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Why Influencer Marketing Pays Off for Small Businesses Harness word-of-mouth from influential people in a cost-effective campaign.

By Eric Dahan

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

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Small-business owners face a massive challenge when it comes to marketing their companies and products. Without the proper tools or experience, they can end up spending large budgets with no guaranteed return.

The typical customer sees countless ads every day, across a huge array of channels.

The chances of a small business successfully cutting through that noise are slim. The way small businesses thrive is through relationships, and influencer marketing could be the best option.

Word-of-mouth marketing is the oldest and most valuable way of convincing people to buy a product or service. Being encouraged and reassured by a trusted source has more value than any other sort of advertising. Social-media influencers have proven rapport with their followers, easily affecting the buying behaviors of those who subscribe to their feeds.

With carefully chosen, highly relevant influencers, a small business owner can target the most relevant consumers for a fraction of the cost of traditional media. Here are some of the advantages:

Related: How to Get a Great ROI on Your Influencer Marketing Plan

1. Create a cost-effective campaign.

An influencer-marketing campaign is extremely flexible, meaning that your initial investment can be quite small and a successful program can immediately be scaled up.

2. Build brand loyalty fast.

A startup does not have the benefit of years of customer relationships and brand loyalty. By having an influencer create native content with your brand's message, you can build equity with potential customers more quickly.

Thus, you leverage the longstanding relationship an influencer has with an audience based on a crucial pre-established trust. You are essentially being introduced to the person's followers with an implicit credibility: This gives a company a major advantage, especially when paired with the vital market research that social media can provide on consumers (from "likes," shares and comments).

Related: How to Create a Successful Influencer Marketing Campaign

3. Achieve highly targeted advertising.

The traditional model of attempting to reach a large, broad audience can be very expensive and inefficient. With an influencer-marketing platform, you can create a highly targeted campaign by zeroing in on very specific variables, like the geography of consumers or an age group.

For instance, pairing with an influencer who has a dense following in a particular geographic location and a high concentration of millennial followers could make a campaign more focused and budget sensitive.

My company, InstaBrand recently executed a campaign for a jewelry company to promote a highly curated collection for men. By carefully selecting key influencers on Instagram whose followings were most likely to appreciate the brand, the campaign resulted in a fourfold increase in online sales. Reaching the right people is sometimes far more important than reaching a lot of people.

Related: 4 Ways to Get Influencers to Spread Your Brand's Message

4. Return on investment is easily trackable.

With influencer marketing, return on investment is highly quantifiable. With a wide array of metrics available to your business, you can appraise the success of an influencer-driven campaign.

Follower acquisition is an important key performance indicator: A follower is essentially a potential customer who can be targeted and advertised to at no additional cost. A potential consumer is more likely to become a purchasing customer if he or she elected to hear from you.

You can then draw on a wide array of metrics to track the effectiveness of individual posts, seeing how well followers react to the content and if it translates to sales. Hashtags and promo codes let you monitor sales, usage and click-through rates, making them valuable indicators of a return on investment.

5. Create premium content without paying model or a photographer.

Content creation takes labor and resources from talented individuals, and a small-business owner might find it best to outsource this. Influencers are also major content creators, not just distributors. Pairing up with a fashion influencer will not only bring you marketing, but professionally produced photos that you can repurpose.

Next time you're considering traditional advertising for your small business, take a stab at influencer marketing and track the return on investment. You may be pleasantly surprised by the results.

Related: 4 Marketing Lessons From Pop-Culture Writer Shea Serrano

Eric Dahan

Co-Founder and CEO of Open Influence

Eric Dahan is co-founder and CEO of Open Influence, where he oversees the strategic vision and growth of the company. Dahan brings a rich understanding of mathematics, game theory and social sciences to his role.

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