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Why does Influencer Marketing Offer High ROI?

Why does Influencer Marketing Offer High ROI?

Influencer Marketing.

Return On Investment is something every business aims for whenever they launch a marketing campaign. Nonetheless, some strategies have lost some of this ability to generate more than they spend, but influencer marketing keeps on top of the highest ROI strategies.

Influencers became "a thing" when social media platforms like Instagram, YouTube, and Facebook became more popular. Since social media made content creation and broadcasting more accessible to "common people," suddenly, all of these platforms were flooded with these new celebrities. So, brands took advantage of them to promote their businesses.

People BELIEVE in what these social media celebrities say - even to a ridiculous measure - and that is why it becomes so profitable for businesses to opt for these personalities when planning a new campaign. 

In this article, we will study why influencer marketing generates a higher ROI for businesses while explaining how to measure it to get the most out of your campaign.

Want to learn more? Keep scrolling!

Influencer Marketing: What is it?

Influencer is the label or name given to all these "celebrities" - which is what they are, after all - who came from social networks. YouTubers or Instagram personalities shared their lives or talked about specific niche topics, and by generating this close relationship with their audience, they somehow "influenced" their way of thinking.

However, if we highlight again that these are "celebrities" since several of them are world-famous and are billionaires, we can say that this trend is not new at all. Before, influencers, actors, and musicians were the preferred options for brands to attract an audience from their fan base.

Now, these internet celebrities have a closer relationship with their audience, making it a more accessible option for brands and even more effective than hiring elite artists.

But who are the influencers? It is good to answer the question since this can also help you know who you should look for based on your needs or niche.

  • Celebrities: This is the top of Mount Olympus; right here, you can find football players working for Nike and Adidas, like Messi, Cristiano Ronaldo, or Mbappe, or big screen actors like Zendaya or Ben Affleck. Usually, big brands like the ones we mentioned use this "bigger than life" to give a sense of superiority and use the celebrity as a role model.
  • Social Influencers: These are the ones we will talk about most in the article. These are the celebrities that reached popularity through social platforms. They still get paid for promoting products; nonetheless, since they are more "reachable" or relatable than celebrities, subconsciously, people tend to believe more in them.
  • Niche Influencers: This is an even better option if your business is more into a specialized market. Huge influencers tend to be in niches like gaming, fashion, comedy, or any other category. If you are more into serious areas like finance, economics, digital marketing, or any other, it doesn't mean influencer marketing isn't an option. There are influencers in almost every industry. If this is your case, it is good to investigate which social media celebrities are performing well in your business area. If you are a B2B business and want to learn how to apply influencer marketing in your company, 
    read this article.

Why is Influencer Marketing So Effective?

Well, we've already described one of the reasons why influencer marketing is so effective: people actually believe in people who have achieved some success.

Unconsciously, everything that a person who has reached that podium of success says seems credible to us; in some metaphorical way, we see them upward, and since we would all like to be in that privileged position, we believe in their opinion and judge.

This also puts a great responsibility on influencers since recommending a product only for the money, and in the end, ends up being wrong, can take away some credibility. Like the wise Uncle Ben said, yes, the one from Spider-Man: With great power comes great responsibility.

But this is not the only reason. Let's see what others there are.

People's Attention is Harder to Catch

Standing out on social networks as a business is challenging. With so much content stimulation, people get lost in the rabbit hole of scrolling down, and even ads that are "plain" are like an obstacle between all the content they want to continue seeing.

Let's see; even if you are using the networks to market your business, the harsh truth is that most users also use them as entertainment, a place where they can see memes, educational content, or any other option.

Among all that entertainment, many times brands fail to grab that precious attention since it also happens that users don't really like it when brands want to sell them everything right in their faces.

But what happens when they see an influencer in the ad?

"Hey, what's he/she doing here? Oh! This must be good!"

This example more or less describes what happens in their minds, and that is why they decide to give their attention to your brand, which, in the end, can drive a large part of their audience to your account. With a larger audience, everything indicates that they can continue on their customer journey to become customers of your company.

