Why Influencer Marketing Spending Is on the Rise 📈

Influencer marketing spending is estimated to see a 14% increase this year.

Insider Intelligence

Today’s Edition

  • Influencer marketing spending is outpacing ad revenue growth on social media platforms

  • Instagram introduces the Close Friends option for the Feed

  • TikTok aims to boost social interaction and engagement

Why Influencer Marketing Spending Is on the Rise

Influencer marketing spending is surpassing ad revenue growth on major social media platforms, according to a new report from Insider Intelligence. Facebook, Instagram, TikTok, YouTube, and Snapchat are all experiencing substantial growth in influencer marketing spending, with TikTok (27.8%) and Instagram (12.7%) leading the way.

In contrast, ad revenue is seeing limited growth on some platforms, with only a 0.1% increase on Facebook and a -1.8% decrease on Snapchat. However, TikTok is witnessing strong growth in ad revenue, with an increase of 23.1%.

Insider Intelligence

The report also estimates a 14% increase in influencer marketing spending this year, compared to a 4.1% increase for ads.

Even without this data, it's clear that influencer marketing is on the rise. You can see this through the increasing amount of sponsored content in your social media feed. This surge in influencer marketing spending signifies the maturation of the industry and its growing importance for brands. But why is this happening? There are a few reasons. Let’s dive into them below.

Creators Are Making Their Mark on Businesses

I helped a brand build its influencer marketing program a few years ago. When I initially started working with them, they allocated about $10,000 to $15,000 per campaign. However, in less than two years, we executed a campaign with a million-dollar budget for creators. This growth was only possible because of the value that creators were bringing to their business, in content, efficiencies, traffic, and sales.

This is one of the primary reasons for the increased investments in influencer marketing today. Creators have proven to be able to impact the bottom line for brands. Some brands like Chipotle and McDonald’s revealed that creators were substantial drivers of business growth this year. For instance, the former saw a 2x increase in quesadilla sales and some of its best digital sales days thanks to a new dish that was inspired by a hack created by TikTok creators Alexis Frost and Keith Lee.

Creator-Friendly Formats and Emerging Creator Types

The emergence of short-form videos is also driving up influencer marketing. As TikTok has shown, creators, not brands, helped birth short-form video. As a result of this, brands often tap creators for their short-form video needs, thanks to their ability to create snackable videos that resonate with audiences.

Due to the various tools available for short-form video creation, being a creator has become more accessible, resulting in a vast pool of creators that brands across all industries can partner with. This has provided opportunities for brands that may have been hesitant to invest in influencer marketing before.

On a related note, the introduction of name, image, and likeness (NIL) legislation has also expanded the creator pool to include student-athletes, attracting more influencer marketing dollars from brands looking to reach younger audiences and sports fans.

Mitigating the Impact of Apple’s Privacy Changes

Creators have also emerged as a solution for brands grappling with the impact of Apple's privacy changes, which have diminished the effectiveness of targeted paid ads. In light of this, and considering broader economic conditions, brands are increasingly shifting their focus toward creators, especially micro-creators, who have niche audiences and communities. This allows brands to reach more specific audiences, which paid media used to be much more effective for.

Creators Are Where Attention Is

Lastly, creators are taking center stage in the battle for attention. According to a Consumer Technology Association (CTA) report, Americans spent 39% of their time-consuming user-generated content on platforms like TikTok, Instagram, and YouTube, compared to 61% on traditional studio media like television. By partnering with creators, brands can position themselves where attention is increasingly heading and where consumers are engaged. Brands that want to be part of culture, communities, and conversations are best suited to do so through creators.

The Hollywood Strike Could Drive More Investment into Influencer Marketing

This shift towards user-generated content, coupled with the Hollywood strike, could signify an acceleration in influencer marketing spending. With delays in the production and release of new TV and movie shows, creators offer an alternative source of entertainment. As is often the case, brand investments follow consumer trends.

It’s Not Either/Or, It’s And

While we are witnessing a rise in influencer marketing spending, it should not lead marketers to focus exclusively on it at the expense of paid media. They should be leveraged in tandem, which I consider one of the primary keys to digital marketing success for brands. Furthermore, it's easier than ever to do so, thanks to various native advertising solutions such as Instagram Partnership Ads (formerly known as Branded Content Ads) and TikTok Spark Ads. These tools enable brands to boost sponsored content directly from the creator's handle, allowing them to leverage the authentic voice of the creator and benefit from the efficiencies of paid media.

News, Insights & Trends

Instagram Introduces A Close Friends Option for Feed Posts and Reels

Instagram has introduced a new audience option for users in the UK, enabling them to share their Feed Posts and Reels with either everyone or exclusively with individuals on their Close Friends list. Similar to the Close Friends for Stories, those included in the list will see a label when viewing these posts. Additionally, when Close Friends like, comment, or share a post, their usernames and interaction details will be visible to other members of the list.

Why it Matters: There is a growing trend, especially on Instagram, towards sharing content within smaller, close-knit groups. This makes the introduction of Close Friends for the Feed a logical step. With the option for selective sharing, it can encourage more users to share content on their Feeds, a space that has somewhat receded in importance compared to sharing via DMs and Stories. This shift is significant among teen users, as Instagram's head, Adam Mosseri, has revealed.

