- Influencer marketing market analysis: key tendencies in 2023
- Published 18/10/2023
- 8 min Read
- Written by Anastasia Zaichko
Table of contents
This article is dedicated to studying the influencer marketing market analysis and outlining the main tendencies for its development. And there is no better way to start than to remember how, in 2019, to celebrate the 50th anniversary of the American moon landing, LEGO surveyed children aged 8-12 years. The company wanted to find out what children want to become.
The researchers were shocked to learn that children are more attracted to being influencers than astronauts: 30% of American and 29% of British children expressed a desire to become content creators, while 11% wanted to become astronauts. Another research confirmed that the idea of building a career in digital marketing is getting more and more popular as more than 53% of US Gen Zers consider it easy to become an influencer.
At Famesters, we know that being an influencer completely differs from being an average social media user. Below, we will consider the latest market analysis for influencer marketing results and see if the figures confirm the point.
INFLUENCER MARKETING MARKET SIZE
Calculating the creators’ market takes a lot of work. There is no single platform connecting influencers and brands. Some collaborations do not involve any intervention from third parties at all.
Following the influencer marketing market analysis results, in 2016, the creators’ market was only worth $1.7 billion. By 2022, it has grown up to $16.4 billion. It is expected to grow 29% to $21.1 billion in 2023. Whatever the size of the market, it is snowballing, adding from 40% to 60% annually over the past five years.
Nothing demonstrates the market growth more evidently than the overlap of three trends:
- growth in demand;
- supply growth;
- rising prices.
We can observe all three trends while working with influencers.
In 2021, 62% of advertisers planned to increase their budget for collaborations with creators compared to 2020. One could make allowances for the COVID-19 pandemic if 66% of brands had not expressed a similar desire in a year before.
Along with demand, supply also grows, but it is much more challenging to estimate. How many influencers there are in the world and how quickly their number is growing remains an open question.
Trying to answer this question, we’ve discovered that the number of creators “floats” ranges from 3 million to 38 million. This is a huge spread, but even the lower threshold is already an impressive number.
Indirectly, the growth of both demand and supply is evidenced by a steady increase in the number of platforms and agencies connecting influencers and advertisers:
However, the explosion of interest in opinion leaders is not indicated by all this but by rising prices. And oh, how they grow!
As an Izea study showed, the average cost of an advertising post on Instagram over six years increased from $134 to $1643 – that is, 12.3 times:
Even in the year of the pandemic, prices have not undergone any significant changes. On Instagram, stories have become slightly cheaper, the cost of posts has not changed, and videos have even become more expensive:
INFLUENCER MARKETING CAMPAIGNS’ EFFECTIVENESS
All this extraordinary growth must surely add up to something for advertisers.
First, to understand effectiveness, let’s overview the most popular social media platforms.
Compared to last year’s market analysis for influencer marketing, more companies use their tools, and noticeably more brands use third-party platforms. When asked if they utilize third-party platforms to assist with influencer marketing, 60.3% said yes (44.6% in 2022).
In 2023, TikTok ranked number one, with 55.5% of brands using it for influencer marketing campaigns. In 2022, 79% of respondents used Instagram for influencer marketing. It is still trendy but has dropped to second place this year. “Only” 50.8% of brands use Instagram in influencer marketing.
Surprisingly, Facebook’s popularity as an influencer marketing channel surged last year, with 50% of brands collaborating with Facebook influencers, although that figure dropped to 42.1% this year.
According to the influencer marketing market analysis, nano-influencers (up to 10 thousand followers) and micro-influencers (up to 100 thousand followers) are of primary interest to advertisers:
WHY?
There are three reasons, and the first of them is obvious – the price. The more followers, the higher the price of an advertising campaign. Only some brands are ready to pay millions to an influencer, even if it is a celebrity.
The second reason is authenticity. This is a controversial factor, but advertisers are also guided by it. The number of hits, popularity, and attention has yet to spoil small creators. Plus, their audience is more homogeneous and therefore relevant.
The third reason – and this is where we come to efficiency – is engagement. For nano- and micro-influencers, it is higher, especially on Instagram and TikTok:
And engagement rate is essential simply because 25.5% of brands use it to measure advertising effectiveness. This is a standard metric for evaluating opinion leaders before purchasing advertising. We look at engagement and understand how accurate the creator’s audience is.
However, the first critical point to measure the success of an advertising campaign with an influencer is the number of views, reach, and impressions – almost 50% of all brands see it as the crucial factor. Another critical indicator of effectiveness is closer to money and revenue – conversions:
USERS AND CREATORS
There would only be a market if it were for users who follow influencers. We either follow or know more than one person who follows a creator on Instagram. And we are not talking about YouTube.
As it turns out, Internet users have no shortage of reasons to follow an influencer: from “to learn something new” to “get a promo code.”
Since there are many reasons to follow a creator, there are also many types of influencers and content that an advertiser can integrate.
When it comes to advertising, content creators serve multiple functions for consumers: showing a product in action, proving its quality, or offering a discount:
Creators influence decision-making. According to the market analysis for influencer marketing, 30% of consumers were influenced by a creator to purchase at least one product.
