Why Does Influencer Marketing Work?

Influencer marketing is a form of social media marketing that started gaining traction along with the rise of the social media influencer. Influencer marketing involves brand partnerships with influencers, in which they post product placements and endorsements on their social channels.

From giveaways to integrated product reviews, influencer marketing can present itself in a multitude of ways. Marketers are always coming up with new ways to leverage social media and content creators for their campaigns. And as social media and the greater digital space continues to expand, the influencer marketing industry expands as well.

The influencer marketing industry has been growing in front of our eyes for the past ten years. In recent years, we have seen astronomical growth within the industry, with more and more brands joining in to see what all of the hype is about.

This is because influencer marketing works. It is persuasive and produces an impressive return on investment. The industry is growing exponentially, and we do not expect it to slow down anytime soon. In the next few years, we expect influencer marketing to overtake traditional advertising as the industry and creator economy continues to evolve.

So, why does influencer marketing work? What sets it apart from more traditional methods of advertising? Why are an increasing number of brands investing in influencer marketing? Why is the number of content creators increasing at such a high rate? 

In this article, we will answer all of these questions and more. Let’s break it down.

Why Does Influencer Marketing Work?:

Why Does Influencer Marketing Work?

Influencer marketing is very persuasive. This cracks down to the key players in the industry, the individuals who the entire creator economy revolves around: content creators. Content creators, also known as influencers, curate a brand that is relatable and resonates with their audience. When it comes to brand partnerships, their audience trusts their recommendations. This makes them reliable, persuasive, and is one of the main reasons why the return on investment (ROI) for influencer marketing is so high.

Through influencer marketing, marketers have the ability to present their brand or product very naturally. Opposed to pop-up advertisements and television commercials, influencer partnerships and sponsored posts appear organically on the social media feeds of a brand’s target audience. 

When scrolling through social media, sponsored posts can appear in a number of ways. From a product review on TikTok to a subtle product placement on Instagram, social media users interact with the influencer marketing industry every day. 

How do you interact with the industry? Take our creator audiences survey here.

In recent years, we have also seen an increase in the quality of sponsored posts. It is important to acknowledge that it takes time for content creators to curate these posts, as they must meet the brand’s expectations in addition to their audience’s. Sponsored posts reflect back on both the creators and the brand, in more ways than one. The benefits of a high-quality, engaging sponsored posts span from higher campaign metrics for the brand to a higher brand affinity for the creator when it comes to future partnerships. Plus, it is no secret that audiences will respond better to a well-curated post.

So, why does influencer marketing work? It is persuasive and, compared to other forms of advertising, relatively natural. Influencer marketing plays to the advantages of social media and influencer culture, strategizing based on trends and creator audiences. As social media progresses, the industry moves alongside it, constantly growing and evolving.

 Next, we’ll take a look at some data and examples to put the effectiveness of influencer marketing into perspective.

Does Influencer Marketing Work? The Data Speaks For Itself

According to our Influencer Marketing Benchmark Report, the influencer marketing industry was estimated to grow to $16.4 billion last year. Additionally, the number of brands investing in influencer marketing is increasing exponentially, with 75% percent of marketers planning to dedicate a budget to influencer marketing and 63% planning to increase their current budget.

So, how much are brands spending? According to NeoReach’s 2021 Year in Review Report, brands spent a total of $603.9M on YouTube influencer marketing campaigns, with the top-spending brand investing nearly $30M in 2021. In 2022, NeoReach found that brands have already spent over $417M on YouTube influencer marketing over the first three quarters.

Additionally, the Creator Economy Market Size is expected to grow to $104 billion this year, with over 50 million people considering themselves content creators at the beginning of 2022. 

Every year, we are seeing more and more content creators transitioning to content creation as their full-time job. While there are still a number of creators who report relying on supplemental income in addition to content creation, NeoReach’s Creator Earnings Report states that 48.72% of creator survey respondents work as full-time content creators. As the industry continues to advance and the demand for creators increases, the opportunity for full-time content creation increases as well.

How do you interact with content creators? Take our creator audiences survey here.

Case Study #1: Netflix

While the data that has been collected over the past couple of years demonstrates the success of the industry, it may also be helpful to look at a case study for another perspective on the industry. Let’s take a look at Netflix, for example. 

In preparation for the release of season three of Netflix’s Emmy-nominated show, Cobra Kai, the streaming giant wanted to utilize TikTok to promote the new season. In order to take their campaign to the next level, they sought out NeoReach, an influencer marketing agency.

Together, NeoReach and Netflix created a campaign strategy that was sure to gain traction on the platform. They created an interactive TikTok filter paired with the hashtag, #CobraKaiChop. Throughout the campaign, the activated influencers used the filter with the hashtag in unique and creative ways, sparking audience participation in the trend and impressive numbers of organic engagements.

Ultimately the campaign produced over 4 billion views of #CobraKaiChop, nearly 3 million views of the paid content, over 24,000 engagements, and a 2.7x ROI – smashing the original campaign goals. 