Close Friends holds strategic potential for creators as well. If Instagram allowed users to create multiple Close Friends lists, it could empower creators to target specific audiences with tailored content every time they post, all within one account, eliminating the need to create separate accounts for different topics.

TikTok's Hiring Trends Point Towards More Focus on Social Interaction and Engagement Features

TikTok is currently recruiting product and engineering professionals to join its TikTok Social team, which is focused on "building a reliable and adaptable platform that enables users to meet and interact with their real-life friends seamlessly on TikTok, and encourages them to share their life moments with each other and stay connected regardless of where they are." This team will work on features such as Stories, comments, the Friends tab, Inbox, and TikTok Now.

Why it Matters: While TikTok positions itself as an entertainment platform rather than a social media platform, its current hiring trends suggest a leaning towards embracing true social media features. This shift shouldn't come as a surprise, as TikTok has gradually incorporated more social elements into its platform, such as the Friends tab and expanded options for direct messaging.

TikTok leads the charge as a destination for users to discover their favorite creators. However, it lags behind competitors like Instagram and Snapchat when it comes to fostering social interaction and engagement. A greater focus on traditional social media features can help TikTok become a place where users interact and engage with others.

YouTube Announces Ad Control Updates For Creators

YouTube has unveiled a series of updates to its ad controls in YouTube Studio for creators. Notable changes include:

  • Streamlined Ad Format Control: Starting in November, creators will no longer have the ability to individually manage ad formats (such as pre-roll, post-roll, skippable, and non-skippable ads) for newly uploaded videos. Instead, they can simply toggle these ad formats on or off. YouTube will then determine which ad formats to display based on factors like a viewer's video watch time and the number of ads they've already seen.

  • Mid-Roll Ad Options for Live Streams: Creators now have more options for incorporating mid-roll ads during live streams. These options include YouTube-optimized mid-roll frequency, self-selected mid-roll frequency, and live display ads. Creators also gain access to new features, including a 60-second countdown before an ad appears, giving them the option to skip the ad before it reaches zero.

  • Enhanced Control for Long-Form Videos: Creators no longer need to choose between automated ad breaks recommended by YouTube and manually set ad breaks for mid-rolls. They can now combine both options to optimize earnings through mid-roll ads effectively.

Why It Matters: The ad control updates empower creators to optimize their ad revenue while ensuring a positive viewing experience for their audience. Although creators have less fine-grained control over specific ad formats, they now have access to a variety of new features and tools that streamline the process of integrating ads into their videos.

X Is Testing the Ability for Subscribers to Share Their Email With Creators

X is in the process of testing a feature that will enable subscribers to share their email addresses with creators. When users decide to subscribe to a creator, they can opt-in to share their email address with the creator for off-platform sharing.

Why it Matters: This move supports Elon Musk's efforts to make X more attractive to creators. It empowers creators to reach their fans beyond X, such as through newsletters or other platforms.

Traditionally, social media platforms hesitated to let creators interact with audiences outside their platforms to maintain platform dependence. But, X's shift signifies a broader trend of platforms considering this change. For instance, Meta introduced Interoperable Subscriptions last year. It's also working on making Threads compatible with ActivityPub, which will allow users to view, share, and interact with content across other platforms like Mastodon and WordPress.

X's initiative could inspire other platforms to follow suit, benefiting creators. In the meantime, there are a few things that creators (and brands) can do to enhance control and audience ownership, such as creating newsletters or email lists, building communities on messaging apps like Slack or Discord, and using link-in-bio tools to consolidate their online presence.

ByteDance Launches Affiliate Program for CapCut to Attract New Users

CapCut, the all-in-one editing app from ByteDance, the parent company of TikTok, has introduced a new affiliate program. This program is focused on recruiting Instagram and YouTube creators to share CapCut-related content, generating traffic, and attracting new users, all in exchange for incentives that include commissions of up to $20,000. Top performers also have the potential for long-term partnerships.

Why it Matters: The affiliate program represents an extension of ByteDance's broader initiative aimed at attracting more marketers and creators to utilize CapCut for various content creation needs, spanning from organic videos to assets for TikTok ads. The strategic focus on Instagram and YouTube creators, rather than TikTok creators, positions it better to tap into a new user base. TikTok creators' audiences are already familiar with CapCut, thanks to its user-friendly templates that facilitate participation in TikTok trends.

With over 200 million monthly users and an increased marketing presence for CapCut, including across TikTok channels, ByteDance likely sees an opportunity to turn the editing app into a more significant revenue stream.

VSCO Gives Creators Enhanced Profile Customization Options

VSCO Pro members can now enhance their profiles with new customization options. They can choose between different profile layouts, add additional links to their social media accounts and website, and expand their bios to up to 200 characters.

Why it Matters: VSCO has been progressively enhancing its premium subscription service for creators by introducing new features and tools. This service not only grants creators access to a desktop version of VSCO but also provides members with exclusive presets, improved support, and now, enhanced profile customization options.

These lean into emerging trends of platforms offering creators more control over their presence and additional opportunities to direct their fans to off-platform destinations.

What I’m Reading

  • Pinterest taps AI to give bigger bodies more visibility (Axios)

  • Teens prefer YouTube over Twitch for gaming despite the platform’s recent privacy challenges in the spotlight (Digiday)

  • How the Cavinder Twins Blew Up the Student-Athlete Playbook (GQ Sports)

  • TikTok has transformed the concert experience (Vox)

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