A Little Different Influencers: We Influence Stronger and Cheaper

Influencer marketing is not a new thing either in the domestic or foreign market, and in 2022 alone, it reached a value of 16.4 billion dollars. So it’s no wonder that every kid wants to become an influencer. Why not? Influencer marketing has proven effective for self-promotion as well as for generating profit.

‒ The influencer industry has been growing rapidly for about a decade, so we might think it has peaked and is not going further, but it is just at the beginning. Although they are among the most effective promotion channels, influencer campaigns still represent a very small part of marketing budgets, which shows us how much room there is for growth, explains Ivan Šmit, co-founder and director of Arch agency, which specializes in influencer marketing and has made it to the list of the 100 largest agencies by revenue, having achieved a revenue of €1.9 million in 2022.

According to Goldman Sachs Research, the ‘creator economy’ has been growing rapidly, and it is expected to grow even more in the coming years. Brand ambassadors, as well as individuals who establish a brand and create their own audience, have become one of the biggest trends and phenomena of the digital age. With the emergence of TikTok and the adaptation of Facebook, YouTube, and Instagram to new formats, the value of the global influencer marketing market is expected to reach 21.1 billion dollars this year, and analysts expect the number of content creators, or influencers, to grow at an annual rate of between 10 and 20 percent over the next five years.

Creators most often earn through direct branding contracts, advertising revenue on platforms, and through subscriptions, donations, and other forms of direct payments from followers. Interestingly, according to Goldman Sachs, only 70 percent of influencers cite brand marketing as their main source of income, and only four percent of content creators worldwide are considered professionals.

Prices are rising, influence is falling

So, influencer marketing is thriving on a global scale, but social networks and influencers, at least those ‘original’ ones who emerged with the advent of Facebook, have been around for a while and are raising a whole new generation of young people, so the question arises whether the hype has slowly faded. Is it time for something new? And what is the actual influence of influencers?

‒ Regarding the influence of influencers then and now and their profitability, I think they are, as everywhere, smaller, meaning the return for every euro invested is weaker than it was five years ago. The industry is maturing, quality is rising, along with the demand for influencer services, and then prices. On the other hand, some influencers have become media powerhouses and provide brands with reach that is hard to achieve through other channels.

The best example is MrBeast, whose YouTube channels are backed by a team of over 100 people. His latest video has 120 million views. Despite the rise in influencer prices, or relatively lower influence, they remain an underpriced channel, and more and more brands are noticing this. This will lead to further price increases until they become an unprofitable channel. Supply and demand, I think that is a trend that every advertising channel goes through. We will see what the next big thing is, says Šmit.

Exploiting positions

Although we do not know what the ‘next big thing’ is, the fact is that the domestic online media advertising market is worth over €110 million and, according to Dunja Ivana Ballon, executive director of the Croatian Association of Market Communication Agencies (HURA) and the domestic branch of the global association for digital marketing (IAB Croatia), it is well-developed and one of the few sectors that are continuously growing, and the same applies to influencer marketing in Croatia, which is estimated to have grown by a high 63 percent this year compared to 2022, from four to as much as €6.5 million.

‒ Influencers are mostly engaged today as an extension or addition to existing (integrated or digital) campaigns. The influencer hype passed a few years ago, but the popularity of using influencers has since grown, and today they are a common part of the communication mix in which strategic investments are made, explains Ballon.

That in recent years we have witnessed a flood of influencers and that some of them even establish ‘academies’, or various courses to teach about the business of influence, was confirmed by Marko Župa, managing partner at F.O. Centering agency, who said that collaboration with influencers comes down to them designing a creative post and then distributing it to their audience that the advertiser would reach more difficultly and expensively.

‒ So, it is not about classic influence but merely exploiting digital positions and the ability to reach a certain group, believes Župa.

General explanation

He adds that the quality of content is significantly declining because today they advertise ‘everything and anything’.

‒ Recently, we conducted an internal study based on collaborations and results of collaborations with various influencers over the past six months, and we came to alarming facts: some, even very popular influencers among brands, despite having 40 or 50 thousand followers, achieve a reach of posts of only a few thousand. However, despite everything, according to our experience, the hype of collaborations with influencers still lasts.

On one hand, it is ‘sexy’ for a brand to have a well-known person appear at its event or for that person to speak nicely about the product on their social media, and on the other hand, influencers have become more affordable, especially when compared to other forms of advertising, explains Župa, adding that this is just a general explanation of the situation and that there are still some influential individuals who with one post can sell out an entire collection, change opinions about a brand, or even encourage social changes.

‒ But then we are talking about just a few individuals, and those are usually the ones who have gained their influence far from social media, such as singers and actors, concludes Župa.

