Bait and switch.

In most cases, Influencer Marketing does not rock.

(TMAI #131: Influencer Marketing? Think Different. - June 2018)

Add the recent Wall Street Journal article to the evidence you've already seen in your company's data.

The WSJ asserts: Best Case - if Influencer Marketing works, there is no proof that it does, and Worst Case - Influencer Marketing is a giant sucking sound on your marketing budget.

If you've not read the article, then you should. The 188 comments are an equally insightful read.

Here are three pieces of data shared by the WSJ that stood out for me:

1. Size and Price.

In a measure of just how much of a wild west Influencer Marketing has become, the estimate of global spending is between $5 billion and $10 billion. That is a big gap, no?

Still, a lack of clarity, at that scale, makes every Marketer have strong FOMO - which only results in even more money flowing into a channel with only superficial accountability.

The chart on the right was new to me.

While it contains that same wild variation you see on the left, it is helpful to know what I need to pony up to have Ariana Grande to promote a B2B Cloud VOIP app. :)

Oh, and you all know how much I love segmentation of data, it was helpful to see the names of the Influencer segments: Nano, Micro, Mid-Tier, Macro, Mega and Celebrity.

(This is how I know Influence Marketers don't know what they are doing: I have 200k Twitter followers, 250k LinkedIn followers, 50k Facebook followers, 46k email Subscribers. Mid-Tier does not sound sexy, but I exceed all criteria and still no one is offering me $10k/post to shill sweaters or phones or the latest ThinkPad. Influence Marketers, you are hurting my Mid-Tier feelings!)

2. Cost of Fake Followers.

It is not surprising to learn entities exist to inflate all kinds of online metrics. Knowing what it costs to generate fake followers was still new news for me.

Cost per 1,000 Fake Followers:

      $16: Instagram

      $34: Facebook

      $49: YouTube

Seems inexpensive, no?

It is also ironic that the whole Influencer phenomenon was turbocharged by Instagram, yet it is cheapest to buy fake followers on that platform.

Consider the incentive: If these numbers are correct, it would cost you $160 to get enough followers to become a Nano Influencer, at which point you are ready to earn $500 per post.

You can do the rest of the math to see the temptation is to get fake followers from Stormlikes ($12/1,000) or Mrinsta ($35/1,000).

It is unlikely that Joe Nobody is going spend $160 and start raking in $500 per post. Joe Nobody still has to have some dimension of reality to their influence (regular postings with half-decent content).

But, if you are Micro-Influencer or Mid-Tier Influencer... You can see the immense attraction to go from 50k to 80k or 500k to 750k to make substantially more money by charging higher rates to Influence Marketers.

3. Influencing Effectiveness Trend.

The article defines engagement as # of Likes as a percent of followers.

(Big props to InfluencerDB for not making this a low quality compound metric!)

It is insightful to see the decline in engagement rates quantified by industry segments...

Likes represent only a percentage of value an advertiser might get. There are comments, there are shares and retweets, relevant clicks to advertiser site, and, if possible, the golden profit metric.

Still, using InfluencerDB's likes as a percent of followers is a hundred times better than the normal vanity metrics Influence Marketers share with CMOs (Reach, Impressions, etc.).

I believe the decline in Influencer paid content engagement rates is a result of three elements coming together:

A. Social Media users have wised up to the fact that the Influencer they are watching is suddenly posing with an energy drink because they are being paid to.

The underlying attraction of paying Micro, Macro Influencers for social posts was the authenticity and organic connection. The bloom is off that rose.

B. Algorithms on all social platforms have worked to reduce organic reach.

You are paying an Influencer for their 10 million followers. But, the Influencer's organic reach is just a couple percent of that 10 million. And, that 2% is on its way down.

C. Any increase in fakes will increase size of the denominator, which ensures the blue dots will move further to the left.

A and C are within the control of an Influencer, B is entirely outside their control.

The net effect for Influence Marketers is non-positive in terms of business value.

Reality Check: Influencer Marketing Budgets will Increase.

Despite the above three challenging data points, the spend on Influencer Marketing is only going to increase.

Wait.

What!

Yep.

The increase will be fueled by the dynamics of large marketing budgets.

You might believe that the allocation of large budgets is based on what has been proven to be effective in the past, or a stack ranking by size of brand value or revenue.

Perhaps the really big chunks. But, after that, it is more common that the budget allocation is based on the vanity of Reach or the shiny potential implied by audience type or simply FOMO.

(It is heartbreaking that we, Marketers, confuse Reach and Audience Type with Influence.)

The WSJ article provides an excellent example of this: Unilever.

Last year Unilever was among the first large advertiser to warn that - in their assessment - fraud was undercutting the power of Influencers.

It might seem odd then that Unilever has doubled their YOY Influencer Marketing budget, and Unilever's investment arm has purchased a big stake in software that helps oversee Influencer campaigns.

According to Bing, Unilever's marketing budget is around $7.5 bil.

I have zero insider knowledge of how much Unilever spends on Influencer Marketing. Let us pick a tiny number for last year, 1.5%. That assumption would mean this year they are spending 3%.

On the surface, it seems trivial to allocate 3% to satiate Reach, Audience Type, and FOMO.

Except, that is 3% times 7.5 billion dollars!

From just one large budget into Influencer Marketing.

Let's say my assumption is wrong, Unilever's number doubled to _just_1.5% of $7.5 bil.

On one hand it is massive to you and me, but to a senior leader at Unilever it is literally a rounding error in service of Reach + Audience Type + FOMO.

Unilever is absolutely not alone in this phenomenon.

This is true for large companies around the world, and many medium and small companies as well. Check the math at your company. 5% of $80 mil, right? Or, 3% of $150 mil.

In many ways Influencer Marketing is still nascent, and the individual budgets are small enough to escape all accountability, and the overall spending will keep going up.

The raison d'etre of these budgets: _Instagram has ONE BILLION people, we have to do something!