Today’s Magic Word: Influencer

Fueled by growing numbers of Gen Zers entering the workforce and the resulting disposable income, influencer marketing has grown steadily worldwide — from $1.7 billion in 2016 to $21.1 billion in 2023. In fact, one-third of Gen Zers and one-quarter of millennials have made a purchase in the past three months based on an influencer’s recommendation.

The creator economy is expected to be worth an estimated $500 billion by 2027, and 96 percent of it is yet to be tapped by marketers. So, what do retailers need to know?

Consumer Habits and Priorities Steer Influencer Marketing

Social media is a shopping platform and search engine.

Recent reports show 40 percent of Gen Z and millennial consumers now prefer TikTok and Instagram as search engines over Google. With trusted content creators offering product reviews and recommendations, 98 percent of customers plan to use social media for at least one purchase this year.

Consumers are savvy and skeptical.

Social media users have grown dubious of content from sources with a financial stake in the product or service. The majority of consumers in a 2023 survey said they’re more likely to trust brands that post user-generated content — i.e., comments and reviews created by actual customers rather than contractually obligated influencers. 

Sustainability is part of the conversation.

Gen Z’s buying habits are a departure from excessive consumption to more intentional and sustainable purchasing. Marketers are aligning influencer communications with those consumer values. For example, sustainable outdoor apparel brand Cotopaxi created a bag giveaway promotion that featured Leah Thomas, an author and advocate for environmental justice and one of the brand’s impact ambassadors.

The Influencer Landscape is Changing

From curated content to authenticity.

Many celebrity influencers have been criticized for selling products they don’t use or that don’t align with their brand or their values. When high-profile influencers are criticized — think of the backlash Kim Kardashian received for the initial name of her shapewear brand or for selling weight-loss lollipops — it erodes the credibility of influencers overall.

From mega to micro.

Rather than investing millions for one post with a major influencer, brands are increasingly working with micro-influencers. Because they focus on a specific topic — e.g., food, travel, parenting, fashion — micro-influencers allow brands to target a narrow audience that's already interested in the subject, resulting in higher return on investment.

From one-off promotions to long-term partnerships.

Long-term partnerships that demonstrate the shared values between a brand and a creator are preferable to one-off promotions that can be viewed as opportunistic money grabs. Long-term partnerships with a major influencer — who is likely to have offers from many large brands — can be challenging and expensive. Micro-influencers offer opportunities for long-term partnerships with strong ROI for both the brand and the creator.

From influencing to deinfluencing.

With more than 584 million uses, the tag #deinfluencing is trending on TikTok. Like Facebook and Instagram, TikTok has become increasingly saturated with brands and monetized content. Pushback against branded content, coupled with a growing backlash against consumerism in general, is driving the trend.

Data Drives Results

Influencer marketing is bursting with opportunities to drive sales and build brand engagement, especially when focusing on data. Retailers that capture volunteered personal data — e.g., usernames, contact methods, interests, and purchase history — can incorporate influencers in their marketing strategies to level up data resources to fuel awareness, drive brand engagement and increase sales.

Influencer partnerships allow brands to capture first-party data, such as online behavior and purchasing habits, including on social media and email. Data collaboration between influencers and brands can help identify trends among customers and predict customer purchase patterns, habits and interests.

The creator economy is positioned to drive increasing brand engagement and sales. Retailers that understand the influencer landscape and how to leverage it will set themselves up for success in this rapidly evolving marketplace.

Lisa Girard is an analyst on the data analytics team and Rachel Klaven is an account director at The Lacek Group, a Minneapolis-based data-driven loyalty, experience, and customer engagement agency. The Lacek Group is an Ogilvy company.