Influencer Marketing: A Comprehensive Guide for 2023
As a Shopify store owner, you’ve likely heard the phrase influencer marketing before. But what exactly is influencer marketing and should you be using this marketing strategy? This comprehensive guide will share everything you need to gain a deep understanding of influencer marketing and assist you in getting started with implementation.
To begin, we need to understand the definition of an “influencer”. At its most basic definition, an influencer is anyone that has authority and sway in their community. Influencer marketing, then, is when a brand partners with an influencer to promote their product or service in exchange for some form of compensation.
The influencer marketing industry has grown over 800% since 2016, reaching $16.4 billion in 2022, and is projected to continue growing rapidly. With Apple’s iOS14 privacy update and Google phasing out the third-party cookie, it has become increasingly hard for brands to gain a satisfactory return on their digital ad spend. Thus, more and more brands today are dedicating a part of their marketing budget specifically for influencer marketing given its effectiveness.
Let’s examine how the influencer marketing industry has developed over the years and what makes it such a valuable tactic.
II. The History of Influencer Marketing
One of the first widely recognized examples of influencer marketing dates back to the 1700s when Josiah Wedgwood, an English potter, made a tea set for Queen Charlotte. Wedgwood received permission from the Queen to name the product “Queen’s Ware” and so, because the product was associated with royalty and marketed as such, its popularity soared.
Influencer marketing evolved in the early 20th century with many brands featuring fictional characters in their advertising who acted as “influencers”. Coca-Cola used Santa Claus in its ad campaigns to help build a brand image around joy and celebration. Other examples of popular fictional characters used to promote a brand include: Ronald McDonald, the Marlboro Man, and the Pillsbury doughboy.
Also during the early 20th century, brands began partnering with athletes to endorse their products. One of the first athletes to be sponsored by a brand was Honus Wagner, who signed a deal with Louisville Sluggers, the baseball bat company. Once sporting events began being televised in the 40’s, sports sponsorships became increasingly popular because they allowed brands to reach a worldwide audience.
In the second half of the 20th century, with TVs in households becoming more mainstream, celebrity endorsements in television ads became more prominent. Some examples include: Andy Griffith & Post Toasties, Michael Jackson & Pepsi, and Karl Maden & American Express.
Then, at the beginning of the 21st century, with the rise of reality TV, many celebrity endorsements shifted to feature these “everyday” stars. One example is this Got Milk campaign featuring the stars of the TV show Survivor.
Around the same time, various social media platforms began emerging. Enter - the Kardashians. While the family got their start on TV’s “Keeping up with the Kardashians”, they demonstrated how social media can be used to build your personal brand and gain a following. Thus, TV advertisements were no longer necessary to showcase a brand’s products. Instead, brands could communicate directly with their target audience via an influencer on social media like Kim Kardashian. Kardashian has promoted countless brands to her following on Instagram from Sugarbear to EthereumMax.
All of this history led to the modern representation of an influencer. Nowadays, with the proliferation of social media, anyone can become an influencer. Later on, we’ll dive into the different types of influencers, but first, let’s examine the benefits of influencer marketing.
III. The Benefits of Influencer Marketing
Influencer marketing’s success is based on the psychological principle of social proof, the idea that people often copy the actions of others in order to conform. Have you ever browsed reviews of a product before making a purchase? This is an example of social proof. And it turns out, you are not alone. According to Trustpilot, nearly 9 out of 10 consumers worldwide read reviews before buying products.
This is what makes influencer marketing so powerful. When influencers share about a product/service, consumers view that as a positive endorsement, and this can directly impact sales. In fact, Inmar Intelligence found that 84% of shoppers have made a purchase based on the recommendation of an influencer.
Traditional advertisements produced by the brand itself do not hold as much persuasive power as a recommendation coming from an influencer. This is because consumers trust influencers as if they were a friend, so their endorsements feel more authentic. An Influencer Marketing Hub study found that 61% of consumers trust influencer recommendations versus only 38% trust brand-produced content.
Additionally, by partnering with influencers in different markets, brands can reach a wide variety of audiences across the globe. A great example is Nike’s partnership with soccer star, Cristiano Ronaldo. Ronaldo has 521M followers on Instagram, making him the most followed individual on the platform. With each branded post on Ronaldo’s account, Nike is reaching a large, worldwide audience.
Moreover, influencer marketing can be quite cost effective compared to other marketing strategies. According to Influencer Marketing Hub, brands can earn $5.78 on average for every $1 spent on influencer marketing. Whereas the average return on ad spend for e-commerce is $4 earned for every $1 spent according to Neilsen.
Depending on the influencer(s) your brand decides to work with, costs will vary. So, let’s dive into the different types of influencers and the costs and benefits associated with each.
IV. Types of Influencers
As discussed above, celebrity influencers, such as Cristiano Ronaldo and Kim Kardashian, can assist your brand with reaching a broad and massive audience. Of course, this comes at a steep price. According to CBS Sports, Nike pays Ronaldo $20 million annually as part of their lifetime deal.
