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Published November 2018

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Copyright 2018 Centaur Communications Limited

Celebrity Intelligence is part of Centaur Media plc.

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06

EXECUTIVE SUMMARY

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14

17

INTRODUCTION

10 WHERE IS THE INDUSTRY NOW?

CASE STUDY: CONVERSE’S ‘YOUNG

AND LACED’ PROGRAMME INVESTS IN A NICHE POCKET OF YOUTH CULTURE

15 KEY

TRENDS

CASE STUDY:

MANGO GIRLS

18 CASE STUDY:

H&M SPORT MAKES AMBASSADORS

OF NICHE GLOBAL

SPORTS ENTHUSIASTS

KEY FINDINGS

Digital influencers have swayed purchase

decisions for the majority of millennials

61% of consumers, aged 18 to 34, have at some point been swayed in their decision-making by digital influencers, the consumer survey finds.

This consumer group is a discerning one having largely grown up with social media and is often the first to notice when an influencer has sold themselves out or failed to disclose a commercial relationship. It stands to reason that within the survey of industry marketers, 56% admit that the changing expectations from a rising digital-born generation of consumers is proving the biggest driver of change within their influencer marketing programmes. Amidst growing rumours of a backlash against influencer culture, how this younger generation perceives influencers, and permits their opinions and choices to be shaped by them, will ultimately determine the sustainability of influencer marketing moving forward.

Confusion continues to plague disclosure guidelines

Brands are fully aware that consumer trust in influencer content is eroding, and 64% of marketers feel that drastic action to prove transparency is critical. While the Advertising Standards Authority in the UK (ASA) and Federal Trade Commission (FTC) in the US, set guidelines for influencers and have begun to take a harder line on individuals who are not properly disclosing their commercial brand relationships, industry experts interviewed say there is a strong case for more clearly defined rules that are not so open to interpretation.

61% of consumers say micro-influencers produce the most relatable content

56% of marketers questioned say that micro-influencers are more cost-effective for them to work with than top tier talent, and 55% also believe they have a better connection with their target audience. When it comes to analysing the appeal of micro-influencers, 61% of consumers believe they produce more relatable content. Furthermore, US consumers particularly value the transparency of this segment of talent

(44%), significantly more than UK respondents (26%).

Proving the ROI of individual influencers is a big challenge for 84% of marketers

A resounding 84% of marketers agree that being able to demonstrate the ROI of influencer marketing will be critical to its future. Yet despite this, 31% say influencer marketing is peripheral to their digital marketing ROI calculations, and additionally proving the ROI of individual influencer collaborations is also cited as the greatest ongoing challenge

(alongside identifying the best talent to work with).

90% of marketers say authenticity is critical to

the future of influencer marketing

More than two-thirds (68%) of industry respondents say that authenticity and transparency is key to influencer marketing success. Experts interviewed for this report stressed the need for due diligence in selecting an influencer to work with, to ensure they are not only a credible match for the brand and their audience, but also the campaign in question.

Contract terms are also changing to reflect the gradual rise in longer-term, organic and more meaningful partnerships that are being forged between brands and influencers. Only 8% of survey respondents claim that they are engaging influencers on a one-off post basis. Above all, 90% of industry respondents say that brands need to take authenticity and transparency more seriously, for it to be sustainable over the long term. Consumer attitudes are similar, with 61% expressing a preference for influencers who create authentic, engaging content.

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DUCTION

2018 has been the year that influencer marketing has exploded, while simultaneously coming under the greatest scrutiny. Initially heralded as the future of digital marketing and thought to have the potential to challenge more traditional forms of celebrity marketing, the past 12 months have exposed chinks in the armour, raising questions over the long-term sustainability of influencer marketing.

Articles have surfaced claiming influencer marketing is dead, and a couple of high-profile investigations by the Competition and Markets Authority (CMA) and Federal Trade Commission (FTC) into whether top tier influencers have been endorsing products without disclosing their commercial interests, have cast doubt over the credibility of digital talent, with critics claiming their influence has also begun to wane.

