The bandwagon of influencer marketing
The steep rise of social media influencer marketing has given enormous scope to marketers as well as advertisers to boost consumer trust in a big way.
The steep rise of social media influencer marketing has given enormous scope to marketers as well as advertisers to boost consumer trust in a big way. Brands have hugely anticipated the influencer marketing model by giving much-needed recognition to influencers by investing more in digital marketing compared to traditional mediums since the COVID-19 pandemic. Influencer marketing is now a buzzword in the field of digital advertising where brands across all genres cash-in-on influencers as nearly two-thirds of the Indian population follow an influencer. It is worthwhile to mention here that the influencer ecosystem is among the fastest-growing industries in India and across the world. At present, the Indian influencer marketing industry is valued at Rs 900 crore and it is expected to surpass Rs 2,000 crore by 2025.
Instagram, YouTube, Facebook, Twitter, Pinterest, Moj App, Trell Community App, Miss Malini App, Pankhuri App, and others, are considered key social media platforms where an influencer marketing campaign can take off. In recent times, around 70 per cent of consumers engage in discovering and purchasing products or services through social media references and influencers' opinions. Nowadays, people have more trust in influencers than traditional celebrities. According to the India Influencer Marketing Report, in the year 2021, celebrities had only 27 per cent of the market share of marketing campaigns, while influencers had a whopping share of 73 per cent.
Here, it is important to understand the model of influencer marketing and how it works. The whole concept of influencer marketing falls under audience engagement, which directly depends upon the number of followers of influencers. Another crucial key criterion for influencers is which "genre/category" he/she belongs. When we say Genre/Category then it's like Beauty & Make-up, Computers & Gadgets, Humour & Fun, Clothing & Outfits. Fashion & Modelling, Mom, Internet Personality, and so on, and the target audience of each genre is different, so brands identify their required influencers in their niche and collaborate with them via influencer marketing platforms such as Gyrnow Media, Good Creator, Plixxo, OPA, Grin, Freeskout, and so on.
In the influencer marketing hierarchy, the top position is acquired by celebrities, who are basically from the entertainment and sports arenas and have a huge number of followers or subscribers. After that, there are mega-influencers with more than a million followers, macro-influencers with 500K-1M followers, mid-influencers with 100-500K followers, and then come micro-influencers with 10–100K followers, and at the bottom, we have nano-influencers with 1–10K followers. Among all influencers, micro and nano-influencers have the highest potential to lure customers to purchase a product or service. As per social media experts, micro and nano-influencers have higher engagement rates with their audience compared to other influencers. Buyers of products recommended by nano and micro-influencer have a 30-40% higher chance of success. It is because a nano-or micro-influencer has the ability to communicate and engage with its followers on a personal level. Brands often target these sections of influencers to partner with as it is affordable for brands to negotiate.
The reviews, stories, and influencer-specific discount codes have proved to be boons for brands to accelerate their sales. Influencers become the driving force for a brand to start a sales conversation or lead generation. According to the Influencer Marketing Report 2021, 80 per cent of brands that have partnered with influencers are satisfied with the return on investment. Influencer marketing has a huge presence in various categories like Personal Care (25%), F & B (20%), fashion & jewellery (15%), and mobile & electronics (10%), which cumulatively stands at 70% to attract buyers. Seeing the booming trend of influencer marketing, the banking, financial services, and insurance (BFSI) sectors have also collaborated with influencers to introduce their new products and make people aware of personal finance.
Many people may be wondering how a brand chooses and compensates an influencer. The total number of followers is the most important criterion for being chosen for collaboration or PR, followed by engagement metrics and, finally, the niche and quality of the content. Brands pay influencers to build trust with their target audience, raise brand awareness, increase sales through affiliate codes, and so on. Influencers often get perks and free products in exchange for their efforts to showcase the USP of products or services through their Instagram reel, YouTube vlog, etc. In light of this, the Central Board of Direct Taxes (CBDT) issued guidelines stating that social media influencers will be subject to new Tax Deducted at Source (TDS) rules beginning July 1, 2022, requiring a 10% TDS on freebies for sales promotion activity received from brands. The new TDS rules further underlined that "in the case of a benefit or prerequisite being a product like a car, mobile, outfit, cosmetics, etc., and if the product is returned to the manufacturing company after being used for the purpose of rendering service, then it will not be treated as a benefit or prerequisite for the purposes of section 194R of the act (the TDS provision)." However, if the influencer keeps the product, it falls under the benefit or perquisite category, and tax must be deducted accordingly.
Influencer marketing has become an emerging career option for the younger generation; they can earn money by doing work from home. The evolution of this career has a long way to go as it is going beyond content creation. The country's digital advertising market is expected to grow 10x in the next 10 years, and a paramount role will be played by influencer marketing as most brands invest 80-90 per cent of their advertising budget on social media for its cost-effectiveness, trust factor, and most importantly, the impact and reach of influencers. But at the same time, influencers must oblige and ensure the ethics of advertising so that consumers are not misled. It is the responsibility of an influencer to act judiciously while promoting and marketing a brand in such a way that influencer marketing trust is intact.