Brands shift budgets to influencers, as social media effectiveness falls

Luggage brand Mokobara partnered with fashion influencer Nagma Mirajkar to promote its products to her 8.6 million followers on Instagram last month. The move was part of the company’s plans to shift a significant part of its advertising budget from social media ads to influencer-driven campaigns.

Mokobara’s campaign is also part of the brands’ general souring on social media advertising. The trend, which started about two years ago, is now more mainstream. According to influencer marketing and social media experts, more firms now choose influencer-led campaigns over social media ads.

The move is driven by a drop in the effectiveness of online advertising and how brands target users with personalized ads on social media. In fact, even Meta chief executive Mark Zuckerberg cited “ads signal loss” as a reason for the social media behemoth’s drop in revenues last quarter and the subsequent layoffs.

A July report by Neilsen showed that the return on investment (RoI) for influencer marketing is on a par with mainstream media today. It also said that aided brand recall, a practice where consumers are tested on how much they remember an advertisement, is 70% for such campaigns.

However, the interest in influencer marketing isn’t driven by this effectiveness alone, but also by the fact that many marketers are now having doubts about the effectiveness of traditional media and social media ads.

According to a November 2021 global survey by marketing solutions firm HubSpot, 37% of marketers said social media marketing is becoming ineffective.

Social media ads on platforms, such as Facebook and Instagram, have lost some advantages as companies give more control to users over the ads they see, some of which are driven by upcoming regulations, too. Influencer campaigns, on the other hand, offer better brand recall and even allow companies to create communities around their products.

“Brands only wanted to associate with influencers to put out the USP of a product or service earlier. Now, they want to create a community. Influencers have a community, which makes customer acquisition easier for brands,” said Gaurav Jain, a former influencer and CEO of Creators Gram, an influencer marketing firm.

In turn, influencer marketing firms saw increased brands’ interest in partnering with creators. Shudeep Mazumdar, CEO of influencer marketing firm Zefmo, said that the shift has been picking up over the past two years, and the need for such campaigns is driven by the longevity of influencer marketing campaigns, which is much higher than the social media ads. “A campaign done with the right influencer is also far more effective than targeted ad campaigns on social media,” he claimed.

Further, Bengaluru-based brand consultant Harish Bijoor said marketing budgets are shifting from ATL (above-the-line) advertising to BTL (below-the-line).

ATL, which has a very large reach and uses traditional outlets like national TV, radio etc., can be expensive, he explained. BTL, on the other hand, uses non-mainstream options, like influencers.

“Influencer marketing brings a unique advantage of trust and word of mouth to help drive trials. Authentic and relatable credentialing can help address specific brand or category trial barriers,” said Sharat Verma, chief marketing officer of P&G India.

Several P&G India brands, like Ariel and Whisper, are working with influencers to raise awareness and challenge stereotypes. Pampers, another P&G brand, engages new and expecting mothers with mommy influencers (mothers with a large following on social media), communities, and groups.

The nature of partnerships varies based on the brand and industry. For example, brands may offer cash in return for a fixed number of videos or make payments through a mix of cash and freebies.

The quantum of payment itself varies based on the effort put in by influencers. Payments are higher if an influencer is doing all the research and production themselves. According to an industry expert who requested anonymity, a single Instagram Reel may cost ₹3-4 lakh to ₹7-8 lakh. Reels are short videos created on Instagram.

Creators Gram’s Jain said that in sectors like fintech, where many influencer partnerships are taking place, brands want Influencers to educate viewers about basic fintech and insurance terms and then link it to a product.

Sanjay Vasudev, CEO of influencer marketing firm BuzzOne, said that while big brands have worked with influencers for a while, even newer and smaller brands are looking to work with them now.

That said, a portion of the industry is convinced that this is a short-term trend, aided by the global economic downturn and diminishing advertising and marketing budgets.

“Short-term conversion through influencer campaigns could be one thing. But, it is unlikely that performance marketing and digital ad campaigns will go away. There could be a short-term impact as brands remain cautious about their ad spending in light of the present economic factors, but this is something that the ad industry has seen previously as well,” said Narayan Devanathan, chief strategy officer of the National Foundation for India.