If you think influencer marketing is just about celebrities promoting products they don’t use, you’re not alone. However, the landscape is far more varied than many realize. Beyond Kim Kardashians and A-list celebrities, countless lesser-known influencers are making significant impacts on direct-to-consumer (DTC) marketing.
Businesses are catching on; a study by Influencer Marketing Hub revealed that 24% of American companies now allocate over 40% of their marketing budgets to influencers. Additionally, 22% spend between 10% and 20%, and 16% dedicate 30%. With such investments, businesses need to understand the true effect influencers have on their sales.
However, research led by Maximilian Beichert at Bocconi University suggests that companies relying on large-scale influencers may be missing out. After analyzing hundreds of paid endorsements and more than 1.8 million global purchases, the study revealed a surprising insight: smaller influencers, or “nano-influencers” (with under 10,000 followers), often generate far better returns than their celebrity counterparts.
Nano influencers can generate an average return of over $1,000 on an investment of just $50 (typically in free products). On the other hand, macro influencers, those with more than 100,000 followers, demand high payments—usually $1,000 or more—yet only yield a modest $6,000 in return.
For businesses looking to maximize their influencer campaigns, here are four key insights from the study:
Before all, define your campaign objectives
Before selecting an influencer, you need to clarify your goals. If your objective is to build brand awareness or garner social media attention, a well-known figure might be the right fit. Celebrity posts are highly effective in attracting attention, but they don’t always translate into sales unless your product goes viral.
Think of the influencer-marketing funnel in four tiers: total following, impressions (the number of followers who see the post), engagement (likes, comments, etc.), and finally, revenue generated by the post. If your primary goal is driving sales, nano influencers offer better results on a cost basis at the last three levels.
Track performance data at the time of purchase
It’s vital to link sponsored posts to actual sales. You can do this through tracking URLs, voucher codes, or unique phone numbers.
Small DTC businesses working with macro influencers often find it challenging to see beyond impressions. If you do decide to work with them, ensure they’re open to providing tracking data so you can measure their true impact. By contrast, micro and nano influencers (with 10,000 to 100,000 followers) are more collaborative and will provide detailed performance insights.
Make use of influencer marketing channels when feasible
Finding a celebrity to promote your product can be time-consuming and costly, especially for smaller brands. Macro influencer contracts are usually managed by agencies, which adds to the complexity and expense. Tracking return on investment (ROI) can also be difficult if influencers don’t provide performance data.
Platforms like Grin and Upfluence allow marketers to collaborate with hundreds of small influencers simultaneously. These platforms help locate suitable influencers, manage payments, and track campaign performance.
If you can’t afford an influencer marketing platform, Beichert recommends reaching out directly to nano influencers. They often have closer relationships with their followers and are more inclined to use tracking links and codes, helping brands gauge their ROI more effectively.
Prioritize authenticity for sales
Nano influencers aren’t just cost-effective; they’re more authentic. Because they interact with their followers like friends, their product endorsements feel genuine and relatable—far more impactful than impersonal celebrity posts.
According to the study, nano influencers’ engagement is what truly drives sales. Their personal connections with their audience, coupled with genuine conversations about the products they endorse, result in higher conversion rates. This level of authenticity is difficult to replicate with macro influencers.
In summary, for brands, it’s not about reaching the most people; it’s about reaching the right people. Nano influencers may have smaller followings, but their ability to build trust and connect with their audience makes them a powerful marketing tool.
(Tashia Bernardus)