The same research shows that 46% of internet users follow an influencer for recommendations, and 24% learn about a new product from an influencer daily. Additionally, 31% of consumers recommend a creator to their friends every week.
It turns out:
- people have more than one reason to follow a creator;
- they use influencers both to find products and to buy them;
- they recommend influencers they like — they create an additional network effect.
This means influencers are an ideal marketing tool: they are effective, users love them, and they scale. Right?
MARKET ANALYSIS FOR INFLUENCER MARKETING: UNDERWATER ROCKS
Well, not exactly.
There are several problems with influencers, and the main one is fraud. In 2017, a Sway Ops study found that 50% of all interactions with influencer-sponsored posts were fake.
Since then, social media platforms have devoted much effort to fighting bots. For example, in 2020, Instagram introduced a new algorithm to identify bot behavior. If an account behaves suspiciously, Instagram will ask the owner to verify the identity.
Does it help? The problem of fake activity has not gone away and will not go away anytime soon.
From 42% to 67% of influencer accounts on Instagram cheat; they buy followers, likes, comments, and story views. Yes, the share of such accounts is falling, which makes it easier, but not much.
And don’t forget about unconscious fraud. Every one of us has an account on social media, and we are sure you have bots following you, which you do not delete. Nobody knows how many subscribers an influencer has, but everyone has them.
Fake activity translates into financial losses for the advertiser. CHEQ calculated that by purchasing an advertising post for $250, a brand loses $37.5 due to bots — that is, 15%. Not much if you have a great ROMI and a life of chocolate. But if you have to count every penny…
One might object: “But there is fraud in all advertising.” Yes, but not all advertising fraud benefits the publisher who places the advertisement. In this case, the publisher is the influencer. And the more fake activity there is, the higher the perceived value of the creator.
Result: 38% of advertisers encountered fraud from influencers. And these are the ones who found out about the fraud.
The next problem is pricing. The aforementioned market analysis for influencer marketing demonstrated that only 31% of marketers fully understand influencers’ pricing. It’s no surprise that the remaining 69% need clarification.
What is the cost of advertising based on the number of subscribers and engagement or potential ROMI? How do you determine potential ROMI if you have little experience running campaigns? How does the price vary depending on the topic?
Until Facebook (Instagram) and Google (YouTube) centralize the purchase of advertising integrations, we will not get an answer to these questions. TikTok has solved the problem, but its marketplace is very young, and it is not yet known how things are going there.
The third problem is trust. According to the influencer marketing platform market research, 34% of users do not trust influencer reviews. That is, you paid for a review for 10 thousand users, but there are only 6.4 thousand.
Some Internet users believe that influencers distort reality and that opinion leaders exploit the audience’s gullibility. And creators are not helping to resolve the issue. For example, only 14% voluntarily tag advertising posts with unique tags.
To summarize the pitfalls, the first two problems can be overcome by optimizing algorithms and centralizing advertising. What to do with the third challenge remains an open question.
Read more on the topic:
INFLUENCERS AND DIRECT SALES
Let’s answer another question: should content creators influence sales? Objectively speaking, no.
Let’s take the well-known television advertisement. Do those who air advertising on TV expect an immediate increase in sales? No, it’s a long game. Of course, when 1 million viewers see a Coca-Cola Christmas advertisement, some will buy this beverage, and some will buy something else.
But the main goal of the message is to hammer into people’s heads that Coca-Cola is an excellent beverage for holidays.
The same applies to influencers, but in miniature and with greater efficiency.
The coverage is, of course, less. Let’s put aside major creators; thousands will see your advertisement, maybe tens of thousands of users. But the coverage is high-quality: you are not targeting the 25-45 segment, but people with a specific interest, people who trust the person advertising the product.
Neither TV nor influencers are talking about users ready to buy a product. These are people who could potentially be interested in it.
The value of influencers is measured not by direct sales but by such a mysterious indicator as earned media value (EMV).
Earned media value is an indicator for assessing the value of unadvertised or hosted branded content. A creator wrote a post about you for free – you consider the media value. The formulas are different, but essentially:
EMV = (reach/1000)*CPM
Why are we doing all this?
According to various estimates, the influencers’ EMV varies from $4.87 to $5.78 – it all depends on the research and methodology:
In addition to direct sales, for every dollar invested, you get $5-6 of media value. It results in brand awareness, brand trust, and other things.
As we said, this does not mean influencers are the perfect marketing tool. As well as the calculation formula. It is impossible to measure everything by direct sales.
WHAT’S NEXT?
We found that the market for opinion leaders is proliferating. We also learned that companies believe creators are influential and worth the cost.
But despite the overall success of the segment, it is plagued by problems such as fraud or mistrust on the part of some users.
Today, we primarily discussed the numerical parameters of influencers’ activities: market volume, collaboration costs, and other issues. But if you need to start a quality advertising campaign with an honest influencer matching your target audience, contact Famesters. Our agency will start the collaboration and deliver the best results possible.
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