Is Influencer Marketing Sustainable? Analyzing Digital Influencers’ Impact on New Product Diffusion
In 2020, I feel as though I cannot go a day without seeing or hearing about some type of online influencer, whether it be through drama that is manifesting on Twitter, watching a video on YouTube that comments on an influencer’s content, or seeing kids try to emulate a new dance posted by their favorite TikTok creator. As new platforms and trends grow popular within modern Internet culture, many have found a successful career as an “influencer,” due to their high follower count and influence on their community and fanbase. In the context of marketing, “digital influencers” have a wide network and thus have lots of influential power over consumers when it comes to the brands and products they consider [1]. A key to a popular social media creator’s success is creating an air of authenticity in the content they create, such as addressing their followers as a “family” and revealing intimate details about their life that a traditional celebrity most likely would not. This oftentimes leads a significant portion of consumers to feel a psychological closeness to the influencers they follow–creating a necessity to idolize this person, similar to how one may “idolize” a friend with a higher popularity status at school or a cool older sibling [1]. Thus, it is no secret that digital influencers have the ability to shape the opinions and behavior of their followers. Due to this phenomenon, brands have found increasing success in forming partnerships and brand deals with popular influencers, who then market a product or brand to their millions of followers. Popular online personalities, theoretically, can be very impactful to a brand’s success due to their ability to stimulate product diffusion throughout a large network of consumers. I would like to explore this trend of influencer marketing and discuss whether I believe influencer marketing is sustainable, or whether this trend may die out as online culture evolves.
The diffusion of a product largely depends on peer effects–that is, the dependence of a consumer’s decision on whether to adopt a product or technology based on their interactions with others in their network. When looking at a node, representing one consumer, in a network, one’s peer effect can be mathematically classified as the proportion of a node’s connections in their local network who have adopted the product. Each node in a network has its own threshold, representing a proportion of their peers who have adopted a product, and if the peer effect value is greater than the threshold, the node in question will also adopt this technology [2]. This phenomenon can be described as the Threshold model, as shown in Figure 1.
Figure 1. The rule of adoption follows the Threshold model, in which a node i in question will adopt a product if the proportion of their peers (peer_effect_i) is greater than the threshold (threshold_i) [2].
Following the model outlined in Figure 1, those targeted through a brand’s marketing campaign can be divided into three main categories: Susceptibles, Unsusceptibles, and Influentials [2]. Susceptibles are those who have a lower threshold as to whether they will adopt a product, due to factors such as personal preference, history of buying products from the brand or similar brands, and demographics. Unsusceptibles are thus the opposite: those who have a higher threshold, often due to their lack of exposure to the type of product or brand in question or personal preference when it comes to buying a certain product. Influentials, which consist of those with higher amounts of connections within a network, such as influencers and celebrities, are a unique case because targeting them in a marketing campaign may lead to higher effects on their followers. Thus, all three groups of potential consumers need to be considered when a brand markets a new product [2].
Targeting influencers in a marketing campaign can be quite costly, and another major factor in the success of a marketing campaign or promotion is the budget. As one grows in follower count, being an “influencer” and promoting products via social media can become one’s full-time career and sole source of income. Thus, convincing an online creator to promote a brand will come at a higher cost to the corporation, since an influencer, especially a very popular individual, will likely charge higher rates to create an advertisement for a brand. In order for a brand to form a deal with an influencer, the company may have to provide a promotion with a higher intensity (i.e. offering free products or a significant benefit to the influencer themselves) [2].
In 2017, a study was done to determine the best course of action when it comes to a brand creating a marketing campaign, in terms of budget, promotion intensity, and the size of the targeted audience. This research was actually performed using an Agent-Based Modeling and Simulation (ABMS) program, which uses computer simulation to model a network of consumers and predict behavior and thus the diffusion of a product within the network [2]. In this study, this ABMS model used an algorithm to generate a network of 10,250 consumers that are connected to one another. Though nodes had an average of 10 connections (peers), a select few nodes had significantly more peers, and thus were dubbed “Influentials”. Each node also had a threshold randomly assigned between 0 and 1, representing the proportion of their peers who would need to adopt the product before the node in question does. Using this computer-generated model, a series of promotions were run, targeting Influentials, Susceptibles, and Unsusceptibles, to determine which caused a product to be more widely diffused throughout a network [2].
