The Rise of Influencer Marketing: Effectiveness and Ethics

By Prof. Kedar Dunakhe, IBS Mumbai

Hello friends, how many social media accounts do you have? Certainly, more than two. How much time do you spend on your mobile phone? Easily more than three hours per day. Is your mobile phone part of your daily entertainment? Indeed, yes. You are not alone. There are hundreds of millions of people like you. We are living in a world of media explosion. In just under 40 years, television channels have increased from one to over a thousand. Multiple OTT platforms, FM radio channels, websites and so many other spaces that keep all of us connected.

Imagine yourself as a small businessman who is trying to sell healthy snacks for that afternoon hunger pang. How and where do you plan to advertise your healthy snacks with a small startup budget? Do you even have a budget to release a newspaper ad or maybe a hoarding at a marketplace or produce an expensive TV commercial? How would you like someone talking about your healthy snacks to thousands, lakhs of health enthusiasts! It is a brilliant idea to reach so many people exactly from your target group. For over a decade it has been made possible by ‘Influencer Marketing’. Identify a health influencer, free of cost on your favourite media. Make sure he or she has a sizeable following and bingo!…. you have found a key to reach your target customers.

Psychology behind influencer marketing:

Parasocial Relationships – We all feel a sense of familiarity with our favorite actors, actresses, internet influencers. We develop an emotional bond with them. Even though they don’t know us personally, we get the feeling that we know them personally and that they are our trusted friends. This is the parasocial relationship that we have with our influencers. Whenever an influencer recommends something, it almost comes to us as the advice of a ‘trusted friend’.

Trust – Economics Times’, Brand Equity research discovered that 67% Indians trust influencer recommendation over traditional advertisement  (https://brandequity.economictimes.indiatimes.com/news/research/67-indians-trust-influencer-recommendations-over-traditional-advertisements-report/120514710).

Feeling of community – The entire group of followers becomes one community. If we take YouTube as an example, it is often observed that the followers comment and reply to each other on the content created by their favourite influencer.

Two-way communication – Even though influencers with millions of followers can’t reply to all comments from their followers, the followers are usually content with the possibility of receiving a reply, and that keeps their following continuous.

Effectiveness:

Niche marketing – By looking at an influencer’s content, you can easily understand who their followers are. This helps marketers reach specific segments more accurately.

Better engagement – The parasocial connection with the influencer and the way the influencer integrates the brand promotion in their regular content increase the engagement of the audience. They focus better on the promoted brand as they are not subjected to the clutter of multiple brands.

Long shelf life of your brand endorsement – Influencers seldom take their content down. As long as the content with brand endorsement remains online, your brand endorsement keeps reaching new followers and new viewers.

Micro-influencers – Studies have established that influencers with ten thousand to one lakh followers have higher engagement with their followers compared to mega-influencers who have millions and millions of followers.

Ethics:

Disclosures and transparency – An influencer is required to disclose if there is a paid partnership with the brand. When an influencer endorses a brand in exchange for payment, the followers are entitled to know the truth. India has already acted upon it. Consumer protection guidelines in India clearly require #Ad, #Sponsored or a mention of Paid Partnership in any communication related to a brand. These are enforced by the Advertising Standards Council of India (ASCI) and Department of Consumer Affairs. Yet, like any other law, some are always found on the other side of it.

Authenticity vs. Commercial Interest – Influencers’ genuine recommendation is likely to get compromised by payment. This is ethically a grey area and an influencer needs to tread upon it very carefully.

Vulnerability of the audience – The age at which young people are getting access to the internet is reducing with every passing generation. The younger the audience, the more influenced they are. That also makes the younger audience very vulnerable. There have been serious cases of undue influence by these influencers over their young audiences. It is the moral responsibility of an influencer to know his or her limits and exert their influence in the right direction.

Fake followers – Influencers are also found to be guilty of creating false following by creating several fake email IDs. It goes without saying that this is an ethically and morally wrong practice.

Takeaways:

Influencer marketing is no more just a trend; it is here to stay. It is a fundamental change in the way brands are connecting and communicating with their customers. The field is very dynamic, complex and it is very data-intensive. To understand more aspects of consumer behavior, marketing tactics and data analytics behind all this, management education is your way ahead. Management education compliments with your core skills and provides you with an ability to use your core skills effectively.

Prof. Kedar Dunakhe

Associate Dean (Institution Building Activities Coordination) and Faculty Member – Marketing at IBS Mumbai