To add fuel to the fire, Keith Weed, Unilever’s CMO, took the stage at Cannes this year to expose the current state of influencer marketing, which he argued is plagued with transparency and authenticity issues. He called for a three-pronged approach to influencer marketing in which misleading engagement, dishonest practices and a lack of transparency need to be fixed.

“We need to take urgent action now to rebuild trust before it’s gone forever,” he said.

Mistakes have clearly been made, by influencers and brands alike, and significant challenges still exist; but to tarnish the entire industry with the same brush is unjustified. There was a period of education as there would be with any new form of marketing, and experts interviewed for this report agree that we have arrived at a place where brands are beginning to do influencer marketing properly. Bexy Cameron, Head of Insight at brand experience agency Amplify and an expert on British youth culture, shares: “How we are working with influencers is changing: the industry isn’t dying but we need to get smarter about how we do influencer marketing and work with people who have expertise, who are relevant and who are already embedded within the brand. Brands need to stop looking at just reach and start considering all of the other parts of influence.”

For a few years brands gravitated towards working with the biggest names and largest followings in the industry, for understandable and valid reasons: after all, that is what has characterised celebrity marketing for many years, with proven success. But diversity is on the rise and brands are seeing the benefits of working with a range of influencers, particularly micro-influencers. Approximately 6 in 10 of the digital marketers surveyed for this report claim the purpose influencer marketing serves for their business has changed in the last 12 months (see Fig. 4 below), with the younger generation of consumers being the biggest driver of change (see Fig. 3). Young people have come to more firmly reject the way that influencer marketing has been done over the past few years and are instead demanding higher levels of authenticity and relevance. “In its infancy, influencers

were engines for product promotion, but today, we are crafting collaborative brand and product narratives through influencer content partnerships. We’re looking for influential voices with interesting stories and points of view for brands,” shares Natasha Hulme, Senior Strategist at Beauty SEEN. “We are taking learnings from the past and understanding how to balance paid endorsements with organic advocacy.”

A simple example illustrates this point well. Grime artist Stormzy, and singer and actress Rita Ora, have both had collaborations with Adidas. Stormzy has been a loyal follower of Adidas for years, dating back to well before he found fame. “You could scroll back five years on his social stream to see him wearing Adidas with his crew - he was very embedded with the brand, because he loved it,” says

Bexy Cameron, Head of Insight at Amplify. Rita Ora, on the other hand, has put out several collections with Adidas Originals, but during that time she also shared pictures of herself wearing Fila and Reebok, among other athletic brands. “Rita Ora got pulled in to do a campaign with Adidas and she had a much bigger reach at the time than Stormzy, however two weeks beforehand her audience had seen her wearing Sketchers. That says to her audience she is there for a brand activation, rather than because she is in embedded with the brand, and when young people are so savvy you can’t afford to make slip-ups like that,” says Cameron.

But the tide is turning, and contrived commercial partnerships are waning in favour of genuine, organic brand tie-ups where there is already some natural affinity or advocacy. Lucy Lendrem, Head of Talent UK at Gleam Futures, shares: “We are seeing a lot of beauty brands only engaging commercially with talent who naturally endorse the brand, i.e. they have to be fans of the brand. In the early days there was a lot of paying people who didn’t already talk about the brand in order to increase reach, but increasingly that is becoming a must-have for brands, which means the talent who are most passionate about a brand end up working with them commercially, and that is only a good thing.”

As we look ahead to 2020, the future of influencer marketing, like any marketing strategy, will be subject to changing trends, audiences, and technologies. The wider the landscape gets, the harder it will be to navigate, and the experts interviewed for this report agreed more challenges are coming. For influencers also, the barriers to entry are becoming higher, which is making it harder for rising talent to break through. This report will consider the opportunities and threats shaping the future of this increasingly critical segment of digital marketing. Through qualitative expert interviews and bespoke survey data collected from both industry marketers and consumers within the UK, US and globally, it will seek to clarify the capabilities and approaches required to make influencer marketing a sustainable investment for brands, both now and in the future.