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Marketing Via Paid Online Influencers Sees Dramatic Growth in Survey More marketers than ever are utilizing so-called 'sponsored social,' with the strategy closing in on display ads. Does this signal a shift in the industry?

By Jason Falls Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

Paid endorsements by online influencers is now used by 52 percent of online marketers -- a number that is rapidly closing in on display ads (58 percent) as the top paid avenue for online advertising. The explosion was registered in the 2014 State of Sponsored Social Report conducted by Halverson Group on behalf of influencer marketing firm IZEA.

It's not just the fact that "sponsored social" is second on the list of channels used, it's how quickly it rose to popularity. When asked how they feel about various marketing channels vs. how they felt a year ago, marketers showed a far greater gap between then and now in sponsored social against any other channel. In fact, sponsored social's momentum was almost twice that of experiential marketing and more than twice that of online display ads.

It destroyed traditional channels. Official sponsorship status in standard TV spots and ads in radio, magazines and newspapers all scored negative momentum from last year (meaning they are less favorable now).

When asked about the leap, even the industry's biggest supporter of sponsored posts -- IZEA CEO Ted Murphy -- was surprised.

"It floored me, to be honest," Murphy says. "I think we have been watching the industry and kind of seeing this happen, but I didn't realize the support would be quite that strong."

Murphy, whose IZEA serves as a platform to connect interested brands with willing social influencers and publishers, says the results surprised the research team at Halverson as well. He says what they think is happening is earned media, paid media and content marketing are beginning to blend. Sponsored social offers so many benefits across channels -- public relations, media and marketing -- brands get more benefit for the investment, according to Murphy.

Related: Introducing the Power Users of Social Media You Want to Reach

Murphy started IZEA in 2006 when the industry found sponsored blog posts and social posts largely taboo. Today, the New York Times sells sponsored posts and even the Associated Press offers sponsored tweets.

While the study's impression is that sponsored social is suddenly shifting to be a nearly universal marketing activity, let's also be fair. The survey was a sampling of a national panel who had some level of accountability or familiarity with sponsored-social marketing. It didn't include those not accountable or familiar with the topic, so if that universe is vast, the numbers may not be all that impressive. Despite the bias, however, the numbers are quite interesting and have implication for marketers and business owners, large and small.

Sponsored social is effective.

Sponsored social ranked first among all other channels for overall effectiveness, scoring 7.27 on a 10-point scale. It beat out experiential marketing (7.25), celebrity endorsement (6.87) and television advertising (6.54). Based on that list, it's no surprise that 74 percent would use or recommend sponsored social in the future.

Perhaps the most interesting and tactically useful result from the survey was the average dollar amount marketers paid for each type of post. The average video post will run $554 while a blog post comes in at $384. A sponsored tweet runs $331. But the survey does little by way of telling you who charges what, so assume that high-dollar investments were with high-follower-count influencers.

The survey showed interesting upward trends for brands investing dollars on social marketing beyond a content and organic-focused program. Of those surveyed, 85 percent were moderately or highly familiar with sponsored social and 53 percent had experience with sponsored-social opportunities in the past year. However, almost 30 percent said they had no experience with it, indicating an upside potential, but also perhaps lingering hesitation.

Some 52 percent of companies responding said they had standalone budgets for sponsored social and 25 percent had organizational budgets for the channel in excess of $500,000.

"I ultimately believe that you're talking about a multi-billion industry," Murphy says. "To be honest, we may already be there. The difficult thing is we're the first folks trying to quantify this in any real way, but we already know that all the major media companies are doing sponsored posts. In celebrity endorsements, sponsored posts are included but not always broken out. So this channel may already be that big. We just don't know for certain."

As for how sponsored social works, companies say 36 percent of the time, money is the incentive. Free products come in closely behind at 33 percent while discounts and coupons, 22 percent, and free service, 18 percent, follow.

And Murphy says there are few holdouts to the old, taboo way of thinking.

Related: The Easy Way to Get a Social Influencer Advocating Your Brand Is to Hire One

"I think that you're probably north of 90 percent at this point," he says, referring to the percentage of publishers, bloggers and influencers who are open to sponsored social. "There are still some holdouts that I would say are more traditional journalists who consider it an ethical issue. At the same time, the New York Times is selling sponsored posts. The question is no longer, "can you,' or "is it ethical?' The question is, "How are you doing it?' Are you being transparent, disclosing properly and does the audience understand the content is sponsored, authentic and fair? If it becomes an infomercial and people feel like they've been tricked, it doesn't work."

Murphy says the audience is the most important part of sponsored social. Without the audience, the publisher has no opportunity to monetize.

