How influencer marketing will evolve in 2017

Heather McIlvaine

7th Feb 2017

Recent years have seen more and more prominent retailers and brands striking deals with bloggers and social media stars to endorse their products and services.

Major players like Qantas, Australia Post and Commonwealth Bank have engaged influencers, as well as brands like Bellabox, Shoes of Prey and Showpo, which are naturally suited to the millennial-friendly marketing method.

In a sure sign that influencer marketing has gone mainstream, online retailer MyDeal has even launched a Top 50 Influencer Awards.

Indeed, the appeal of influencer marketing is hard to deny: a direct channel to consumers who increasingly avoid ads by streaming media and using ad blockers; an opportunity to increase brand awareness in a market crowded by international entrants and online retailers; and a new crop of matchmaker agencies making it even easier for retailers to find relevant influencers for their brand.

However, concerns about influencer marketing’s return on investment persist. Algorithms intended to weed out accounts followed primarily by chatbots prove all too easy to fool. And research indicates that while social recommendations are a key purchase driver, 90 per cent of word-of-mouth conversations occur offline.

Retailers are increasingly aware of the gap between what influencers can actually deliver and what may just be empty promises.

One example of this is Kitchen Warehouse, which takes a measured approach to its investment in the trend.

“At the moment, the direct expense for influencers makes up a small part of our total marketing spend,” Justine Murphy, head of marketing at Kitchen Warehouse, said.

“It can be difficult to measure some of the desired outcomes. As an influencer cannot be controlled, you have a risk factor that your brand may not be managed correctly or damaged.”

This is just one reason Murphy won’t be doubling her budget for influencer marketing campaigns in 2017.

“If we saw a direct increase in ROI in terms of SEO and SEM, we would increase the budget. It’s something we want to increase, but right now we’re keeping it constant.”

From celebrity to girl-next-door

According to Victoria Harrison, founder of Australian influencer marketing agency, The Exposure Co, a shift is underway towards influencers with smaller followings.

“We’re now tapping into influencers with followings of 5,000 to 200,000. They’re people in your area, they’re a lot more relatable, they’re seen as a good friend rather than a brand ambassador,” she said.

Harrison describes this as a positive thing for retailers, since it brings them as close to user-generated content as possible. But an argument could also be made that the limited number of social influencers with truly massive followings has forced all but the biggest players to move down the line.

The upside to this is that smaller followings often mean more targeted audiences. The downside, however, is that across the board, consumers have become “more switched on to the influencer ploy”, according to Harrison.

This is evident in the Australian Association of National Advertisers’ recent decision to introduce new language into its Code of Ethics.

As of 1 March, 2017, the code will include the following statement: “Advertising or marketing communication shall be clearly distinguishable as such to the relevant audience”. A spokesperson for the AANA confirmed to IRW that influencer marketing played a role in this decision.

Unlike in the US, Australian Consumer Law does not specifically require influencers to label their posts as sponsored, but it does prohibit businesses from engaging in misleading or deceptive conduct. This puts the onus on retailers and brands to ensure their influencer marketing activities are clearly labelled as such, while influencers are recommended to work with brands with which they have a genuine connection.

The ACCC said it doesn’t track how many influencer marketing-related complaints it receives, but a spokesperson for the Advertising Standards Bureau said it expects to receive more complaints once the Code of Ethics is updated this year.

A version of this article first appeared in sister publication, Inside Retail Weekly.