Dr Sommer Kapitan a Senior lecturer in marketing at Auckland University of Technology talks about the influencer marketing industry and how does it compare to the US, UK markets
Lighting on, adjust the object, smile, click.
Uploading a photo to Instagram can be the first step in putting a product, and a brand, centre stage on social media – particularly if you’ve got thousands or millions of followers.
With the average consumer streaming through 3000 messages a day on social media, brands are increasingly catching on to how they can profit from exposure on platforms such as Instagram, Facebook and YouTube.
In the process, many advertisers are using “influencers” – people who already have a big social media following.
Influencer marketing isn’t new – celebrities have been endorsing products since the dawn of advertising – but with the rise of social media, it has become more sophisticated.
Auckland-based influencer marketplace The Social Club defines influencer marketing, or social media marketing, as: “Any time a brand engages with somebody on social media who has a large following to push out a message – it could be on Facebook, Instagram, YouTube, Snapchat, any social platform, generally in exchange for some sort of compensation; with us it’s generally money but for some people it could be product or service discounts.”
United States research has found influencer marketing generates 11 times more return on investment than traditional marketing.
It’s big business and an emerging market in New Zealand, says Georgia McGillivray, co-founder and chief executive of The Social Club.
New Zealand influencers can earn anything between $50 and $50,000 per post, depending on how many followers they have, engagement levels and reach, McGillivray says. The average amount paid per social media post in New Zealand last year was $500, and almost double that for a YouTube video.
“Generally, a brand will be running a traditional advertising campaign maybe on TV, digital, radio … and add an influencer component to that.
“A brand will reach out to, say, five influencers, and they’ll send them a brief which will say; ‘On X day we’d like you to do X and post it on to X’. The content always gets approval from the brand before it goes live, and then the influencer will say: ‘Okay, I’m interested, my price to complete this is X.”
The average campaign spend by a retail brand through The Social Club is still modest by the standards of conventional advertising – about $8000 per campaign, though it often reaches $12,000 – but that amount is rising.
“That average has been doubling every six months for the last two years,” McGillivray says. “Some influencers are making hundreds of thousands of dollars individually while some are making thousands or tens of thousands.”
Compared to influencers in established markets such as Europe and the US, the value of an influencer is higher here but the income is less consistent, as relationships aren’t as well-established.
“In New Zealand, our influencers are more expensive as there are less of them and they are more in demand, but also the standards haven’t been fully set yet in terms of what the value of an influencer is.”
Kiwi YouTube star Shannon Harris – known for her beauty channel Shaaanxo, and assumed to be the most popular and best-paid influencer in New Zealand, started making YouTube videos, experimenting with makeup in her bedroom.
Actor KJ Apa and YouTube star Shannon Harris aka Shaaanxo. Photo / Doug Sherring
She now has 3.65 million subscribers on her two YouTube channels, a large following on her social media platforms and subsequently launched her own beauty brand xoBeauty, selling eyelashes, makeup brushes and makeup.
It is estimated that Harris is earning hundreds of thousands of dollars a year from influencer marketing alone.
Influencer marketing has been around for decades, McGillivray says. “Billboards are a good example, where, say, Pepsi would use Britney Spears or H&M would use David Beckham – those were the influencers of the time, the celebrity influencers and then that moved to TV and we saw a whole lot of celebrities repping a lot of different brands.
“When the internet came around, that’s when the social media influencers started to appear. Previously we saw influencers as celebrities but now a lot of our influencers aren’t actually that well known. You might walk down the street and not know who they are, but they have 100,000 followers.”
Recent changes to the way social media rank content have also given influencers more credibility.
“Changes in the Facebook and Instagram algorithms, which is promoting people’s content over brands’ content, means that influencers have become in even higher demand because brands are having to pay more and more to reach their followers and influencers are getting really high reach and engagement.”
Auckland University of Technology (AUT) senior marketing lecturer Dr Sommer Kapitan says influencer marketing hit New Zealand in 2014, two years after its US debut.