However, not all influencer partnerships are that expensive. There are different levels of influencers, based primarily on follower count. The amount that influencers get paid per post also depends on engagement rate, the social media platform they are using to promote your brand, and the type of content being created.
Macro influencers have an audience between 100K-1 million. Various Peloton instructors such as Robin Arzón, Ally Love, and Alex Toussaint fall into this category. They have partnered with brands such as Athletic Greens, Adidas, and Hyperice. Jared Watson, marketing professor at the Stern School of Business, speculates that the instructors likely get paid an average of around $20,000 per post.
Micro-influencers are defined as those with a following of 10K-100K followers. The general consensus across marketing experts is that those with smaller followings often have more engaged audiences. Forbes cites that micro-influencers have up to a 60% increased engagement rate compared to macro-influencers. This also translates to sales, with micro-influencers having over a 20% higher conversion rate. In terms of cost, the Izea Insights’ State of Influencer Earnings Report found that micro influencers were paid an average of around $1,500 per post across platforms.
To reach an even more niche audience, your brand can partner with nano influencers, those with under 10K followers. Nano influencers can be super effective for reaching a hyper targeted audience. Jalyn Baiden, for example, is a nano influencer specifically focused on skincare and beauty. She has partnered with brands like Lancome and Armani Beauty. According to Business Insider, Baiden charges $350 for a 3-frame Instagram story.
Last, but certainly not least, your very own employees and customers can also be leveraged as influencers. Employees and customers who are loyal to your company can help spread brand awareness to their personal networks through word of mouth advertising. The Famous Finder app for Shopify makes it easy to identify those customers in your database who may have considerable influence in their communities. Download the app today for a simple way to get started with influencer marketing utilizing those who are already supporters of your brand!
Read on for details on how to select the right influencers for your brand and set up an effective campaign.
V. How to Identify the Right Influencers for Your Brand
So how do you determine which type(s) of influencer is right for your brand? First, you’ll want to decide on your influencer marketing budget. As demonstrated above, the cost of influencer partnerships can vary widely.
Let’s say, for example, that my company sells all-natural sweet potato chips. As a small, family-run business, our overall marketing budget is quite small, so I have chosen to allocate $2,000 to influencer marketing. That being said, I know the category of influencer that is most appropriate for my budget is nano-influencers.
Once you have an idea of the category of influencer you are after, then you can begin your research to find the perfect influencers that align with your brand. Ensure that you first have a clear picture of who the target audience is for your brand. That is, who are you trying to reach with your messaging? Then, you can start formulating a list of influencers that have a following matching your target audience.
Continuing on with the sweet potato chip company example, the target audience we want to reach with this influencer marketing campaign is health-conscious moms. As the primary grocery shopper in most households, we want to communicate to moms that our sweet potato chips are a nutritionally-beneficial alternative to regular potato chips that kids will love.
Neal Schaffer offers some helpful suggestions for how to go about finding influencers in your niche organically. Of course, an obvious place to start looking for influencers is within your own customer database! With Famous Finder, you can easily identify who among your customers may be classified as an influencer. If you want to broaden your search beyond your first-party data, there are other Shopify apps that can assist you with influencer discovery.
As mentioned above, I would start my influencer search with Famous Finder, discovering who among my own customers might already have a following in their community. As purchasing customers, these influencers have already tried and hopefully enjoyed your product, which makes it easier for you to initiate the partnership. After that, I would use Neal Schaffer’s list of ways to find social media influencers in your niche. The first suggestion is simply using Google. Searching for “healthy mom nano influencers”, I came across a number of curated lists of nano-influencers. I identified 5 possible influencers that could be a good match with my brand from these lists: @carlajian, @glambybrea, @jenifromtheblog_, @justjojo1234, and @vigoritout. Next, following Schaffer’s second suggestion, I chose to look at the speakers from the latest Food and Nutrition Conference & Expo (FNCE). Here, I found 3 more contenders including: @sklingerrd, @chefjulie_rd, and @lagringanutricionista.
After you have an initial list, you’ll want to analyze and compare the influencers based on various criteria. Ultimately, the goal is to find influencers whose personal brand fits together nicely with your own brand. Some questions to consider include:
- Do followers seem engaged with this influencer and their content?
- What other brands is this influencer partnering with?
- Do I trust this influencer to represent and uphold my brand’s image?
- Is this influencer an expert in the industry related to my brand?
Utilizing the questions above, I narrowed down my list of potential influencers to my top 3: @chefjulie_rd, @carlajian, and @jenifromtheblog_ These influencers seem to align best with my brand and resonate the most with my desired target audience.
Now that you have chosen the influencers that you’d like to work with, let’s dive into the details of creating a successful influencer marketing campaign.
VI. Creating a Successful Influencer Marketing Campaign
Follow these steps to create a successful influencer marketing campaign:
Step 1: Set clear campaign goals
- Who do you want to reach with this campaign?
- What is your objective? Perhaps it’s to increase brand awareness and expand your reach or perhaps it’s to boost brand engagement amongst your current audience.
- What metrics will you use to measure the campaign?
- What action are you wanting those who see the campaign to take?
