Why it’s vital to keep a close eye on influencer marketing spend

By Angelika Scarperi, Global Strategy & Client Partner, FirmDecisions

All of the 75,000 visitors who attended the OMR ‘Online Marketing Rockstars’ conference in Germany earlier this year were doubtless dazzled by the focus on digital, the new generation of digital experts, and the wide variety of topics that digital transformation lays before us. The rapid pace of innovation in the digital space will likely change most of our lives very soon — if, indeed, it hasn’t already.

One of the hottest topics at OMR was influencer marketing. This sector has evolved so far and so fast over time, and today those at the cutting edge are already discussing how to build communities in the metaverse using virtual influencers. Studies on GenZ have shown that the platforms where influencers[AS1] have most clout are the most relevant to younger consumers; 13-to-24-year-old Germans, for instance, describe Instagram as a “can’t-live-without” platform. Not only is Instagram becoming increasingly relevant as a media channel. It is also a major source of inspiration when it comes to fashion and beauty shopping.

Watch outs

The growing number of communications channels undoubtedly brings exciting new opportunities for reaching consumers. At the same time, it can tax brand owners’ marketing expertise as they attempt to keep up with a market characterized by such rapid change. Key watch-outs for social media include fake likes and fraud, not to mention ‘post botting’ — posts with likes that are bought and not from genuine followers. Fraud-tracking tools can help here to limit risk.

From our perspective as contract compliance auditors, it’s vital to track campaigns against promised delivery to ensure that you pay for performance agreed with your agency and pool of influencers. Even more fundamentally, it’s clear that the rigor and discipline of contracting for influencer marketing campaigns has not yet reached the levels we expect for media agencies which — understandably — has been the focus in recent years. But it’s time for that to change, as influencer marketing takes an increasing share of total marketing spend. There are three, key parameters advertisers should demand of their agency partners in this area:

1. Access to the relevant type of influencer you aim to work with, whether that’s a celebrity endorser or a subject-matter expert of relevance to your brand

2. A clear understanding of the influencer selection process

3. Transparency obligations with audit rights

What’s more, if there’s a supply chain between the brand and the influencer — such as agency -> platform -> influencer — it makes sense to ensure that your contract allows for financial transparency right across that supply the chain.

Best practice in influencer marketing

Applying higher standards to how you contract with influencers starts with the identification of influencers in the markets, background checks, details on how the influencers and campaigns will be managed. This should include: the briefing process, adherence to the advertiser’s strategic guidelines, control mechanisms, approval processes, monitoring tools, and reporting. It feels like a lot, but it’s no more than you should expect and demand.

When working with external influencers as your brand promoters, it’s vital that you have a strong contract in place which protects you and your brand equity, clearly stating the conditions of the engagement for all parties involved. This contract should also detail post-termination obligations and rights, including both clarity on the ownership of content created and posted as well as exclusivity agreements. Since influencer marketing at scale is still a relatively new field for many advertisers, many current contracts still lack clauses to handle important areas such as under-servicing, liability, penalties, and escalation guidance.

Risk and reward

As this sector matures and more money is being allocated here, the risk of burning budget with insufficient return is increasing. Setting this right from the start is the best approach, but many major brands are learning as they go, accelerating their understanding as campaigns are flighted. It’s encouraging to see that increasing numbers of advertisers are starting to apply the same auditing tools and techniques to influencer marketing as to other marketing spend, from full financial compliance audits — including full reconciliation — to influencer process compliance audits focusing on the influencer selection process.

When we run audits on framework agreements for influencers, we often find that contracts lack essential clauses and guidelines to govern activity properly, such as influencers’ conduct or liability risks. As in other media and marketing services audits, we reconcile proposed costs and fees with actuals. This can lead to unspent funds being returned to clients. In addition to challenges around both financial and contractual agreements, we have also found lack of compliance in the influencer selection process. This can take the form of tools being used to generate lists of potential influencers, insufficient background checks, influencers failing to meet selection criteria in terms of engagement rates, number of followers, and so on.

Unexpected, unintended — but most welcome — consequences

Paradoxically, the focus on the social media boom has also helped to up the stakes in monitoring the impact of more traditional advertising activity. For instance, out-of-home marketing is benefitting from the trend of “hacking the feed”. This means that advertising in locations where many photos are taken and are likely to be shared with social media communities is resulting in brands gaining additional presence thanks to tourists sharing them via social media.