Over the past several years, social media platforms including Instagram and YouTube have increased their reach, their members, and their capabilities. If you are standing on the sidelines, you might not have noticed that the 20-something year old girl that you used to watch as she sat on her floor and described products that she likes is now a multimillionaire. How did that happen and what is the value to brands of these relatable people talking about their products to upwards of millions of subscribers? Where did this industry come from? Where is it going? And what is next? 

types of industries sponsoring celebrities


Influencer Marketing is a term used to describe when a focus is placed on individual people rather than a target market. It utilizes people that have gained influence over a specific group of people and centers its marketing activity around them. From my vantage point, which is that of a consumer and research analyst, this type of marketing happened nearly on accident, although from the brand and content creators’ perspectives, I am sure this was very purposeful. Thousands of people began posting more and more products online and giving their unfiltered reviews. Some industries saw the opportunities arise more than others such as the fashion, travel, beauty, and food communities. As these social media mavens gained followings, their influence grew and what they inadvertently promoted translated into sales for companies around the world. And From this, Influencers and Influencer Marketing was born. 

Historically, consumers would receive a newspaper on their front porch and look through the coupons and ads that were provided. Further they might have looked through the circular for their local department store, grocery store, or even a specific brand. The consumer would then generate their purchasing plans based on the targeted ads that they viewed. Through the years, that medium became less popular and online advertisements took over many eyes. The younger generation might look to a website to understand what the best deal on a camera or TV is this week. However, as mentioned, the target market for these types of promotions is very broad. If a brand promotes through a retailer, it will have to find a way to capture the specific subset of people that are actually looking for their products. Influencer Marketing eliminates this. These content creators have captured audiences that are there for a specific reason. If you look at any advice on how to start a blog or enter the social media space to gain attention, one of the first rules is to ‘pick your topic’. You must have a focus, for this allows you to have that highly coveted targeted audience. 

In addition to shifting attention on ads from a print media perspective, other factors within our current economy have contributed to the spur and growth of Influencer Marketing. Among those are the departure from traditional TV viewership. While screen time has not necessarily decreased holistically, it has shifted to programs on streaming devices, YouTube, and movies. With that, there are fewer opportunities to actually capture the intended audience. In addition, there have been steps taken to implement ad blocking technology into web browsers. Because of this technology, publishers are not able to reach their targeted audiences in the same manner that they once were able to. In turn, consumers almost have to choose to receive advertisements. They are already watching their favorite social media stars and are receptive to their recommendations. 

The Brand’s Perspective

From a brand’s perspective, the potential ROI on Influencer Marketing can be nearly 10 times that of traditional marketing. For example, if a camera brand wanted to get their product featured with an influencer in a YouTube video or an Instagram post, they would have to take a few key steps including: 

  • Select the influencer
  • Provide guidelines (most influencers don’t want too many of these)
  • Offer monetary compensation
  • WalahPoof! You have a campaign

A traditional marketing campaign could potentially include: 

  • Identify a campaign theme
  • Find Select a studio
  • Find a spokesperson
  • Identify a campaign theme
  • Rent or buy Shooting shooting equipment and crew
  • Procure Editing
  • Hire stylists for Makeup makeup / hair
  • Purchase Ad ad space

In this completely hypothetical scenario, these two options have drastically different costs. If a company decided to pay that influencer $50,000 for a dedicated video featuring their product and they sold 10,000 products priced at $400 each, they would make $4 million on that campaign alone. Of course, this is a simplified example, but you can see the point. The traditional marketing campaign could cost upwards of $200,000 depending on the situation. Furthermore, that traditional campaign might not get the attention that the brand wants since it does not have a targeted audience. 

The pros of Influencer Marketing from a brand’s perspective are clear. One challenge that remains is understanding that exact ROI. Some brands provide codes or unique links that help them understand exactly what sales were directly driven by that influencer. However, it can still be challenging to track the lift that is generated from this type of promotion. Maintaining that genuine content creator’s opinion is also a challenge, so seeking out the correct fit between the person and the brand is key to a successful campaign. 

 instagram influencer market size

If you are still skeptical about this type of promotion, take a look at the estimated market size of the Instagram influencer market alone. In 2017, the market was already valued at over $1 billion with expectations to more than double in the next 1.5 years. As an active participant on Instagram, this does not surprise me. A whole new market has been created over the past couple of years. It should be noted that this is just a view of the Instagram influencer market and does not include all of the sales generated by influencers making videos and posting to YouTube or any other social media outlet. 

The Consumer’s Perspective 

Understanding some of the pros and cons for brands, let’s now look at the situation from the consumer’s point of view. 

One of the biggest benefits to this type of marketing is that it is often times more pull than push. Consumers are seeking this content and sometimes getting a subtle hint (or not so subtle) that they should purchase something. Consumers want to trust reviews. It is no secret that posted online reviews on any given website can be posted by the brand itself and that reviews are typically filtered to remove negative or derogatory comments. To sum it up, there is a lot of skepticism out there. 

