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The Explosive Growth Of Influencer Marketing, The Law and Future Trajectory

Influencer marketing spending in the United States is expected to increase by more than 30% this year, surpassing a significant milestone. According to Insider Intelligences’ first projection, influencer marketing spending...

This story originally appeared on ValueWalk

Influencer marketing spending in the United States is expected to increase by more than 30% this year, surpassing a significant milestone. According to Insider Intelligences’ first projection, influencer marketing spending in the United States would top $3 billion in 2021 and $4 billion the following year.

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It is argued that word-of-mouth referrals from people we know are the only form of marketing that has ever been consistently successful. That's also the one media that marketers haven't had much success with in the past. Celebrity endorsements were the closest thing to knowing the individual, but knowing who the person is on television isn't the same as knowing the person. Influencer marketing has evolved over the last decade as a result of its ability to effectively meet this need.

Influencer marketing has grown from a small-scale marketing concept involving celebrities promoting already established brands to a global phenomenon involving thousands of businesses and billions of consumers. The influencer marketing sector has risen dramatically in recent years, and we'll look at how much it has grown and, more importantly, what has allowed it to grow so swiftly.

Understanding Influencer Marketing

The influencer marketing sector is a multibillion-dollar industry that has the potential to develop dramatically in the next few years, but where does it stand now? Influencer marketing soared to new heights in 2018, and instead of being a niche marketing strategy used by a few chosen firms, it has evolved into a global phenomenon and an important part of most marketers' strategies.

With the rise of micro-influencers, social media marketing has become more accessible to companies with limited marketing resources, resulting in a major boost for the industry. Micro-influencers are not only less expensive to recruit, but they have also been shown to be more effective at reaching a specific target population. As micro-influencers improve at what they do, social media marketing will soon outperform all other marketing platforms.

According to a research conducted earlier this year, 39% of marketing professionals in the United States aim to boost their influencer marketing expenditure over the next 12 months. According to the same poll, only 5% of respondents planned to cut their budget, while 31% planned to maintain it the same. Naturally, this means that influencer marketing is now more important than ever.

Growth Patterns

Influencer marketing began as a method for celebrities to profit from their millions of fans, as you undoubtedly already know. Brands began to recognize the value of utilizing celebrities to advertise their products on social media, but no one could have predicted how big the sector would grow. It didn't take long after the first celebrities began posting advertisements on their social media accounts for the trend to catch on, and social media marketing was suddenly ubiquitous.

Influencer marketing was still a thing for celebrities with millions of followers at the time, and it would take a few more years for the sector to grow into the gigantic monster it is now. Influencer marketing didn't truly take off until a few years ago, when the concept of leveraging smaller influencers was first attempted. Because celebrities charge a lot of money for social media postings, it's often more than the regular firm can afford. So, in order to obtain a piece of the pie, brands began seeking smaller influencers with a strong connection to their followers but a lower price tag, resulting in the birth of micro-influencers.

Despite the fact that celebrities continue to make millions by promoting brand products on their social media platforms, we believe micro-influencers are driving the trend, and we'll explain why below.

The Rise Of The Micro-Influencer

Trust is the number one reason why micro-influencers have shown to be more effective than larger influencers and other methods of marketing. Because of the buzz that consumers are exposed to these days, banner advertising and commercials are becoming less and less successful. They are exposed to an extreme amount of ads and are much more skeptical of them. Today's advertising can appear insincere and is not as well received as it once was. They say that you should be where your clients' eyes are, which is on their cell phone. When we're watching TV and an ad comes on, our attention is drawn to our phones rather than the TV screen. by the day, because customers can see right through sales tactics.

In comparison to a celebrity, a micro-influencer has a closer and stronger relationship with their followers, resulting in greater trust. Consumers trust a person they follow and look up to a lot more than a TV commercial that comes directly from the corporation when it comes to making purchases. As a result, smaller influencer marketing programs yield greater results and higher ROIs for firms.

The Cost Of Influencer Marketing

Influencer marketing spending grew at a slower pace in 2020 than in previous years. Last year, the category surged 14.4% as the pandemic put a burden on many advertisers' budgets. Influencer marketing spending in the United States is expected to increase 33.6 percent in 2021, reaching $3.69 billion. Given this steep increase, agencies like Social Plus have an interesting view: Their spokesperson said “there may be a shortage in providers who can create the relevant social and follower infrastructure fast enough to help brands and influencers adapt to the trend”.

"Many marketers temporarily suspended their influencer marketing activities during the early stages of the pandemic," said Jasmine Enberg, eMarketer senior analyst at Insider Intelligence. “However, because the pandemic propelled several new creator-driven social trends, including short video and social commerce, marketers immediately restarted and are now increasing their spend on influencer marketing, realizing that influencers are their ticket to access those audiences.” Travel is a crucial component of this year's strong growth, as it is a category that extensively spends in influencer marketing.

Influencer Regulations

The Federal Trade Commission (FTC) requires influencers to disclose their relationships with brands in their posts when it comes to influencer marketing. Followers must be able to distinguish between an ad and an organic post from the influencer. Violations of the rules can result in fines, penalties, and legal fees. For example, in 2016, a video network reached a settlement with the Federal Trade Commission over concealed payments to online influencers. In 2014, a Sony-affiliated ad firm was chastised for encouraging its staff to promote a gaming system on Twitter without disclosing their affiliation with the agency or Sony.

Final Thought

Influencer marketing can be a great way for businesses to raise visibility and sales, and familiarizing yourself with FTC standards can help you implement this strategy legally. With Linkedin being the lowest converter in B2B social (according to Sitetrail agency insights), the big question is which platforms will become the preferred choices for B2B and B2C.