It's fair to note that the survey's definition of sponsored social focuses specifically on a brand or company paying a blogger or online influencer to write, tweet, post or otherwise share a given product or service with his or her network. It does not take into account paid social advertising like when a brand uses Facebook's Sponsored Posts on its own content. That would certainly tilt the scales to show that social advertising overall has overtaken other avenues of spend to reach consumers. Perhaps that balances the bias in the survey panel, perhaps it doesn't. But we can at least draw a broad assumption that spending money to gain endorsement is a growing trend and thought of well by those who do it.

Creators are word-of-mouth advocates.

As for influencers, or as the report calls them, "Creators," the main takeaway for me was that this type of influencer outreach seems to create the coveted stakeholder all brands want: an advocate. Results showed 88 percent of the creators -- all IZEA program participants, so again biased but relevant -- verbally tell friends about brands that sponsor them. What that tells us is sponsored social effectively turns influencers into true word-of-mouth advocates. That's pretty powerful stuff if you believe the Word of Mouth Marketing Institute's statistics that word of mouth is 62 times more powerful than traditional advertising.

Additionally, 72 percent say they share additional posts outside of the contractual agreement for free, adding value for the investment. And 77 percent say they are likely to purchase from brands that sponsor them, meaning the investment results in customer acquisition as well.

"This is something we've known for a long time, but never had the ability to quantify it," Murphy says. "To put a number to that is huge. It underscores that this is more than just a transaction for these people. When someone decides they want to work for a brand and publicly share and endorse them to their followers, it's much more about creating a relationship and doing so in an authentic way. If they were truly fans of the brand and excited to spread the word, they wouldn't be doing things outside of what they're contractually obligated to do."

Related: Save Native Ads From the Slippery Slope of Deception

The creators bring credibility to the table, so social-media purists can calm down. The most important factors they consider when deciding to take a brand's money include whether their audience finds the content interesting or relevant, and whether the product or service fits with their content or was something they were proud to represent.

Some other interesting nuggets:

  • The majority of those being paid to create content or refer brands were over the age of 30. In fact, 83 percent of all creators were, with 59 percent ages 30 to 44. Only 7 percent were under the age of 25.
  • Food was the most prominent category of content followed by lifestyle, parenting, beauty and DIY/crafting. Health, fashion, entertainment, music, pop culture and video games ranked on the list as well. Social media (eighth), technology (11th), advertising (12th) and business (20th) were as well.
  • Social-media paid-sponsorship posts ranked eighth on the category. This tells me social-technology companies are spending an inordinate amount of money sponsoring social compared to other industries because social is a very small, defined niche of content compared to other verticals.
  • Twitter, Facebook and the good, old, trusty blog were the top three networks used for sponsored social according to the creators. Instagram and Google+ were close behind with YouTube and LinkedIn next in line.

To their credit, 92 percent of creators were at least aware of the Federal Trade Commission's guidelines around disclosure for receiving payment for endorsement or promotion. Unfortunately, marketers have a ways to go. Only 71 percent were aware of FTC guidelines in the space. That will need to change, so be aware of the disclosure guidelines.

In the end, take the report with a grain of salt.

The bias pointed out in the selection of marketers, coupled with the fact that the only creators surveyed were IZEA publishing partners leaves a lot to be desired in the sampling. The total number of respondents was also concerning as only 152 marketers and 152 creators made up the quantitative part of the survey.

To be truly indicative of a wide market trend, we need a lot more responses, but also for it to be of brand marketers, not just those familiar with sponsored social. What if that group makes up less than 10 percent of the total? That would make these numbers moot. And asking questions such as "Is sponsored social a source of income for you?" to an audience of people who are paid to share branded content by a company is sort of redundant, right?

Still, the swift change from last year's sentiment around sponsored social is something to take note of. There are brands spending money -- apparently a considerable amount -- on sponsored social. It is perceived as effective and is producing the coveted word-of-mouth behavior in the influencer community. You may wish to consider sponsored social for your company.

It should be noted that while IZEA benefits from a positive overall take on sponsored social and it sponsors the study, Halvorson Group conducts the survey and produces the results independently. Prior to this year, IZEA conducted the study itself, but elected to add third-party creditability and management this year.

Using both a quantitative national study and a qualitative online bulletin board as gathering points, Halvorson gathered the results and published the report. You can find it online here.

Related: 27 Masters of Marketing and PR Every Entrepreneur Can Learn From

Jason Falls

Entrepreneur Leadership Network® VIP

Digital Strategist, Industry Analyst, Speaker, Author

Jason Falls is a noted author, speaker and influencer in the social and digital marketing space. He is the senior vice president for digital strategy at Elasticity, an integrated marketing firm with offices in St. Louis, Mo., and Louisville, Ky. He is the author of two books on digital marketing and a frequent analyst and commentator on the social technology space.

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