A million dollars. That’s how much a single post on Kylie Jenner’s Instagram feed will cost you. If that sounds extravagant, you could try Selena Gomez. She only charges $800,000 a post. Kim Kardashian is practically bargain basement at $720,000 a post, while Logan Paul is giving it away by charging just $17,000 a post.
How Much Does an Influencer Cost
A million dollars. That’s how much a single post on Kylie Jenner’s Instagram feed will cost you. If that sounds extravagant, you could try Selena Gomez. She only charges $800,000 a post. Kim Kardashian is practically bargain basement at $720,000 a post, while Logan Paul is giving it away by charging just $17,000 a post.
Those numbers come from Hopper HQ, an Instagram scheduling tool. In 2018, the company compiled an estimated cost per post using data on each influencer’s number of followers, status, reports of previous endorsements, and engagement levels. They also contacted the influencers’ agents to ask for a price for a sponsored post and calculated a cost per thousand followers. Kylie Jenner then had 117 million followers. She now has more than 137 million.
That’s a big audience but it’s also a lot of money. Is it worth it? Are companies right to jump on the influencer bandwagon and throw their revenues at millennials with selfies? Or is influence overrated?
Pick a Celebrity
You can divide influencers into two groups. One group of people who make money by posting on social media are famous outside the walls of Instagram, Facebook, and Twitter. Selena Gomez has a successful career as a singer and actress. Cristiano Ronaldo, whose posts are worth $750,000 each according to Hopper HQ, is one of the world’s leading soccer players. For these celebrities, social media endorsements are just one aspect of the sponsorships that pay their bills. In 2016, Nike signed a lifetime sponsorship deal with Cristiano Ronaldo that’s said to be worth up to $1 billion. The $750,000 he earns by waving a swoosh-clad boot on his Instagram page will form part of that contract.
Celebrity endorsements like these are as old as celebrity itself. In the 1920s, when a star of the new movie industry threatened the comb business by sparking a fashion for short hair, Sam Foster switched his comb factory to sunglasses. He then promoted the accessories by paying movie stars to wear them. His advertising slogan, “Who’s that behind those Foster Grants?” created a brand that relied entirely on celebrity endorsements. He used stars to influence the public. Unlike the other comb businesses of Leominster, Massachusetts, that brand still exists today. Athletes now make more from endorsements than they earn in prize money while names as big as George Clooney and Beyonce advertise coffee and soda.
As long as customers want to look and feel like the celebrities they admire, those celebrities have a service that businesses can sell. As long as customers trust the recommendations of the celebrities they like, brands have a resource they can purchase. The fact that celebrity endorsements have survived for so long suggests that that influence still works. The rise of social media endorsements has just given those celebrities—and their sponsors—another way to reach audiences. Instead of relying on a red carpet, a magazine page, or a billboard ad to show off the goods, celebrities can photograph themselves at any time and put themselves on millions of phones.
What is new though is that many of the highest paid influencers attracting sponsorship money aren’t famous at all. Or at least, they aren’t famous outside the world of social media. It’s not entirely accurate to say that they’re famous for being famous. Kylie Jenner is famous for creating a look that women want to copy, and successfully broadcasting that look on the Internet. Logan Paul is famous for the antics that won him an audience—and a lot of controversy too. But neither of them has a profession outside the walls of Instagram or YouTube. Their audiences are built entirely online—as are the metrics that prove to companies that they’re worth the price they charge for a post.
What Do You Get When You Buy an Influencer?
In theory, it’s in the metrics that the value lies. Brands know that stars like Selena Gomez and Beyonce Knowles ($700,000 per post) are famous. But they don’t know exactly how famous. They can look at their record sales, count the number of times they appear in the media, and they can now check trending data to gauge popularity in a target demographic but they can never put exact figures on the size of an audience nor on a celebrity’s ability to move that audience. George Clooney might have high name recognition but can he really move people to buy coffee pods just by being filmed using one?
The benefit that social media has brought to the endorsement industry should be data. Companies can now see exactly how many followers an influencer has, and by looking at the number of likes and comments they generate, they can also see how much influence they wield over those followers.
That’s vital because brands aren’t interested in sponsoring celebrities. The celebrities are the means to the end. The end is the audience and the goal is to move them to buy their products. That means that for social influence, the face and the name on the Instagram page are less important than the number under the follower label and the industry in which that page works.