“2014 was the year the magic happened here in New Zealand, when advertisers as a whole started spending more online than in any other medium,” Kapitan says. “That’s the year enough Kiwis had their hands on mobile devices, WiFi was finally widespread, and data plans cheap enough for online eyeballs to be worth chasing with the most advertising industry dollars.”
New Zealand influencer marketing is in its infancy, but that doesn’t mean it isn’t on a par with the standard of deals and trends set overseas, Kapitan says.
“New Zealand is a smaller market for eyeballs but that actually means it’s quite ripe for social influencers to take hold,” she says.
Last year, McDonald’s teamed up with influencer Jordan Watson, the Kiwi behind the humorous How To DAD online parenting videos.
The Auckland father rose to internet fame when his video How to hold a baby, posted on Facebook for a friend, went viral. Three years and two book deals later, he’s now making YouTube videos raking in ridiculous views – and silly money.
Watson and his agent Sarah Campbell, from the Bloggers Club, approached McDonald’s to collaborate on a video idea he had, which later became How to take kids to a restaurant, and from there they agreed on another collaboration for its Kiwi Burger campaign. He was paid an undisclosed amount to create a piece of content advertising its latest burger creation.
Some influencers are making hundreds of thousands of dollars individually while some are making thousands or tens of thousands.
The company also worked with influencer group the Cougar Boys last year to promote the launch of its all-day breakfast menu.
McDonald’s head of communication Simon Kenny says it is common for influencers to approach brands for partnership opportunities.
Its biggest influencer campaign was the launch of its Gourmet Creations range in 2015, for which it got 60 influencers on board.
“Depending on the objective of the campaign, we could be looking to drive trial and awareness of a product, or build brand affinity,” he says. “Sometimes partnerships can come about quickly, as an ad hoc opportunity, but generally they are planned out months in advance.
“While influencer marketing appears to be a relatively new phenomenon, it’s really just an extension of how brands have been working with individuals for years.”
The Warehouse says it gets requests for influencer collaborations on a weekly basis.
“A deal with an influencer typically consists of a contract where we agree on the content and type, number of posts they’ll deliver, both in terms of posts but also attribution and declaration,” says a company spokeswoman.
How to Dad aka Jordan Watson eating a Kiwi Burger during a sponsored video. Photo / Screenshot
The Warehouse says its contracts stipulate a declaration that the influencer has partnered with the retailer, including using tags such as: #paidfan, #ad, #sp, #partner, #paid/sponsored, #collab, #I’veteamedupwith, or “This is a paid partnership with”.
Regulations covering influencer marketing are less transparent in New Zealand than they are in more established markets, with few guidelines and standards.
In the US, for example, influencers are by law required to disclose if a piece of “content'” – whether it is an Instagram post or YouTube video – is sponsored, a paid advertisement, endorsement or a collaboration with a brand.
In this country, the Advertising Standards Authority (ASA) says “advertisements should be clearly distinguishable as such, whatever their form and whatever the medium used” and that anyone using Twitter to advertise or publicise a paid-for endorsement must use the hashtag #ad.
For advertorial Facebook content, it suggests a social media disclaimer such as: “This page is monitored daily by Your Company/Organisation.”
But there are no guidelines on the use of advertising on Instagram – the platform where perhaps the most successful brand collaborations are happening, says The Social Club’s McGillivray.
“Instagram is a visual platform, so it works really well for visual brands,” she says.
What we’re saying to each advertiser and publisher is that you need to be confident that the people looking at this material will understand it is a commercial message.
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New Zealand’s influencer marketing industry is playing catch-up with the rest of the world and has been slower to adopt standards and guidelines, McGillivray says.
The ASA is working on new guidance notes for the industry which will come into force next month, something McGillivray says is “exciting”.
“All other media is governed by the ASA with rules and regulations around what you can and can’t do, so having guidelines for influencer marketing really confirms how much the industry has grown and that it is here to stay.”