The Decline of Organic Reach in Social Media

There was a time when the feed's timeline was ordered depending on the hour you posted. You used to get more likes, as people see your post more easily. But suddenly, the algorithm disgrace came, and now posts must fight fiercely against big brands and influencers to get the precious blessing of the algorithm. If you want to learn how to manage every algorithm, click here.

Jumping out from this horror tale, the truth is that today, it is more challenging to reach your audience organically. Social platforms benefit those accounts with great engagement, so big players keep on top of the hill while smaller or growing businesses have to fight to create all types of content to get users' attention. 

Of course, since influencers come with a large audience behind their accounts, it gives you access to their audience, helping you be more visible within these platforms.

Add Blockers

It's painful to admit people, but people tend to hate ads everywhere, so much so that they are willing to pay to avoid ads at any cost.

But when a social media celebrity talks about your company, it looks more friendly to them, and they will probably want to learn more about your products or services.

Word of Mouth

People believe more in reviews than the company itself; that's why when they look at the influencer reviewing the product, they are more likely to buy it or not.

Of course, this word of mouth doesn't stay just in the followers of the influencer, as this opinion can jump to family and friends of theirs, making it an avalanche effect for your company.

Word of mouth is still so valuable in the 3.0 web era.

Why is Influencer Marketing Effective?

Why does Influencer Marketing offer Higher ROI for Businesses?

To discuss this topic, two great pillars back up influencer marketing's effect on a high ROI: statistics and consumer behavior.

Statista tells us that 60% of marketers agree that working with influencers has a higher ROI than traditional advertising.

Back in 2017, this strategy was still generating excellent results, as shown in a Convince&Convert article that says that for every $1 invested in influencer marketing, your business can generate $6.50 in return. See the ROI? It can be up to 650% or more, which shows that it is an investment worth the profit you will get.

As for consumer behavior, we already know that followers admire these content creators. So, whenever they see one promoting a new product, they automatically think it is good since it has the approval of this celebrity. 

The analytics firm Twitter and Annalect studied the strength of influencers. They found that 40% of respondents purchase an item online after watching an influencer use it. Even more, Influencer Marketing Statistics shows that 62% of social media users trust influencers over A-list celebrities. The main reason behind this is that big stars get multimillion-dollar contracts for working with brands. While influencers also do, they tend to give more honest reviews about these products.

But let's go deeper into the benefits of influencer marketing and see how it affects other aspects while retrieving your business with a higher ROI.

Leads and Conversions

As influencers promote and say good things about your business, they invite users to follow your company. As a result, they can check your website, allowing you to nurture leads into sales.

Brand Awareness

One of the main reasons why influencer marketing works wonderfully with growing businesses is because it allows these companies to get noticed by wider audiences.

This growing factor doesn't only stay on grabbing followers' attention, but it can replicate to other users as they share influencer's content.

Beats Adblockers

Isn't it strange to you that the main benefit of subscription plans like YouTube and Spotify doesn't allow ads? It's practically the only benefit! 

It seems slightly disappointing for marketers, but there was a time when YouTube didn't have ads, and people could watch videos without interruption. Nowadays, you have more than three ads in a 3-minute video, which can annoy users. 41% of millennials use adblockers to cut out banners and popup ads.

Nevertheless, when you put influencers in your spots and add creative twists to the advertising, it looks more entertaining, and people love that type of marketing.

Cost Effective

Cost-effective and ROI are almost synonymous.

You see, working with an influencer can be even cheaper than many marketing strategies and give you fantastic results. Now, we are not talking about big influencers but about micro-influencers. And while the term "micro" does not cloud your judgment about the effectiveness of working with them, the fact that they have a relatively more minor fan base than big internet stars does not mean that those many followers stop fully believing in their judgment.

In this way, for growing businesses, it becomes effective to work with micro-influencers who have more affordable quotas when it comes to working with celebrities. Still, if they create a pretty good campaign, it can benefit both parties.

Snowball and Viral Effect

Influencers were the pioneers of virality within social platforms. By working with several micro-influencers, you can achieve, in the best-case scenario, a snowball effect when these followers begin to share the content.

