The influencer industry has become very serious

The influencer industry has become very serious

Natalie Portman or Lipstick King ?! The influencer industry has become very serious and is gaining ground in luxury brands. More and more people manage to become “ambassadors” even for the most demanding brands.

In general, luxury brands are in a monologue. When they have news to release, they generally communicate one-way directly to the end consumer – through billboards or various editorials in glossy magazines. In the age of social media, however, consumers are responding. And a certain group of consumers is heard even by the heads of the big brands – the influencers. There are those who have a cohort of followers behind them and who write chronicles, advertise and occasionally rotate various creations or products. Their fame comes primarily from using Instagram, Snapchat or TikTok applications. At first glance, their posts do not seem very serious, but their business is very serious, comments the British magazine The Economist.

For consumers, influencers are a moving advertisement and a trusted friend. For brand owners, they are the vectors of behavior typical of Z-generation and millennial consumers, who will account for about 70% ($ 350 billion) of global spending on luxury brands by 2025, according to consulting firm Bain.

Digits

There is little reliable data on the influencer industry. According to 2020 figures from China’s National Bureau of Statistics, where influencers have gained ground ahead of those in the West, the industry contributes $ 210 billion to gross domestic product (about 1.4%). And during the COVID-19 pandemic, the numbers are likely to rise.

According to EMarketer, 75% of American marketers will allocate budgets to influencers, compared to 65% in 2020. The amounts allocated globally by influencer brands could reach 16 billion dollars this year, ie over one dollar out of ten spent on advertising on social media . Another research firm, Research and Markets, admits that in 2021 intermediaries have raised global revenues of nearly $ 10 billion and could reach $ 85 billion by 2028. And the number of companies offering services around influencers has increased. by a quarter last year, to almost 19,000.

Vedete vs. Influencer

The influencer ecosystem is a challenge to the traditional principles of luxury brand management – unidirectional, somewhat standardized, unchanged and expensive campaigns. The same Hollywood smile that tries to entice passersby to buy a product. For ten years, for example, Julia Roberts and Natalie Portman have been the best-selling perfumes – La Vie est Belle (by Lancôme) and Miss Dior, respectively, and according to a report, the money spent by the LVMH group on the entire campaign Miss Dior has been $ 100 million in the last year).

Such campaigns, which focus on first-hand celebrities, may seem unfriendly to 20-year-olds or thereabouts, who value authenticity and not that timeless glamor. And influencers, with their familiar charm, ask for less than the price of a star.

The best ones can reassemble the brand message in a way that is in line with their own style, with the tastes of their followers and adapted to the platform. For example, Instagram is very suitable for all types of celebrities with over two million followers, and TikTok – for niche microinfluencers with up to 100,000 followers or for nanoinfluencers with less than 10,000 followers.

And as social media applications introduced the possibility of shopping, influencers began to combine entertainment with sales. The so-called “social trade” is huge in China, where it was invented. In October 2021, Li Jiaqi, better known as Lipstick King, garnered nearly 250 million views in a 12-hour streaming session featuring a wide variety of products, from lotions to headphones (in total value of $ 3 billion), just before Singles Day, an annual time of extravagance in China in terms of shopping.

In addition, many influencers are directly involved in advertising production in a way that traditional ambassadors could not. There are video editors, copywriters, lighting specialists, directors, all in one person (see Jackie Aina, whose beauty secrets attract seven million followers on multiple social platforms).

These skills combined with access to influencer audiences translate into brand value. Estimating it, however, is an inaccurate science. The analytics firm Launchmetrics is trying to measure this value by tracking the visibility of a campaign in print and online platforms. The so-called “media impact value” (MIV) parameter reflects how much a brand should spend to achieve a certain degree of exposure.

risks

In addition to new opportunities, influencers also take risks, especially in the case of luxury brands whose identity is based on price discipline and exclusivity. For example, shopping events broadcast live by influencers in China from brands such as Louis Vuitton or Gucci have been ridiculed for bringing luxury brands to the retail area.

There are also indirect costs to consider for brands. A group of younger and more unpredictable ambassadors is harder to control by brands, compared to one or two celebrities with whom they have exclusive contracts, which include clauses on possible behaviors with reputational risk for the brand.

There are natural fears that explain why some fashion houses are still very cautious when it comes to possible collaborations with influencers. Hermès, for example, is the kind of brand that keeps its social media presence away from influencers.

But more and more people feel that the benefits outweigh the risks. Despite the quixote with those live streaming sessions for Louis Vuitton and Gucci brands, the owners of the two brands – LVMH and Kering – continue to rely on influencers to create effervescence on social media around their products. “To be a top ten brand, you have to know how to play digitally. If you don’t know, you won’t stay in that top for too long, “said Flavio Cereda-Parini of Jefferies Investment Bank.

Money & law

Chinese authorities closed the accounts of 20,000 influencers last year on the grounds that they “pollute the Internet”.

CEILING. And the regulatory part is getting stricter in this area. On March 29, the Chinese authorities set new limits on the amounts that Internet users can spend to reward their favorite influencers, how much they can earn from fans, what they are allowed to post, and so on. MEASURES. There are regulators in several countries, even social platforms, who have started taking action against influencers who do not mark their content as advertising.