ASA chief executive Hilary Souter says the new guidelines aim to promote transparency. “The guidance note that we have been putting together is on the identification of advertising; it has some language in it around influencers but it also has language around it for print, television and radio,” Souter says.
“We don’t want to be too prescriptive. What we’re saying to each advertiser and publisher is that you need to be confident that the people looking at this material will understand it is a commercial message.”
Souter says the ASA would not be enforcing how advertorial content on social media should be disclosed, but rather making sure advertorial material is known. “People talk about authenticity a lot, it seems to me, in the influencer space and in my view, being authentic means being transparent about whether or not it is a commercial message.”
New York-based entrepreneur Ryan Mulcock, co-founder of on-demand hiring firm Outfit, says he will soon be looking to bring his business to New Zealand to tap into influencer marketing.
“There are great agencies handling big talent, but what we’ve found is that there’s an opportunity for mid-market influencers, where someone may have a significant amount of followers but not enough to put them into a proper marketing agency,” Mulcock says.
Georgia McGillivray, founder of influencer marketplace The Social Club. Photo / Supplied
Auckland University PhD student Hamid Shahbaznezhad, who has spent the past four years unpinning the relationship between social media and companies in the airline industry, says there are four types of “content” that businesses post on social media: informational, transformational, experimental and transactional.
“Transactional content is about motivating [social media users] to purchasing and lead customers to payment,” Shahbaznezhad says. “Social media connects people and can help businesses to get more information about their customers. This is their rule of social media – connecting people to the business and to their sales.”
And, says Kapitan, “Social influencers who are known for their expertise or humour or beauty tips and who generate enough content to keep us engaged, keep us laughing, keep us tuned in – they are hard to ignore.
“Whether a social influencer is explicit and shouts recommendations about a brand, or implicitly happens to be wearing, using or seen consuming a product or experience from a certain brand without out loud mentioning the brand, we see that.”
“Getting the right social media influencer to recommend your brand is thus a powerful recipe for capturing consumer hearts and minds. And often consumers might not even notice or realise they are being advertised to – they are simply viewing recommendations from a trusted source.”
Occasionally, though, efforts to sell social media influence don’t go as planned. When UK YouTube user Elle Darby offered Dublin’s The White Moose Cafe hotel a positive review, in exchange for a free stay, the hotel posted a screenshot of her email on Facebook, and it was picked up by news organisations around the world.
Based on her 87,000 YouTube and 76,000 Instagram followers, the hotel then sent her a €5.3 million ($10m) invoice for “the provision of features in 114 articles across 20 countries with a potential reach of 450 million people”, according to the Daily Mail.
Auckland University PhD student Hamid Shahbaznezhad. Photo / Supplied
The power of the mummy blogger
Nappy company Rascal and Friends, launched in September last year, has taken off in just three months thanks to social media.
Grant Taylor, the company’s 33-year-old founder, says “millennial marketing” has been paramount, and attributes so-called mummy bloggers to its success.
“Parents like to post on Instagram and Facebook because [our products] have that visual look to them … and that’s created a conversation online which has had that viral effect, and it’s rolled on from there,” Taylor says.
When the firm launched it had just 4000 Facebook followers, but that number passed 23,000 in three months. The business is using social media advertising and regularly holds giveaways to boost its social media engagement.
“Facebook is a lot better for us as it enables [more] conversation,” Taylor says.
“Before we launched I was sceptical, it was a very grey area in terms of whether they worked well and were believable, but what we’ve found is that we have a very strict model that we’ve gone in with influencers [that works well] … they have to be using our brand – they can’t just be anyone who’s well-known saying ‘this is amazing’, because people won’t believe it.”
Rascal & Friends uses five key influencers – who he will not name – and pays them in product, rather than cash.
“We give them a guideline sheet on what our [product] features are and say ‘Do what you want to do. If you don’t like them say you don’t like them’.
“It’s hard because you can’t put a conversion rate on it. For us, it’s not about sales, it’s about awareness of the brand.”
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