Narrow niches

The audience has indeed become more critical and demands authenticity, so influencers must truly believe in the products they promote, at least according to Dario Marčac, a TikTok consultant and founder of the creator community Crew, who also claims that more and more influencers are focusing on specific niches rather than a broad audience.

‒ The influence of influencers has changed compared to the previous five years. While they were once a new and fresh way of promotion, today it is a practice that has become the norm. Their influence is now more directed towards creating long-term relationships with their audience and building trust, rather than just one-off promotions, explains Marčac, emphasizing that the influence of influencers changes with the change of social platforms and trends, so while they may have once been more focused on direct product promotion, today they are increasingly focusing on creating long-term relationships with followers and promoting brand values.

Companies that want to reach a younger population, one that does not watch television but rather short formats offered by TikTok and Instagram, most often use influencers in their marketing activities.

‒ Influencers have become an indispensable part of digital marketing strategies, and their strength lies in a personal and authentic approach, which allows the brand message to be conveyed in a more effective and intimate way, claims Marčac, emphasizing that new faces always appear on the scene, who at this moment are mostly content creators on TikTok.

‒ Although these influencers may be less known to the wider public, they can have a significant impact within their specific communities, says Marčac.

And Lana Bedeković Rosandić, managing partner of the Alert agency, claims that the hype around influencers does not stop, on the contrary, it is growing, primarily due to TikTok, but above all because of the effectiveness of using that communication channel.

Specific personalities

However, it is not only the new faces of the influencer community that pose a threat to the more experienced ones. This year, artificial intelligence has also entered the scene, which has given rise to virtual influencers, or non-human or animated influencers who sound and behave like humans. Namely, a virtual or computer-generated photo or video that embodies a person and behaves like a human aims to communicate with its followers and influence their purchasing decisions.

‒ Artificial intelligence has enabled the creation of virtual personas and avatars, but in Croatia, this trend is not visible as it is elsewhere in the world, especially in Asia. Artificial intelligence is used here to identify the right influencers for a particular brand and/or campaign, which greatly contributes to the results of influencer campaigns. There has been talk about virtual influencers for a long time; they are not a novelty – primarily, artificial intelligence provides new creative opportunities, but also insights into metrics and offers new possibilities for content creators, so we expect further growth of influencer marketing, explains Bedeković Rosandić.

Marketing campaigns are essentially a major driver of creating virtual influential figures, although the purpose of virtual influencers is still omnipresent and extends to other creative arenas such as music, dance, and storytelling. Avatars and virtual assistants existed about a decade ago, but only as ‘robots’, and now, with the advancement of artificial intelligence technology, virtual personas look quite realistic and can even mimic human expression, voice, and tone.

Similar to a human influencer, a virtual influencer, say on Instagram, is someone who creates content to influence their audience in any form, so they can persuade a follower to buy a product or to think, behave, or dress in a certain way.

The most interesting, or perhaps frightening, thing is that virtual influencers are not bound by time or place, so they can produce more content compared to humans, which could give them an advantage for the marketing strategies of a particular brand that needs consistent content to engage customers. Although many companies see huge advantages in working with virtual influential figures, resources in that space are still limited. Since virtual influencers have a specific ‘personality’, it may not be flexible enough to work for every brand.

Lack of empathy

Moreover, the element of trust can also be a problem. With human influencers, brands know that the person they are dealing with is a real human being who has an established presence on social media and a following. However, with virtual personas, this is challenging because you do not know who is behind it.

At this moment, virtual influencers are slowly gaining popularity, and this trend is expected to grow. However, the idea that virtual influencers will replace humans is still strained. Yes, virtual influencers will become more present and may even collaborate with human influencers, but almost everyone is convinced that they will never take over the world of influencer marketing.

‒ Artificial intelligence at this moment does not have its fingers in the domestic influencer space in the segment of virtual influencers or avatars. They oppose the very core of the influencer channel, namely the belief in personal recommendation and the experience of using a particular product or service, which is why I believe this will be one of the areas where AI will experience a fiasco and will not take off.

On the contrary, the minimal level of innovation in that segment could be overshadowed by the dominance of opportunities for fraud and imposition on users. On the other hand, AI offers interesting possibilities regarding related segments such as user experience, support, and virtual assistants, or the analysis of metrics and performance of influencer marketing that will contribute to better quality in the online world, confirms Ballon.

That the human factor cannot be completely replaced is also considered by Marčac:

‒ Artificial intelligence can potentially improve influencer marketing, especially when it comes to data analysis and selecting the right influencer for a particular campaign. Additionally, artificial intelligence can help create personalized content for different audience segments. However, empathy, authenticity, and personal touch are still key, he concludes.

So, influencer marketing is not the same as it was five or ten years ago, and with the emergence of artificial intelligence, it is changing even more, but regardless of what tools for generating text into text, text into image, text into sound, or text into video appear, the human element in influencing will never be replaced, no matter how charming some virtual people may be.