That’s created a whole new market for brands who want to use endorsements. For them, any social media page with a large enough Instagram following in the area in which they operate is as useful as a page run by a well-known celebrity or their team.
It means that anyone who knows how to build an audience on Instagram, Twitter, or Facebook has the opportunity to earn money from that audience. Brands don’t have to approach Beyonce’s agent or try to twist the arm of Dwayne “The Rock” Johnson ($650,000 a post) to get their logo onto their Instagram pages. They can approach someone with a keen eye for cosmetics or a gift for photographing cakes and reach the audiences that they’ve built in return for a relatively small sum.
The approach does raise a few questions for marketers though—not least whether it works.
Good Influencers, Bad Products
The Fyre Festival suggests that it does. Billed as a luxury Caribbean music festival by Billy McFarland and rapper Ja Rule, much of the promotional work was performed on Instagram using paid influencers. Kendall Jenner (who was said to have received $250,000), Emily Ratajkowski and others put a clickable Fyre logo on their feeds and invited followers to watch a video showing model Bella Hadid running on a tropical beach. McFarland sold 5,000 tickets at prices that ranged from $500 to $1,500. VIP packages cost as much as $12,000.
The festival, of course, was a disaster. McFarland had no idea how to organize it or how to pay for it. He ended up with a six-year sentence for wire fraud and was ordered to pay $26 million.
But while the product itself was a mess, the marketing clearly worked. A particular kind of product—a luxury, lifestyle event—had been sold successfully on Instagram using influencers with aspirational lifestyles.
Even here though, the clearest example of influence having an impact, there’s no clear path from post to sale. Did people click through straight from post to sales page, or did they tell their friends what they saw, read an article in a magazine and thought it would be a good idea to buy a ticket?
That’s not clear. A report last year from Celebrity Intelligence asked marketers how they tracked the results of an influence campaign, and for a new form of marketing, the replies were pretty old school. Fifty-four percent looked at revenue generation and 59 percent measured growth in Web traffic. But the most popular measure of the success of an influence campaign wasn’t the number of extra sales it created but the amount of press the campaign generated. Marketers who buy influence appear to be using it at least in part to reach the mainstream press, where they can reach a much bigger audience.
Faking the Numbers
Influence marketers might not be looking at sales numbers but they are looking at other metrics. They’re looking at follower numbers and engagement stats as the main indicators for whether an influencer is worth paying, and that provides plenty of room for fraud. Writing in Forbesin 2018, Dennis Kirwan, CEO of marketing agency Dymic Digital, described how his company had tried to promote a video it had produced for a client:
[W] e were approached by a social media influencer who claimed she was popular online and had thousands of followers related to our desired target audience and demographic. After a cursory check of her online presence, we found that she was indeed followed by tens of thousands of people and received hundreds of likes on her posts. We agreed to hire her and paid her going rate, which if I recall correctly, cost us a small fortune. She followed through and posted the promotional video on her social media accounts.After a few days with no product movement, Kirwan’s company looked again at the influencer’s follower list. Most of them, they found, were bots. The “small fortune” that the marketing agency had paid was wasted.
That problem hasn’t changed. In February 2018, Jacqueline Detwiler of Entrepreneur magazine set herself up as an Instagram influencer.
She started by taking pictures of candles carefully placed around her apartment. When she realized that she didn’t have enough content, she began swiping other people’s imagery without attribution. She even created a fake Italian vacation by stealing pictures of the Amalfi Coast. And she paid an agency for 5,000 instant followers and as many likes as she wanted. With fake content and fake followers, Detwiler then began approaching candle companies, asking for free samples. The most expensive company didn’t reply. One offered her a 30 percent discount code. The other two sent her boxes of samples. When Detwiler explained that she was actually a journalist, one of the companies asked for them back and refused to be interviewed. The other company, though, explained that handing out free samples to influencers is like giving discounts to new customers. An influencer is a potential customer, she remarked, and has the possibility to bring more customers.
That’s not an unreasonable approach to take when the cost is nothing more than a few free samples. But when you’re paying $17,000, let alone a million bucks, to a celebrity that has no life outside social media, the decision is much harder.
And it’s here that social media influence starts to run into trouble.