At the end of the day, it is a more plausible and faster way to reach new audiences for your business.

Provide Promo Code

Another effective measure to quantify how much traffic the campaign is bringing you is to give your influencers a promo code that they can place in the videos or posts they make. By taking out the percentage of people who have clicked on said code, you can better see how profitable this strategy is for you.

Finally, concluding this article, if you are a B2B company looking for an influencer, we give you the complete guide to choose one effectively.

Final Thoughts.

Influencers are not just personalities who play video games for 7 hours on Twitch, do dances on TikTok, or review movies on YouTube. Social networks have opened the way for any personality to become famous by talking about their favorite sub-topic, and the thing is so profitable that they even make a living room out of it and work with companies associated with their specialty.

Ultimately, if you are looking for an influencer, there is one right for your company; you just have to do the necessary research. As we know, running a business is already demanding enough without adding the extra task of looking for an influencer; that is where digital agencies like Codedesign offer you professional help to advise you on any digital marketing issue. If you want more help, contact us to solve it!

FAQs - Frequently Asked Questions 

What defines influencer marketing and how does it work?

Influencer marketing is a digital marketing strategy that leverages the reach and credibility of influential personalities, often known as influencers, to promote products, services, or brands. It operates on the principle of trust and authenticity, where influencers use their established platforms—such as Instagram, YouTube, TikTok, or blogs—to share content about a brand. This method works by tapping into the influencer's audience, who often value the influencer's opinions and recommendations, thus driving awareness, engagement, and potentially sales for the brand. The process typically involves identifying relevant influencers, collaborating on content creation, and measuring the impact of the campaign on the brand's objectives.

Why does influencer marketing offer a higher ROI compared to traditional advertising methods?

Influencer marketing often yields a higher ROI than traditional advertising methods due to its nature of leveraging personal recommendations, which are seen as more trustworthy and authentic by consumers. Traditional advertising methods, while still effective in their own right, can lack the personal touch and trust that influencer marketing inherently possesses. Influencers have the ability to create genuine connections with their audience, leading to higher engagement rates. Moreover, influencer marketing allows for targeted outreach to specific demographics, resulting in more efficient use of marketing budgets. For instance, a beauty brand collaborating with a beauty vlogger can directly reach an audience interested in beauty products, thereby enhancing the effectiveness of their marketing spend.

How can businesses measure the ROI from influencer marketing campaigns?

Measuring the ROI from influencer marketing campaigns involves tracking specific metrics before, during, and after the campaign. These metrics can include engagement rates (likes, comments, shares), website traffic referrals from the influencer's content, conversion rates (sales, sign-ups), and brand sentiment analysis. Additionally, using unique promo codes or affiliate links specific to each influencer allows businesses to directly track sales or actions taken. Advanced data analytics tools can further dissect the data to attribute changes in consumer behavior or sales figures directly to the influencer marketing efforts, providing a clear picture of the campaign's effectiveness.

Who are considered influencers, and what categories do they fall into?

Influencers are individuals who have the power to affect the purchasing decisions of others because of their authority, knowledge, position, or relationship with their audience. They fall into various categories based on their follower count and niche. These include:

  • Mega-influencers: Celebrities with millions of followers across platforms.
  • Macro-influencers: Individuals with followers ranging from hundreds of thousands to a million, often with a broader appeal.
  • Micro-influencers: Those with followers between 10,000 to 100,000, usually more niche-focused with higher engagement rates.
  • Nano-influencers: Individuals with fewer than 10,000 followers, offering the highest levels of engagement and authenticity within very specific communities.

What makes influencer marketing particularly effective in today's digital landscape?

In today's digital landscape, where consumers are bombarded with countless ads every day, influencer marketing stands out due to its authenticity and personalized approach. Influencers, being real people, create a more relatable and trustworthy image than traditional ads. The effectiveness of influencer marketing also stems from its ability to cut through the noise of the digital world by providing content that adds value to the audience's lives, whether through entertainment, education, or inspiration. Furthermore, the rise of social media platforms has given influencers a direct channel to communicate and engage with their audience, making influencer marketing an integral part of the digital ecosystem.

