Is an Influencer Marketing Bubble About to Burst?

Because influencer marketing has quickly become one of today’s most popular marketing strategies, some PR and marketing experts predict the influencer marketing bubble will soon burst.

The craving of social media influencers to generate an income stream for themselves has diminished their authenticity. Consumers wonder if influencers are advocating for a product because they believe in it or because they are being paid. As a result, consumers have lost trust in influencers’ recommendations.

Even advocates of influencer marketing say they face numerous substantial challenges, including spotting fake followers and inauthentic engagement, algorithm changes that make content less visible, accurately measuring results, and rising costs.

Influencers Pay Double

In many industry categories, a major problem is that too many people claim to be “influencers” in order to obtain sponsorship fees and free products. Businesses in a wide range of industries appear to be growing tired of those requests. Fed up with influencers’ pitches free products, a California ice cream truck owner vowed to double his prices for influencers.

“We truly don’t care if you’re an Influencer, or how many followers you have. We will never give you a free ice cream in exchange for a post on your social media page. It’s literally a $4 item…well now it’s $8 for you. #InfluencersAreGross,” ice cream businessman Joe Nicchi shared on Instagram.

Since it’s well known that followers and likes can be purchased, they have little credibility. Nicchi told People.

In another incident, a woman claiming to have 80,000 followers requested a free room at a Dublin hotel in exchange for “exposure.” The hotel owner promptly lambasted her on Facebook, then on YouTube after she complained of ill treatment.

Backlash Against Influencers

Such incidents indicate an anti-influencer movement, says Arik Hanson, principal of ACH Communications. “For the first time in a while, the data (and my gut feeling) say we may be reaching a tipping point with influencer marketing,” he states.

Social media feeds are becoming saturated with posts from influencers and pretenders, prompting disenchantment and falling engagement. Engagement rates for Instagram influencers dropped earlier this year, according to a Trust Insights analysis. In response, companies will likely reduce their influencer marketing budgets.

How to Proceed

Savvy brands will get ahead of the trend and reduce spending now. Those that stick with influencer marketing should proceed carefully, he warns.

“Choose your influencers wisely. Use your influencers for much more than just Insta posts–think about ways to fold them into your organization, across the board (using them at employee events, for example),” he advises. “Lock influencers into year-to-multi-year contracts–make them feel a part of the organization instead of treating them like a tradeable commodity.”

The possibility of influencers dropping out of social media, however, adds risk to long-term contracts unless they contain performance clauses.

“It’s more important than ever to be thoughtful and strategic when embarking upon influencer marketing,” agrees Oliver Yonchev, managing director at Social Chain. Partner with honest and authentic influencers, look beyond vanity metrics, beware of influencer fraud, and prioritize depth when developing social stories, Yonchev advises.

Brands can create depth by tapping into cultural moments in sports, entertainment and politics; harnessing consumer sentiments; creating content meant for social-first distribution, and examining and leveraging how people act, behave, and consume, he says.

The Rising Cost of Influencer Marketing

Rising costs also pose significant challenge to influencer marketing. Charges vary substantially depending on the number of followers, the niche and social media platform. YouTube is the most expensive channel.

Nano-influencers, defined as those with 500 to 5,000 followers, charge an average of $315 per YouTube video, according to influencer marketing platform Klear. YouTube celebrities, who boast 500,000 or more followers, demand a whopping $3,857 per video on average.

Brands also pay a premium for video posts on Instagram. Nano-influencers make an average of $114 per video post on Instagram, while celebrities rake in an average of $721 for Instagram Stories and $2,400 for a Facebook post.

Travel is the most expensive category, averaging $5,335 a post and nine times more expensive than fashion, the second most expensive category.

“In recent years the Influencer marketing industry has seen rapid growth, so much so that it is now a standard channel brands incorporate into their strategy. However, brands still struggle with budgeting as there are no clear industry standards for influencer pricing,” blogs Lena Young, director of communications at Klear.

Investments in influencer marketing – especially long-term investments – must now be made more carefully than ever.

Bottom Line: Influencer marketing may soon fade away, experts warn. Although few brands will completely abandon the strategy, influencer marketing faces problems with fraud, trust and costs. Both consumers and brands are losing faith in people who claim to be influencers. Experts urge brands to re-examine the strategy, curtail spending and proceed cautiously.