The key here is the 4B+ views of the hashtag in addition to the views gained by the sponsored content. The campaign went viral. Posting with the hashtag and filter became a trend, and the resulting videos contributed to the campaign organically. This ROI and such a high number of organic views/engagements is what every marketer dreams of. 

So, does influencer marketing work? Yes, it sure does. This case study demonstrates just how far a targeted and unique campaign strategy can take an influencer marketing campaign, and why playing to trends and audience engagement is the key to success.

How do you engage with sponsored posts? Take our creator audiences survey here.

Case Study #2: Tezos

If Netflix’s outstanding results weren’t convincing enough, let’s take a look at another example. Tezos is a community-focused, open-source blockchain network. The brand reached out to NeoReach for assistance in promoting brand awareness and establishing itself as an easy and accessible NFT platform. In addition to brand awareness, Tezos wanted to drive more traffic to their platform and Build, Play, Collect home page. 

Together, NeoReach and Tezos implemented a campaign strategy that would position Tezos as a key player in the NFT and Crypto space. Utilizing Twitch and YouTube, Tezos activated creators within the tech, gaming, crypto, and entertainment industries while also guaranteeing there would not be too much of an audience overlap. This was to ensure that the campaign was reaching the maximum number of users.

Through the sponsored content, the activated influencers connected Tezos to ideas that they, and their audiences, feel passionate about. This led to a genuine endorsement of the platform that, in turn, produced amazing campaign results. 

Ultimately, Tezos amassed over 1 million views across the sponsored content for this campaign. Additionally, the campaign produced over 40,000 engagements and a 1.33x ROI.

A key takeaway from this example is the importance of having a target audience and ensuring that all activated influencers are reaching that audience. For instance, Tezos is a brand within the NFT and Crypto sphere. It’s safe to say that the brand will align more with content creators within the gaming and tech niches rather than fitness and beauty. That being said, a large reason for the success of this campaign was how strategic Tezos was in activating relevant influencers.

How do you interact with influencers? Take our creator audiences survey here.

What Can These Examples Tell Us?

Looking at these two case studies, we were able to see two of many different ways that an influencer marketing campaign can be carried out. 

Looking at Netflix, we see a brand that wanted to boost awareness for the new season of a show. As a brand, Netflix is very established, which is why its campaign was not as focused on overall brand awareness as Tezos’ campaign was. Tezos, on the other hand, wanted to launch a campaign specifically focused on brand awareness and increasing users of their platform. There was not a specific product Tezos was promoting – just the brand, itself.

Due to this key difference in campaign goals, different strategies were sure to follow. Netflix relied on the virality of TikTok by starting its own trend, while Tezos relied on long-form video platforms and reaching their target audience through influencers within their niche. Utilizing different platforms, different types of content creators, and very different strategies, both of these brands were able to reach their campaign goals.

There is a multitude of ways that an influencer marketing campaign can be carried out. These are just two examples of many. So, when we’re asking how this form of marketing works, we must look to the dynamicity of social media as a significant reason – the opportunities are endless.

What Role Do You Play in The Creator Economy?

Influencer marketing is so persuasive because of the nature of social media, itself. As mentioned above, social media is incredibly dynamic. There are endless possibilities for how a brand can leverage a specific social media platform to achieve their campaign goals. Not only are there multiple leading platforms to choose from, but there are also more than 50 million people who consider themselves content creators. 

According to Statista as of 2021, more than 4.26 billion people worldwide use social media in their daily lives – and this number is only rising. Because of this, there is a high likelihood that there will always be a niche of social media that contains a brand’s target audience. As mentioned earlier, partnering with content creators within those niches are how brands can connect with that audience.

But, social media trends are constantly changing. Something that is trending today may be completely irrelevant a few weeks from now. Therefore, brands must keep on top of the current trends and listen to what their target audience wants to see on social media. That is the key to reaching the full potential of an influencer marketing campaign. Although influencer marketing has been proven to work remarkably well compared to traditional methods of advertising, it is nothing without a solid campaign strategy.

As mentioned earlier, the creator economy market size is projected to grow to $104B this year. It is becoming increasingly relevant not only in the influencer marketing industry, but also the greater digital space. As the industry skyrockets and the creator economy continues to expand, it is important to consider the role that each individual person plays. Whether you are a creator, marketer, consumer, or regular social media user, every single one of us plays a role in the creator economy.

In collaboration with NeoReach, we are collecting data on buying habits, creator audiences, and how we all interact with the creator economy. This data will be turned into a report intended to further educate our audiences on the state of the industry and the role each of us play.

We greatly value your input and unique perspective on the influencer marketing industry, whether you work with content creators or just follow them. Please take this short, anonymous survey to contribute to our next report. Take the survey here.

What role do you play in the creator economy? Take our creator audiences survey here.

About the Author
From time to time we feature Guest Contributors who we see to be thought leaders in the social media and influencer marketing industry. The content pieces below are featured content from these authors.