Reasons behind the prominence of influencer marketing and the future challenges of such success

By Dr. Nan Jiang and Associate Professor Dr. Jason James Turner

Influencer marketing has developed into a popular and effective advertising strategy in a social media context, reaching a growth of $16.4 billion in 2022 and a return on investment (ROI) 11 times more than traditional mass-media based advertising.

In a Malaysian context, influencer marketing expenditure will reach $56.90M in 2022 with a projected annual growth rate of 13.27% and market volume of $106.10M by 2027. What are the reasons behind its rise in prominence and the future challenges which can impact its continued success?

Influencer marketing refers to a tactic where companies compensate influencers financially or in-kind (such as free products, services, or experiences), to generate social media content on behalf of the brand to influence followers’ preference or purchase decision.

The power of influencer marketing is founded on the authenticity of the individual who is a perceived expert in a specific field area, whether it be food, beauty, travel, or fashion. Influencer marketing impacts follower recognition, preferences, and purchase intention through a combination of electronic word of mouth, influencer-generated content (such text, image, narration, engagement), and congruence between brand, influencers, and consumers.

Although influencer marketing is clearly popular and impactful, it faces three key challenges moving forward. The first is to identify and select the appropriate influencer, with many followers an important consideration.

However, one must be aware that high potential reach does not guarantee qualified endorsement, rather the level of engagement between the influencer and their followers is a more powerful measure for assessing influential effectiveness. Individuals with only many followers may not be the most appropriate influencer for a brand as their persona and characteristics may not be in sync with the brand image.

In other words, advertisers should not just consider the numbers of followers an influencer has, they should also reflect on the synergy between the influencer and their followers as well as with the brand ethos so there is ‘common interest’ connection with the brand and the target audience through communication with the influencer.

The second challenge is the effective measurement of influencer marketing campaigns. The efficacy of influencer marketing is normally assessed by sales, overall reach, frequency, impression (such as likes and tags) and engagement (such as shares or purchases).

Subjective scales (such as self-reported questionnaire and interview) are commonly used to examine the influencer marketing effectiveness. However, many external factors such as response rate, time restriction, and voluntary participation may bias such a measurement scale.

Therefore, experimental and biometric methods (such as heart rate, eye tracking and skin conductance) are arguably better measures to be employed to objectively reflect followers’ cognitive and attitudinal reaction towards influencer.

The textual post, visual narration and corresponding reactions by both influencers and followers in social media can also be used as big data sources for machine learning (such as text analytics) and natural language processing (sentiment score) to further enhance the effectiveness of influencer marketing and improve advertising literacy.

The third challenge is advertising disclosure and implementation. In social media influencer marketing, followers may not be aware that they are being exposed to an endorsed advertisement, so they may mistakenly believe that the influencers genuinely prefer that product or brand.

This leads to ethical considerations around misleading and subconscious persuasion, and the need for full and transparent disclosure where hashtags are included in posts to ensure follower awareness.

Both brands and influencers may be hesitant to implement such disclosures due to the possibility of decreased impact on consumers’ purchase intention. However, they arguably should not be overly concerned as including such disclosures can underline the honesty and transparency of the relationship between influencer and follower and the authenticity and integrity of the post and interactions.

As it may be observed, influencer marketing is a powerful and persuasive strategy but must evolve as the market and its consumers change. The nature of the influencer-follower relationship is built on trust and a transparent interaction which allows followers insight into the lives of emerging celebrities with whom they feel an affinity with.

Trust however is a fragile commodity, if consumers feel manipulated or less connected with the influencer, the numbers of followers will inevitably decline. Popularity can be fickle which means staying relevant and genuine is key to maintain the momentum of influencer marketing in Malaysia and across the globe.

Dr Nan Jiang is a Senior Lecturer for the School of Management and Marketing at Taylor’s Business School, Faculty of Business and Law, Taylor’s University, and Associate Professor Dr Jason James Turner is the Head of the School of Business at Asia Pacific University of Technology and Innovation.