How Much Influence Do Your Influencers Have on Social Media?

Dr. Patrali Chatterjee, professor of Marketing and the Graduate Program Coordinator for Digital Marketing at the Feliciano School of Business, discusses the power of influencers as part of brands’ overall marketing strategies in this Q&A that was originally broadcast on Facebook Live. Watch the video below to learn key information regarding:

• How social media algorithms have forced brands to find new and innovative ways to reach their customers (as they cannot rely on simply posting in their own social streams)
• How influencers impact consumer opinions, actions, and overall purchase intentions
• How brands invest in influencers to mitigate product risk, drive market share, and introduce innovative product development 
• The significance of #ad in influence marketing
• How competitive the influencer market is and how influencers are paid

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Power of Social Media Influencers – Influencer Marketing

We’re live. Hi everyone. Welcome to this week’s Feliciano Live and I welcome Doctor Patrali Chatterjee. She is a professor of marketing and the graduate program coordinator for digital marketing here at the Feliciano School of Business. Our topic today is how much influence do your influencers have on social media? For those of you who are joining us, feel free to ask questions. I will get to as many as I can. So let’s start with our first question and then we’ll proceed. First question, why are companies using and paying social media influencers when they can reach their customers directly through social media and many promote products they like anyway?

Welcome. I’m happy to be here today. So let me address this particular question. Do companies really need to pay people to develop positive reviews, influencers on their brands? The fact of the matter is that over the last three to five years, algorithms on social media platforms decide what you see on your newsfeed, on your timeline. And that has made it a lot more difficult for brands to generate what is called organic reach. What do I mean by organic reach? A brand can have, let’s say a million followers on its Facebook page. The assumption is if you follow a particular brand, anything the brand posts will appear on your newsfeed. That’s not what happens now. Only about 10% of those 1 million followers actually get to see every feed that’s posted by the brand.

Okay. For those of you who just joined us, we’re here with Dr. Patrali Chatterjee. She is a professor of marketing as well as the graduate program coordinator for digital marketing here at the Feliciano School of Business. Our topic today is how much influence do your influencers have on social media. Please ask questions as we go through the interview here and we’ll get to as many as we can. The second question is, how do social media influencers impact consumer opinions, actions and overall purchase intentions?

If the brand wants to reach its users and followers, it has to pay. It has to pay to generate paid ads in order to reach its customer base. So when consumers see these paid ads on their newsfeed, what do they do? Think back to what you do. You just gloss over, you know it’s paid ads. You don’t pay attention to it. Hiring influencers is another way of reaching to consumers while making sure that their message is listened to, paid attention to and believed by their followers. Technically, brands use influencers to achieve many objectives. The three most important of them are reaching new audiences or segments. Second, many brands rely on the influencers to develop content. Lots of videos, suggestions, tutorials, so on and so forth. And that becomes a part of the brand’s content generation strategy. And the third reason brands use influencers is because influencers are very good at spotting new trends and they are often the source of new product ideas

So when consumers trust messages or spokespeople they typically trust them to two processes. One is affect transfer. I like Kylie Jenner. Kylie Jenner likes a particular brand. So I like the brand. So that’s the affect transfer process. The second way in which consumers believe or comply with a particular advertising message or marketing message is because they trust the brand itself. And they trust the brand itself because of what they know the brand does for them. So these are the two processes by which influencers change people’s opinions about a particular product, make them consider a product for purchase or have the brands enter into their consideration set and finally make them go and purchase and buy. They effectively provide the use case scenario for the brands that they represent.

Okay. For those of you who just joined us, we’re here with Dr. Patrali Chatterjee. She’s a professor of marketing as well as the graduate program coordinator for digital marketing here at the Feliciano School of Business. We are talking about the topic of how much influence do your influencers have on social media and for those of you have any questions, feel free to ask them as we progress through the interview. So our first live questions is how do companies select an influencer to represent their company?

Okay. In many cases, brands select influencers based on the suggestions from their ad agency. The ad agency decides that at a particular point in their advertising strategy, it would make sense to you use an influencer to boost exposure to their particular advertising message. When brands select influencers, many of them rely on, as I mentioned, ad agencies and specific talent agencies for influencers. Many of them also select influencers based on the information they get on the social analytics tools. And at the Feliciano School of Business, we have the Salesforce Social Studio. And when our students use the Salesforce Social Studio, they get exposed to a wide variety of analytics and one of those analytics are the influencers. These influencers have their influence score. Salesforce Social Studio is not only analytics tools. There are many others. Some of them use what is called an authority score.