Instagram is Just a Giant Billboard
Facebook can deliver detailed demographic data but teenagers don’t use Facebook, and a campaign that relies on an influencer’s ability to move followers is fundamentally different to one that depends primarily on a combination of messaging and targeting.
The strength of influence platforms like YouTube and Instagram is that advertisers, even without detailed user data, know that they can reach a young audience. And they know too that they’ll be reaching that impressionable group through someone who can make an impression on them. What they can’t know is how much of an impression they can make or, considering the unreliability of follower numbers, even how many people they’ll actually be reaching.
For all of the detailed statistics that Internet marketing in general and social media marketing in particular can generate about followers and likes, the reason that marketers measure sentiment and press coverage is that sites like Instagram can be poor at tracking sales. Sponsored posts tend to take the form of endorsements that show the influencer using the product, rather than a special offer that can be redeemed by clicking the right link. Over time, those posts build trust, which increases the likelihood of a sale. Followers see a celebrity they like using a product and assume that if they buy the product, they’ll enjoy it too. But attributing the sale to an Instagram campaign is difficult, especially if it’s run at the same time as other campaigns.
In the end, despite its apparent sophistication, an influence campaign is little different to the traditional pay-and-hope exposure of an old Hollywood star billboard campaign. Advertisers have always paid trusted celebrities to endorse their products and put them on giant signs. They can estimate roughly how many people might see those billboards. They can draw rough ideas of the kinds of people who will be in the neighborhoods where those billboards will be located. They can’t know whether those billboards will have an effect on sales—and if they don’t move sales, they also can’t know whether the problem was the location or the message.
The End of Influence
For small businesses that are willing to give discounts and free samples to people with limited and possibly fake followings, the risk of an influence campaign is minimal. They might be taken in but they’ll still have lost very little.
Larger brands have had a different calculation to make. They could assume that at least some of the followers of a well-known Internet celebrity would be real. They’d use the number of likes and comments as a proxy for the extent to which those followers could be moved to take action. But they could never be sure whether the money they send to an Instagrammer’s bank account in return for seeing their product in the influencer’s timeline would come back to them.
But they could assume that if they’re trying to reach a teenage market, and they don’t put at least some of their marketing dollars into an influence campaign, their competitors would.
Or at least that used to be the case because the rise in the popularity of influence marketing and the declining reputation of the influence market has had an effect. The Atlantic reported recently on how the hotel industry has formalized the application process for travel influencers, weeding out amateurs hoping to pick up a free stay from professionals who will deliver images of the hotel rather than selfies on the beach. According to Marketing Insider Group, Unilever’s €7 billion marketing budget no longer includes money for social media influencers. The company quotes Keith Weed, CMO at Unilever saying:
There is no more trust in bloggers. They buy likes and subscribers. Almost half of them did it at least once. We cannot invest in such a shadow tool. We need to take urgent action now to rebuild trust before it’s gone forever
The failure of the Fyre festival, too, has led to a backlash against influencers. Many of those paid to promote the festival failed to reveal that they had received payments, an omission that generated warnings from the FCC. When users can’t trust influencers, the ability of those influencers to affect behavior is weakened.
It’s not clear that influence marketing works. It is clear that it should work, that an endorsement from someone an audience trusts, whether they’re a movie star or a YouTube star, should have the power to drive sales. But the industry’s lack of transparency and risk of fraud means that businesses are now cautious about handing over anything more than free samples to names they don’t recognize. Users are more cautious about believing them, and even freebies aren’t as easy to find as they used to be.
Those numbers come from Hopper HQ, an Instagram scheduling tool. In 2018, the company compiled an estimated cost per post using data on each influencer’s number of followers, status, reports of previous endorsements, and engagement levels. They also contacted the influencers’ agents to ask for a price for a sponsored post and calculated a cost per thousand followers. Kylie Jenner then had 117 million followers. She now has more than 137 million.
That’s a big audience but it’s also a lot of money. Is it worth it? Are companies right to jump on the influencer bandwagon and throw their revenues at millennials with selfies? Or is influence overrated?
