The Dangers of Influencer Marketing, Marketing & Advertising News, ET BrandEquity
Over the past few weeks, crypto platforms like Vauld & Celsius Network have been making headlines for all the wrong reasons. Many of these platforms have suspended crypto withdrawals citing volatile market conditions.
Interestingly, some of the financial influencers who have advocated such platforms are under the social media scanner and facing a harsh online backlash. While a few have been responsible, many influencers who have promoted investment in crypto stocks have missold the crypto asset class by downplaying volatility risks, gray regulation, and ignoring individual risk profiles. .
In this column, we look at the dangers of influencer marketing that are likely to emerge in the next 2-3 years.
Tensions from influencer marketing
The reason influencers have become a marketing vehicle over the past few years is because they were seen as genuine while celebrities were not seen as such. Celebrities were seen as good vehicles for increasing reach, but poor vehicles for consumer engagement and conversion.
However, mega-influencers who follow more than a million followers have become celebrities, leading to the same issues companies had with celebrity marketing. Thus, some large companies are turning to nano (
Additionally, there are growing concerns that some influencers are buying likes and falsifying engagements and as a result, global marketing giants like Unilever and Samsung are taking a strong stand against this. Some businesses are concerned that they cannot control some of the other brands that the influencer endorses and the other brands can have a shadow effect on those businesses. As a result, some big companies release their own content through YouTube channels and their social media pages.
Additionally, there are tax concerns for creators with the coming into force of a new tax where social media influencers will have to pay 10% withholding tax (TDS) on gifts or any other form of payment. in-kind, if the value of the product is above Rs. 20,000. Finally, the real threat comes from virtual influencers (e.g. virtual humans, AI-created characters and digital avatars), especially in China and in East Asia. Top companies like Dior and Prada work closely with such virtual influencers. The outlook for influencer marketing looks broadly bright
Despite significant tensions emanating from influencer marketing, their prospects look promising. Influencers became a marketing tool because they were seen as authentic with their community. This has led to massive brand partnerships on YouTube, Instagram, Tik Tok, Snapchat, and even LinkedIn.
Influencer marketing, globally, is valued at nearly $13.8 billion in 2021, according to Statista estimates, and is expected to grow by at least 20% over the next few years. India alone has an influencer marketing industry valued at Rs. 900 Crores last year according to an influencer marketing report by GroupM INCA. New surveys in the developed world indicate that children now want to be YouTubers rather than astronauts. FMCG companies around the world are increasing their spend on influencer marketing.
Massive need for influencers to self-regulate and become accountable
The current episode of the crypto industry meltdown is likely going to be an inflection point for major influencers. It’s time for them to reflect on themselves and be responsible for what they stand for. The principles of advocacy are quite simple.
– If you are not likely to use a product or service, avoid endorsing it. Do you remember Christiano Ronaldo and the way he pushed away a bottle of Coca Cola?
– If you are promoting a product or service, say it in your language so that, consciously and unconsciously, your audience’s interest is preserved.
– If in doubt, drop the brand partnership.
– As an influencer, your primary responsibility is to your audience, not your bank account.
Likewise, brands need to be careful about which partners they partner with. While a one-time transaction with a top influencer can generate short-term uplift, it can have devastating impacts on long-term brand equity.
In conclusion, influencer marketing is here to stay. But the irony is that influencer marketing was seen as a way to suppress the noise. Unfortunately, “noise” is what takes center stage these days. What a tragedy!
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