Another thing I mentioned earlier is that this type of marketing almost popped up by accident. For years, social media was a place to share ideas, pictures, and perspectives. It was not necessarily the intention of content creators years ago to push sales, but simply to share their thoughts. It should be noted here that there are still a number of social media content creators that still don’t aim to sell products and are in it for the love of creating content, sharing their opinions, and having a creative outlet. Nevertheless, with that, these now-influencers created trusting audiences and relationships, which turned into one of the best possible ways to sell. If I am interested in eating healthier, I might follow one of my favorite foodie Instagram accounts and while she is just sharing her favorites, I can relate to her on many levels, and am an open audience to listen. With that, if she likes Primal Foods Avocado Oil, I would probably like it too. The particular influencer I follow may have a link in her Instagram Stories that I can easily click on and purchase the product. Win Win. 

 ftc compliance


Seems simple enough. As with many things, there is a dark side. With this type of marketing taking a fast start and generating billions of dollars, the rules are sometimes bent. Subscribers have grown to trust these social media accounts and relate to them as if they actually knew these people like friends. When a social media influencer then starts working with a brand of any sort, they are required, by law, to disclose that information. There are a number of rules for this and these rules are not always followed.  he trouble is that when they aren’t followed, a subscriber (or a million subscribers) may think that the influencer is just talking about another product that they love. However, they may be compensated solely to talk about that product. Without this information, the review can be interpreted differently. 

ftc violations


Most influencers state that they only work with brands that they know and trust, but consumers have grown skeptical. There are thousands of examples where this just is not the case and someone will provide a good review for a product that is not all they say it is. Furthermore, there are many ways for influencers to work with brands that does not require them to disclose anything. For example, negative marketing campaigns may suggest that the influencer not mention the sponsoring brand at all, but only discuss the negative parts of that brand’s competition. As long as they are not endorsing that brand specifically and they are only telling facts, this is completely legal. To put this in perspective, mediakix.com has several reports on this exact type of situation. According to mediakix.com, over 90% of top celebrity social media endorsements do not follow FTC regulations. 

Ultimately, this will hurt the influencer as the trust will go away. Short term, this can generate sales for a company, money for that influencer, and the consumer is none the wiser. Because this type of marketing happened as organically as is possible in today’s day and age (at least from the consumer’s perspective), many of the subscribers, followers, and consumers didn’t see the shift. Consumers want to know when they are being advertised to and when they are being told just an opinion. Historically, if you watch a TV commercial, you know it is an ad and you know that the company is trying to appeal to some part of you to encourage you to purchase their product. The challenge today is that social media is a mixture – there are some genuine influencers out there that just like sharing information and are not necessarily trying to get you to buy the next camera or widget. Then there are others that proudly display when they are working with brands. And then, there are those that don’t. And because of this, it is a hard space to navigate that is creating a lot of animosity and distrust within many industries.  

Humble Advice

To Brands – From my perspective, you are best to work with influencers that properly disclose and fit your branding. This will help consumers know what they are getting. They then have a choice to watch that content or not. At the end of the day, that was part of the value of influencer marketing – you have a captured audience. Allow those influencers to provide a genuine perspective of the product as this is what ultimately garners trust. No product is perfect for everyone. The goal is to find the people that already love your brand and product and can connect with an audience that has similar preferences. This will that your product is ideal for and create trust and loyalty for purchases to come. 

To Influencers – Be honest. That is what people want. They want to relate to you and learn from you. Not everything has to be about sales and if it is, maybe just tell people as much and find the audience or career that supports your endeavors. There are some great people on social media who have valuable things to share in all industries – let’s not lose that perspective or the amazing content that serves so many purposes including product suggestions, connecting with people that share interests, creative outlet, as well as pure entertainment. If being an Influencer is your job, that's great, own it and what that means. You have a responsibility when you generate a large audience whether you like it or not. Use that for good. 

To Consumers – Don’t let the few ruin your view of the many. The skeptic attitude of this type of marketing is rampant right now and genuine people are suffering for the mistakes of others. There is a lot of money involved and with that, corruption was inevitable. Take suggestions, opinions, and recommendations with a grain of salt as you would from a friend or company and make your own choices. Understand that you are always being advertised to or influenced whether it is paid for by a company or not.  That is the world we live in.  But also remember, you have the power here as you choose your content. Support people who you want to succeed and forget the rest. Ultimately, their success lies in your hands. 

Final Thoughts

There is a lot of room in the social media world for all kinds of people, perspectives, and objectives. Share what yours is and find the audience that relates to you. Companies have a huge opportunity to connect through influceners and content creators directly with their audiences and that is incredibly powerful. At the end of the day, loyalties will remain with the genuine and long-term relationships between consumers and brands will result from quality products and finding the right audience. The ways to connect to an audience are always evolving. Staying on the right side of it will benefit everyone long term.

For more than 15 years, gap intelligence has served manufacturers and sellers by providing world-class services monitoring, reporting, and analyzing the 4Ps: prices, promotions, placements, and products. Email us at info@gapintelligence.com or call us at 619-574-1100 to learn more.