Pick a Celebrity
You can divide influencers into two groups. One group of people who make money by posting on social media are famous outside the walls of Instagram, Facebook, and Twitter. Selena Gomez has a successful career as a singer and actress. Cristiano Ronaldo, whose posts are worth $750,000 each according to Hopper HQ, is one of the world’s leading soccer players. For these celebrities, social media endorsements are just one aspect of the sponsorships that pay their bills. In 2016, Nike signed a lifetime sponsorship deal with Cristiano Ronaldo that’s said to be worth up to $1 billion. The $750,000 he earns by waving a swoosh-clad boot on his Instagram page will form part of that contract.
Celebrity endorsements like these are as old as celebrity itself. In the 1920s, when a star of the new movie industry threatened the comb business by sparking a fashion for short hair, Sam Foster switched his comb factory to sunglasses. He then promoted the accessories by paying movie stars to wear them. His advertising slogan, “Who’s that behind those Foster Grants?” created a brand that relied entirely on celebrity endorsements. Unlike the other comb businesses of Leominster, Massachusetts that brand still exists today. Athletes now make more from endorsements than they earn in prize money while names as big as George Clooney and Beyonce advertise coffee and soda.
As long as customers want to look and feel like the celebrities they admire, those celebrities have a service that businesses can sell. As long customers trust the recommendations of the celebrities they like, brands have a resource they can purchase. The fact that celebrity endorsements have survived for so long suggests that those recommendations still work. The rise of social media endorsements has just given those celebrities—and their sponsors—another way to reach audiences. Instead of relying on a red carpet, a magazine page, or a billboard ad to show off the goods, celebrities can photograph themselves at any time and put themselves on millions of phones.
What is new though is that many of the highest paid influencers attracting sponsorship money aren’t famous at all. Or at least, they aren’t famous outside the world of social media. It’s not entirely accurate to say that they’re famous for being famous. Kylie Jenner is famous for creating a look that women want to copy, and successfully broadcasting that look on the Internet. Logan Paul is famous for the antics that won him an audience—and a lot of controversy too. But neither of them has a profession outside the walls of Instagram or YouTube. Their audiences are built entirely online—as are the metrics that prove to companies that they’re worth the price they charge for a post.
What Do You Get When You Buy an Influencer?
In theory, it’s in the metrics that the value lies. Brands know that stars like Selena Gomez and Beyonce Knowles ($700,000 per post) are famous. But they don’t know exactly how famous. They can look at their record sales, count the number of times they appear in the media, and they can now check trending data to gauge popularity in a target demographic but they can never put exact figures on the size of an audience nor on a celebrity’s ability to move that audience. George Clooney might have high name recognition but can he move people to buy coffee pods just by being filmed using one?
The benefit that social media has brought to the endorsement industry is data. Companies can now see exactly how many followers an influencer has, and by looking at the number of likes and comments they generate, they can also see how much influence they wield over those followers.
But brands aren’t interested in sponsoring celebrities. The celebrities are the means to the end. The end is the audience and the goal is to move them to buy their products. That means that for social influence, the face and the name on the Instagram page are less important than the number under the follower label and the industry in which that page works.
That’s created a whole new market for brands who want to use endorsements. For them, any social media page with a large enough Instagram following in the area in which they operate is as useful as a page run by a well-known celebrity or their team.
It means that anyone who knows how to build an audience on Instagram, Twitter, or Facebook has the opportunity to earn money from that audience. Brands don’t have to approach Beyonce’s agent or try to twist the arm of Dwayne “The Rock” Johnson ($650,000 a post) to get their logo onto their Instagram pages. They can approach someone with a keen eye for cosmetics or a gift for photographing cakes and reach the audiences that they’ve built in return for a relatively small sum.
There are two problems with this approach though.
Faking the Numbers
The first problem is that when follower numbers and engagement stats are the main metric for whether an influencer is worth paying, there’s plenty of room for fraud. Writing in Forbesin 2018, Dennis Kirwan, CEO of marketing agency Dymic Digital, described how his company had tried to promote a video it had produced for a client:
[W] e were approached by a social media influencer who claimed she was popular online and had thousands of followers related to our desired target audience and demographic. After a cursory check of her online presence, we found that she was indeed followed by tens of thousands of people and received hundreds of likes on her posts. We agreed to hire her and paid her going rate, which if I recall correctly, cost us a small fortune. She followed through and posted the promotional video on her social media accounts.After a few days with no product movement, Kirwan’s company looked again at the influencer’s follower list. Most of them, they found, were bots. The “small fortune” that the marketing agency had paid was wasted.