In the sweet potato chip company example from the previous section, I identified the target audience as health-conscious moms. Our objective with this campaign is to increase brand awareness since we are a small company and relatively new to the CPG industry. We want those who see the campaign to purchase the product from our online store so that they will try and fall in love with our chips. The main metric that we will use to measure this campaign is sales. We will keep track of the level of sales brought in by each influencer utilizing specialized promotional codes.
Step 2: Outline a plan to reach your goals
- Which social media platforms will you involve in your campaign?
- Will the influencer be responsible for creating the content or are you defining the specific content you want shared?
- How will you promote your campaign?
For the sweet potato chip campaign, we will mainly be using Instagram since the platform’s gender and age distribution aligns nicely with our target audience. While we will provide brand guidelines, content will be created by the influencer to ensure authenticity.
Step 3: Collaborate with influencers and establish mutually beneficial partnerships
- Set clear expectations for the partnership, including how long you will work together, how the influencer will be compensated, and the best way to communicate with one another.
- Share any brand guidelines with the influencer so the execution is line with your brand image
- Highlight what you love about any of the influencer’s prior work so they can get a better idea of what it is you’re looking for
For a relatively easy-to-manage and long-lasting partnership, the sweet potato chip company will pay its influencers based on performance. That is, influencers will earn a percentage of the sales that they drive to the site. Influencers will also receive free sweet potato chips to assist in their content creation and promotion of the product.
Step 4: Measure and analyze campaign results
Return to your smart goals outlined in Step 1 and assess your performance:
- What was the engagement level with the campaign?
- How many people did you reach?
- Did you drive the desired action (clicks, conversions, etc.)?
- What was the ROI?
Utilizing the questions above, I would reevaluate each influencer partnership and return to Section V if necessary to discover new influencers.
As you plan your campaign, it is important that you are aware of the laws surrounding influencer marketing. The section below has all of the details you need to know.
VII. Legal Considerations for Influencer Marketing
The Federal Trade Commission Act of 1914 prohibits “deceptive acts or practices in or affecting commerce”. The FTC has specific guidelines outlining the principles used to evaluate endorsements and testimonials for deception. To boil it down for simplicity’s sake - all sponsored content must be clearly disclosed. For more details on what this looks like, check out the FAQs from the FTC.
Additionally, intellectual property rights across social media platforms state that the content created by an influencer is their IP. Thus, your brand must get permission from the influencer before reusing the content.
Beyond keeping these legal considerations in mind, some general best practices when working with influencers can be found below.
VIII. Working with Influencers: Best Practices
As mentioned above in Step 3 of creating a successful influencer marketing campaign, clear expectations should be set around the influencer/brand partnership. This includes outlining what communication between parties will look like and any details related to compensation. It is also recommended to have a discussion around transparency and disclosure to avoid any legal troubles.
Once the expectations are set, however, remember to respect the influencer’s creative process and let them exercise their ingenuity. After all, they know their audience best and you chose to work with them for a reason. Make sure to offer your support and provide any necessary resources that they may need to effectively execute on your campaign’s goals.
And most importantly, remember that influencers are people too. Treat them with respect and communicate openly and honestly so that you set the foundation for a successful, long-term influencer-brand relationship.
IX. The Future of Influencer Marketing
The influencer marketing industry has already experienced rapid growth in the last 7 years, and that growth is expected to continue. In fact, the global influencer market is predicted to reach $22.2 billion by 2025.
Micro- and nano-influencers will likely begin to make up a larger share of the pie, as these categories of influencers are more accessible for smaller brands with tight budgets. Larger brands might even shift their influencer marketing strategy more towards micro- and nano- influencers since they tend to have more engaged followings than macro-influencers.
The overall landscape of the industry will continue to evolve as new technologies emerge and trends shift. Brands may start to utilize influencer marketing in new spaces such as the metaverse like KFC did with their digital version of Colonel Sanders. AI can help brands with finding influencers more easily and measuring campaign results more accurately.
Additionally, with Google phasing out the third-party cookie, first-party data is going to become even more important for marketers. The Famous Finder Shopify App can help you take advantage of this first-party data by seamlessly finding who among your customers have influencer status.
As social media usage continues to rise, more people will begin to self-identify as influencers. This means you’ll have the opportunity to build authentic relationships with many influential members in the community who can help grow your brand.
Influencer marketing is becoming an increasingly popular tactic for businesses small and large, and the industry is only continuing to grow. As a Shopify store owner, you do not want to miss out on this great opportunity. As discussed above, influencer marketing is an inherently powerful form of marketing, drawing on the psychological principle of social proof. Moreover, influencer marketing has proven to be effective, driving higher ROI than other forms of digital advertising.
As you start to outline your 2023 influencer marketing strategy, remember to be thoughtful about choosing influencers that align well with your brand and the goals of your campaign. In order for your partnership to be successful in the long-term, focus on building a mutually beneficial relationship rooted in communication and transparency.
Lastly, if influencer marketing still seems overwhelming to you, get started with the information that already exists within your Shopify store - the names of your customers. Download Famous Finder on the Shopify App Store to assist you with leveraging your current brand supporters as influencers.