To determine the success of a promotion, the increase in market share (IMS) value was calculated, basically determining how much more widely the product spread due to the effects of the promotion versus how it would spread without any intervention from the corporation. Figure 2 depicts the IMS resulting from targeting strategies aimed at all three groups of consumers, as well as targeting individuals at random (i.e. not taking into account the number of one’s connections nor threshold) [2].
Figure 2. IMS models depicting the influence of size and intensity of a promotion on different groups of consumers [2].
Following the results of this study, it is interesting to note that in the Susceptibles group, the intensity of a promotion barely impacts the IMS, while with Unsusceptibles, the intensity proves to be more of a deciding factor. With Influentials, however, both intensity and size play a role in whether diffusion of the product will be successful (obtain a higher IMS) [2]. However, targeting Influentials will result in a higher IMS than targeting Susceptibles, mainly due to the fact that Influentials can reach a higher proportion of consumers. Thus, this study concludes that if a corporation has a lower budget, they can run a lower-intensity campaign to a higher range of susceptible consumers, while if the corporation has more to spend on a promotion, it is beneficial to target influencers, who can offer widespread diffusion of information about the product, leading to higher proportions of consumers adopting the product, often influencing those deemed “unsusceptible” to eventually adopt [2].
Although this study portrays diffusion of a product in an ideal network, it cannot account for the nuances that exist within influencer marketing that can also affect a product’s adoption by consumers. Due to an influencer’s high follower count, they are more likely to be involved in public controversies and scandals viewed and discussed by millions online [3]. A brand that was endorsed by such an influencer may become rejected at higher rates by consumers who do not want to adopt a product that was promoted by someone with whom they disagree or actively dislike due to the behavior of that individual. Especially with the rise of TikTok, those who have become famous influencers at a young age may not fully understand their impact on the market when doing promotions for brands, and may say or do something online that is widely disliked, simply due to their age and inexperience in the spotlight. Thus, brands should be cautious when turning to young creators who may not fully understand their fame and significance in the public eye. Additionally, influencer marketing can be deemed unethical in some cases, as many influencers have a very young and impressionable audience, which this type of advertising exploits [3].
So, back to the question at hand: is influencer marketing a sustainable form of advertising for a brand? As demonstrated by the study in [2], if companies are willing to dedicate a higher budget towards marketing campaigns, targeting influencers by pushing higher-intensity promotions, such as offering free products to the online creator or a better deal to their followers, can lead to higher amounts of diffusion within a network of consumers. However, this study also showed that on a tight budget, it is much more economical to target a susceptible audience with a weak promotion, such as offering a small discount or a trade-in with one of the company’s old products for the new product. Additionally, influencer marketing can actually hurt a brand’s image depending on the actions of the endorser and the demographics of the influencer’s audience [3]. As more and more individuals achieve viral status via social media platforms like TikTok, YouTube, and Instagram, it is clear that influencers are not going away any time soon, and will likely continue to have a major impact on modern culture. With influencer marketing becoming a major trend among brands, it is important for brands to be careful in determining how to promote products in an economical fashion to allow the product to diffuse amongst a network of consumers.
Sources:
[1] Wielki, J. (2020). Analysis of the Role of Digital Influencers and Their Impact on the Functioning of the Contemporary On-Line Promotional System and Its Sustainable Development. Sustainability. 12(17), 7138. https://www.mdpi.com/2071-1050/12/17/7138
[2] Hu, H., Lin, J., Qian, Y., Sun, J. (2017). Strategies for new product diffusion: Whom and how to target? Journal of Business Research. 83, 111-119. https://www.sciencedirect.com/science/article/pii/S014829631730382X
[3] Iurillo, O. (2019). 6 Dangers of Influencer Marketing. Retrieved December 13, 2020, from https://www.socialmediatoday.com/news/6-dangers-of-influencer-marketing/558493/