooldown.
  • If you can’t consistently measure and track results — or ROI, for that matter — paid influencer marketing can reflect poorly on your brand and even create legal risk.
  • Marketers need to get much more specific about which type of influencer marketing they want and need, as well as the ROI and expectations associated with each type.

Before diving into the problems with prominent influencer marketing strategies and developing a better approach, let’s look at the three distinct types of campaigns that fall under this heading.

Organic Influencer Marketing

Influencer marketing began with the organic sharing of unique and interesting messages. Dove’s Real Beauty sketches and Lane Bryant’s “I’m No Angel” campaign inspired people to write about each brand on their blogs and share these campaigns on social media.

That type of consumer-generated content elevated the brands’ SEO rankings and showcased that people were genuinely interested in what Dove and Lane Bryant had to say. No one earned compensation, so these social shares were natural and authentic. If an influential person commented, even better. But there was no celebrity-driven initiative behind the campaigns’ successes.

Paid Influencer Marketing

Paid influencer marketing has seen a big boost in recent years, so much so that 75 percent of marketers now use this tactic. Brands are increasingly willing to pay Instagram stars and bloggers up front for exposure, as long as the brands can dictate how their products talked about.

The influencer typically receives a flat fee to create infomercial-style content about the company’s offerings. He or she might also receive free products in exchange for the endorsement.

Performance-Driven Influencer Marketing

Performance-driven marketing rewards influencers through affiliate programs, paying them after they’ve generated ROI instead of in advance. This approach makes it easier for companies to track results and ensure that promotional efforts are brand-aligned.

As we’ll discuss, performance-driven marketing is the only way to demonstrate true ROI. It’s also more genuine; influencers are motivated to promote products based on their personal use and enjoyment, rather than solely because they’re getting paid.

Paid Versus Performance Marketing

Reality television star Scott Disick’s Instagram gaffe in May illustrates the problem with paid influencer marketing. Disick posted a picture of himself preparing a Bootea Shake, but instead of posting just the brand’s caption, he mistakenly copied and pasted its promotional instructions as well.

The post cast doubt on the sincerity of Disick’s endorsement. When brands pay influencers for canned promotions, consumers can’t trust what they say. Does this person actually like this product, or is he just getting a paycheck?

Companies sometimes fail to disclose when native posts are in fact advertising, but people have a way of finding out. Lord & Taylor was recently forced to pay penalties after placing content in Nylon Magazine but failing to mention that it was involved with editing the article and subsequent Instagram post.

That’s been the status quo in paid influencer marketing, partially because it’s challenging for brands to monitor whether influencers are properly tagging their content as ads. But that’s changing, thanks to stricter enforcements of advertising laws.

The Federal Trade Commission has begun cracking down on brands that don’t implement transparent disclosure practices. Anyone who receives compensation in exchange for promoting a product or service must publicly acknowledge the deal. Google is following suit by requiring that every link back to a supplier be tagged as “nofollow” in the HTML code.

Neglecting to call out brand relationships could hurt both parties’ SEO and affiliate links.

Aside from the ethical questions raised by paid influencer marketing, it’s also difficult to track results. There’s been a lot of paid placement and CPM activity on influencer-only networks (companies that aggregate successful bloggers, celebrities, and Instagram personalities, and then match them with brands) in the past six to 12 months.

But these networks haven’t implemented robust tracking and CPA analysis systems. Businesses spend tens or even hundreds of thousands of dollars on influencer content with no clear picture of the ROI. That’s why 30 percent of marketers say they’re losing money, or just breaking even, on influencer campaigns.

In performance marketing, there’s a much more structured oversight process. Program managers enforce disclosure guidelines to ensure that promotions are above board, which protects the brand while driving incremental sales.

For example, if an influencer consistently fails to mention that she’ll receive a commission if readers make a purchase via her site, the program manager can remove her from the client’s affiliate program. That quality control is key to maintaining both profitability and credibility.

Building a Performance-Based Influencer Strategy

The terms “influencer” and “native” are the buzzwords of the day, but the fundamental principles of influencer marketing have been at the heart of affiliate programs for a long time. Great affiliate managers have long provided content suggestions to their partners, who then develop that into native advertising that suits their websites or social media accounts.

If you’re ready to shift toward performance-based influencer marketing, here’s how to do it:

1. Establish an affiliate marketing program. Affiliate marketing programs enable high-value influencers to earn revenue shares by endorsing brands’ products and services. Because the compensation is based on how many sales each influencer generates, it incentivizes them to promote aggressively. It also ensures that you don’t overpay for underperformance, making affiliate marketing one of the most cost-effective acquisition channels.

In order to successfully run an affiliate program, you need strong program managers. Whether you select them in-house or hire an external agency, someone must track performance, report the metrics, and monitor payments. Program managers should also create explicit terms for affiliate agreements and map out different avenues through which influencers can participate.

2. Offer fair and competitive compensation. Creating impressive content that aligns with your brand, but make sure it’s unique and not overly promotional — this takes time. Strong influencers expect appropriate compensation for their efforts. After all, they have spent years building their reach.

Decide whether you’ll compensate them via sales commissions, flat fees, or a combination of the two. Then develop a structure that rewards them based on the type of promotion, relevance to the brand, and potential exposure.

Figuring out how to fairly compensate influencers is not a one-size-fits-all approach. Your program managers should conduct research on industry standards and tailor affiliate offers to your products. Good affiliate programs come down to making it worthwhile for influencers to work with you.

3. Nurture influencer relationships. In order to have a successful performance-driven influencer program, you must support your partners throughout the relationship. Offer them incentives to sign up, such as special discounts that encourage them to get to know your brand. Hold occasional contests and giveaways to engage both influencers and their followers, which drives more traffic for your company and shakes things up on their end.

Once they’ve been working with you for some time, invite them to collaborate on more high-profile strategies. Finally, send them influencer-only promotions. These ongoing interactions will keep them interested in your company and cultivate long-term loyalty.

Celebrity influencer endorsements are hot right now. But, as with other trends, this strategy will soon flame out.

If you can’t consistently track results and ROI, what’s the point of using influencer marketing at all? Flashy strategies ultimately diminish brands, making them seem inauthentic and putting them at legal risk.

It’s high time we stop using “influencer marketing” as a catchall term and get specific about which tactics really generate ROI.

Interested in learning more about performance-based influencer marketing? Contact us! 

Author: Robert Glazer