How does influencer marketing overcome the challenges posed by ad blockers and declining organic reach on social media?

Influencer marketing effectively bypasses the challenges of ad blockers and declining organic reach on social media by integrating promotional content seamlessly into the influencers' regular posts, making it less susceptible to being blocked or overlooked. Since the content is part of the influencers' natural content flow, it reaches the audience as part of their chosen and curated social media experience. Moreover, influencers' content often enjoys higher engagement rates, which can counteract the effects of algorithms that reduce organic reach, ensuring that the promotional messages are seen by a dedicated and interested audience.

What are the key statistics supporting the effectiveness of influencer marketing?

Key statistics that highlight the effectiveness of influencer marketing include:

  • Influencer marketing campaigns can generate $6.50 in revenue for every $1 spent.
  • Nearly 90% of all marketers find ROI from influencer marketing comparable to or better than other marketing channels.
  • 49% of consumers depend on influencer recommendations for their purchase decisions.
  • Micro-influencers are found to have 7x more engagement rate on Instagram compared to influencers with larger followings.

These statistics underscore the growing importance and efficiency of influencer marketing in reaching targeted audiences and driving sales.

How does influencer marketing contribute to lead generation and conversions?

Influencer marketing contributes to lead generation and conversions by leveraging the trust and relationship influencers have with their audience. When an influencer recommends a product or service, their audience is more likely to take action, given the trustworthiness of the source. This direct recommendation can significantly increase leads and conversions because the audience perceives the products or services as vetted and endorsed by someone they follow and admire. Furthermore, influencers can utilize calls-to-action, such as swipe-up links in Instagram stories or promo codes, making it easy for their audience to make a purchase or sign up, thus directly contributing to conversions.

What strategies can businesses employ to ensure their influencer marketing campaigns are cost-effective?

To ensure cost-effectiveness in influencer marketing campaigns, businesses can:

  1. Focus on micro or nano-influencers, who often have higher engagement rates and lower costs compared to mega-influencers.
  2. Clearly define campaign goals and target audiences to select influencers who align closely with the brand’s values and audience interests.
  3. Utilize performance-based payment models, such as commissions on sales generated through affiliate links or promo codes.
  4. Foster long-term relationships with influencers to negotiate better rates and ensure consistent brand representation over time.
  5. Track and analyze campaign performance meticulously to understand which strategies and influencers deliver the best ROI, allowing for more informed decisions in future campaigns.

What tips can help businesses choose the right influencer for their brand?

Choosing the right influencer involves several critical considerations:

  1. Relevance: Ensure the influencer’s content aligns with your brand’s niche and values.
  2. Engagement: Look for influencers with high engagement rates, indicating a strong connection with their audience.
  3. Authenticity: Select influencers who have a genuine interest in your brand or product to ensure authentic endorsements.
  4. Audience: Analyze the influencer’s audience demographics to ensure alignment with your target market.
  5. Content quality: Review the quality and consistency of the influencer's content to ensure it matches your brand’s standards.

By carefully evaluating these factors, businesses can partner with influencers who can effectively embody their brand and resonate with their target audience.

What are the emerging digital marketing trends in real estate for 2024?

Emerging digital marketing trends in real estate for 2024 emphasize the importance of technology and personalized experiences:

  1. Virtual Reality (VR) and Augmented Reality (AR) tours become standard, offering immersive property viewings online.
  2. Artificial Intelligence (AI) drives personalized customer experiences, with chatbots and AI-driven analytics tailoring content and recommendations to individual preferences.
  3. Video content, especially live tours and Q&A sessions, continues to rise in popularity, enhancing engagement with potential buyers.
  4. Social media marketing evolves with a focus on community building and storytelling, leveraging platforms like Instagram and TikTok to showcase properties and lifestyle.
  5. Sustainability and green living features are increasingly marketed, responding to growing consumer interest in eco-friendly living spaces.

These trends highlight a shift towards more interactive, personalized, and technologically driven marketing strategies in the real estate industry, aiming to meet the changing expectations of modern consumers.

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