Social media advertising has undoubtedly brought a new dimension to the brand discovery game. Platforms like Facebook and Twitter have been launching more sophisticated ad products for marketers in the past few years, giving marketers newer, more creative ways to attract eyeballs.
Marketers are reciprocating too. Over 80 percent of them are planning to spend more on paid social advertising within the next 12 months, of which, 42 percent of them will be spending on such efforts for the first time.
But even as more ad products, distribution channels, and analytics tools burst into the scene, digital marketers must keep in mind that their customers are more than just clicks, impressions, and conversions.
Creating and optimizing social media ads solely based on data can be a myopic mistake to make. Consumers are actual human beings, and their decisions are influenced by peer opinions and social validation just as much as, if not more than, good design and copywriting.
Word-of-mouth: the social element in social media
88 percent of consumers are most inclined to trust in word-of-mouth recommendations from people they know. No matter how much marketers spend on elaborate branding campaigns, a word from a trusted source is what helps a consumer make the purchasing decision.
This explains the famous saying of Brian Chesky: “It’s better to have 100 people who love you than finding a million who just sort of like you.”
Enter influencer marketing. A McKinsey research shows that marketing-induced consumer-to-consumer word of mouth generates more than twice the sales of paid advertising. The research also found that influencers generate on average three times more word-of-mouth messages than an average consumer, and each message has four times more impact on a prospect’s purchase decision.
Searching for micro-influencers within your customer base or within the industry should be a wiser move.
For bootstrapping startups getting their product into the market with little or no marketing budget to speak of, influencer marketing can certainly be a worthwhile strategy to consider.
Influencer marketing should not be confused with celebrity endorsement, a tactic frequently used in TVCs. Approaching only famous social media personalities for massive reach is simply teaching an old dog new tricks and it can be extremely costly and inefficient.
Searching for micro-influencers within your customer base or within the industry should be a wiser move. This is because, while the reach is a lot lower, their opinions are considerably more trusted and valued by their closely-knitted network, resulting in a high-impact campaign.
Hearing from the experts
(L-R) Fergus Clarke, CEO, and Nathan Pacey, CTO of Lamplight Analytics. Photo credit: Lamplight Analytics.
To learn more about influencer marketing and its future, I had the chance to speak with Nathan Pacey and Fergus Clarke, the CTO and CEO of Lamplight Analytics respectively. Lamplight Analytics is a Hong Kong based company that has developed a platform for marketers to find micro-influencers and opinion leaders on any given topic or industry.
Alan: How does your technology help marketers find influencers and how is this different from what is traditionally done?
Nathan: Previously, if a brand wants to partner with an influencer, a celebrity will be hired through an agency. Celebrities obviously have very large audiences so this approach fits neatly with old-school marketing agencies to broadcast and reach the masses. For social media influencers, there are various ‘influencer exchanges’ who pair up brands with their database of influencers. Think of them as a talent agency with a digital platform. The exchange will then take a cut of the engagement fee.
We looked at this model and thought that our technology can cut out the middleman, making the process simpler and cheaper. We charge a monthly subscription fee of US$50 for access to our platform and let our users deal directly with influencers.
We have also made it easier to find highly-relevant influencers by making the platform like a search engine — type in keywords and the platform will show you a list of people ranked by their influence and content.
Alan: How big is the market for influencer marketing, and how much more can it grow?
Fergus: In the near future, we believe that marketers will see influencer marketing as an integral part of their marketing strategies. One factor driving this movement is the fact that ads are by and large disruptive to the user experience. Just last year, more than 200 million people used desktop browser ad blockers. This number is expected to grow exponentially in coming years.
Social media marketing ad spend totaled US$10.9 billion in 2015, up from US$7 billion in 2014. At present, we estimate the influencer marketing spend to be about US$500 million. But these are early days. As more marketers become educated and fluent with working with social influencers, we expect this figure to rise significantly. This is why we want to build a platform that can connect marketers with the right influencers easily.
Alan: You mentioned about a movement towards influencer marketing. How will this affect marketers and brands?
Nathan: For one, brands can no longer communicate exclusively through meticulously planned advertising campaigns. Consumers now expect two-way communications, anytime and anywhere, through social media. Marketers need to leverage on influencers to create organic conversations and build deeper relationships with consumers.
Brands can also take advantage of this movement to humanize their corporate identity by putting faces to the name. By curating suitable social influencers to be brand ambassadors and advocates, brands are now able to engage with their customers and prospects on a personal level. This has immense potential for strong communities to be built, which translates to great business value.
Alan: Sounds exciting. One last question: what does the future hold for influencer marketing and Lamplight Analytics as a whole?
Fergus: We have already developed a proprietary algorithm to measure and rank influence across users and industries. Moving forward, we will refine that algorithm using data science to determine dollar value against social influence, just like how tools such as Nielsen Ratings are used to price TV advertisements.
We are also looking into hyper-localization. Essentially, we are quickly developing our algorithm to analyze what people post and pinpoint the locations where these influencers spend most of their time. The broad idea is that a cosmetics brand planning an event in Penang, for example, might be able to reach out to an influential makeup vlogger located nearby to drive event awareness in real-time.
Alan: Cool stuff! I guess I should start building my social following so I might make some money off my social media channels in the future. Thank you both for your time.