That problem hasn’t changed. In February 2018, Jacqueline Detwiler of Entrepreneur magazine set herself up as an Instagram influencer.
She started by taking pictures of candles carefully placed around her apartment. When she realized that she didn’t have enough content, she began swiping other people’s imagery without attribution. She even created a fake Italian vacation by stealing pictures of the Amalfi Coast. And she paid an agency for 5,000 instant followers and as many likes as she wanted. With fake content and fake followers, Detwiler then began approaching candle companies, asking for free samples. The most expensive company didn’t reply. One offered her a 30 percent discount code. The other two sent her boxes of samples. When Detwiler explained that she was actually a journalist, one of the companies asked for them back and refused to be interviewed. The other company, though, explained that handing out free samples to influencers is like giving discounts to new customers. An influencer is a potential customer, she remarked, and has the possibility to bring more customers.
That’s not an unreasonable approach to take when the cost is nothing more than a few free samples. But when you’re paying $17,000, let alone a million bucks, to a celebrity that has no life outside social media, the decision is much harder.
And it’s here that social media starts to run into trouble.
Where Did Those Sales Come From?
Facebook can deliver detailed demographic data but teenagers don’t use Facebook, and a campaign that relies on an influencer’s ability to move followers is fundamentally different to one that depends primarily on a combination of messaging and targeting.
The strength of influence platforms like YouTube and Instagram is that advertisers, even without detailed user data, know that they can reach a young audience. And they know too that they’ll be reaching that impressionable group through someone who can make an impression on them. What they can’t know is how much of an impression they can make or, considering the unreliability of follower numbers, even how many people they’ll actually be reaching.
For all of the detailed statistics that Internet marketing in general and social media marketing in particular can generate about followers and likes, sites like Instagram can be poor at tracking sales. Sponsored posts tend to take the form of endorsements that show the influencer using the product, rather than a special offer that can be redeemed by clicking the right link. Over time, those posts build trust, which increases the likelihood of a sale. Followers see a celebrity they like using a product and assume that if they buy the product, they’ll enjoy it too. But attributing the sale to an Instagram campaign is difficult, especially if it’s run at the same time as other campaigns.
In the end, despite its apparent sophistication, an influence campaign is little different to the traditional pay-and-hope exposure of a billboard campaign. Advertisers have always paid trusted celebrities to endorse their products and put them on giant signs. They can estimate roughly how many people might see those billboards. They can draw rough ideas of the kinds of people who will be in the neighborhoods where those billboards will be located. They can’t know whether those billboards will have an effect on sales—and if they don’t move sales, they also can’t know whether the problem was the location or the message.
The End of Influence
For small businesses that are willing to give discounts and free samples to people with limited and possibly fake followings, the risk of an influence campaign is minimal. They might be taken in but they’ll still have lost very little.
Larger brands have had a different calculation to make. They could assume that at least some of the followers of a well-known Internet celebrity would be real. They’d use the number of likes and comments as a proxy for the extent to which those followers could be moved to take action. But they could never be sure whether the money they send to an Instagrammer’s bank account in return for seeing their product in the influencer’s timeline would come back to them.
But they could assume that if they’re trying to reach a teenage market, and they don’t put at least some of their marketing dollars into an influence campaign, their competitors would.
Or at least that used to be the case because the rise in the popularity of influence marketing and the declining reputation of the influence market has had an effect. The Atlantic reported recently on how the hotel industry has formalized the application process for travel influencers, weeding out amateurs hoping to pick up a free stay from professionals who will deliver images of the hotel rather than selfies on the beach. According to Marketing Insider Group, Unilever’s €7 billion marketing budget no longer includes money for social media influencers. The company quotes Keith Weed, CMO at Unilever saying:
There is no more trust in bloggers. They buy likes and subscribers. Almost half of them did it at least once. We cannot invest in such a shadow tool. We need to take urgent action now to rebuild trust before it’s gone forever
It’s not clear that influence marketing works. It is clear that it should work, that an endorsement from someone an audience trusts, whether they’re a movie star or a YouTube star, should have the power to drive sales. But the industry’s lack of transparency and risk of fraud means that businesses are now cautious about handing over anything more than free samples to names they don’t recognize—and even freebies aren’t as easy to find as they used to be.
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