Yet another score is a cloud school, which was the first or one of the premium influencer rating database systems. Influence scores typically depend on three criteria. The first one is the size of the network a particular social platform user has. So the size of the network is basically the number of followers minus the number of dead or spam or bot followers. The second criteria that most of these rating scores use is the number of people that follow them and how, what’s the strike rate or the proportion of tweets or posts that get retweeted and shared. The third criteria is to what extent are the, what are called, betweeness centrality figures. To what extent are influencers connecting different audiences, different groups of people that would not otherwise read each others messages. There are many other criteria that these ratings programs use. Most of it is proprietary and it is still a developing science in terms of the influence scores and what the influence scores or how much you can trust the influence scores to deliver what you’re looking for in terms of communication outcomes.

Okay. We have another live question. Would you think influencers have a huge role in the tech industry? Normally people associate it to the beauty industry.

Both tech and beauty industry are characterized by lots of products. There’s a very high level of competition. Most of the products seem to be doing similar things and it’s very difficult to differentiate them. So those product categories where there is not too much product differentiation and people have a high level of uncertainty between the match of what they want from a product and what the product is able to deliver, use influencer programs. So in the beauty industry, many brands like L’Oreal and MAC have holds of squads of influencers. Typically they are bloggers. Some of them are makeup artists that will use different kinds of products in their tutorial and pitch them or include them into their content. The tech industry is another category where there are lots of similar products that are not very much differentiated and consumers are not sure of whether the product will meet their needs prior to actually buying them. So it’s the pre-purchase uncertainty associated with the product and the risk of making a wrong match. Those are the product categories where influencers can really play a major role in driving market share and driving popularity of a product, in driving whether consumers will even give the product a try.

Okay. For those who just joined us, please ask your questions. We’ll get to as many as we can. We’re here with Dr. Patrali Chaterjee. She is a Feliciano School of Business professor of marketing as well as the graduate program coordinator for digital marketing. Our topic is about social media and influence that influencers have on it. We have another question. What impact did Kylie Jenner have on Snapchat?

Okay, so now we are talking about what happened last week. Kylie Jenner last week tweeted about Snapchat on Snapchat and basically her comment, the synopsis of her comment, was that she doesn’t like the Snapchat redesign and she’s finding it difficult to use because it’s not displaying her messages as she would like them to. This was important because when she made the comment, I believe last Thursday, Snapchat lost $1.6 billion of its market gap in a split second. And it just caught everybody by surprise.

Why did this happen? Now, Kylie Jenner is a spokesperson and influencer for multiple brands. She is not technically a paid influencer for Snapchat even though she is a major power user of Snapchat. So it’s a very informal relationship of her being an influencer on Snapchat. Now, when she commented, made that particular comment, Snapchat was already under a lot of pressure from other users who were complaining about their interface redesign. When she made that comment, it just broke, it was just a straw breaking the camel’s back. She has a huge following on Snapchat. Snapchat’s demographics made up of young people, teens to young adults, follow her and they are extremely influential in terms of either joining or leaving or reducing their use of Snapchat. It is because of her power or her influence over this segment of users and the fact that Snapchat is still struggling to justify its commercial viability that her comment made a big impact on Snapchat’s market valuation.

Grow Your Business and Brand with Influencer Marketing Strategy

Is the addition of a social media influencer to a company’s marketing strategy worth the investment?

It can be. In many brands, especially are brands that have very short life cycles, whether it be movies or video games and even many cosmetic products that are very much hit driven and trend driven and apparel, influencers can make the biggest influence possible at launch. Many brands sign up influencers prior to launch. It’s a part of their launch strategy. Generate positive feedback and create anticipation for the brand. You see this happening with a lot of movies where influencers will talk about being invited to a private screening or pre-launch screening and they’re raving about it, generating a lot of positive feedback and excitement about the brand and the product. And once that momentum is generated at launch, it drives people to the movie theaters, the same thing with Black Panther, drives people to the movie theaters and if you have an opening weekend that’s a blockbuster, it is likely to keep continuing. So influencers in many different product categories become a pivotal part of their launch strategy.

Does the addition of a social media influencer add an unwanted stereotype to the company?

It may in some cases where the influencer maybe a celebrity. And if that celebrity’s persona beyond advocating for the brand does not match with it’s user base, with the brands or other associations, they can become a liability. However, the bulk of the influencers these days are not celebrities. The reason they are an influencer or the reason they were selected as an influencer is because of their relationship with the brand. So they’re already a part of the brand communities so they know the culture and the language and the norms of the brand community. So the rest of influencers, so-called going, having a negative impact are much lower than what it used to be in the past with spokesperson, where you know a lot of us know about examples of spokesperson. Subway’s the number one example, where the spokesperson does something negative or makes a faux pas and that reflects on the brand. So this is not to say that influencers have no negative impact. They can have negative impact. But the risks are much lower because we’re talking about most companies using lots of influencers, squads of influencers. And each influencer already is a part of the brand community before they’re selected as an influencer.

Next question. How competitive is a social media influencer market?

Very, very competitive. You can’t go through any particular week without reading about a 15 year old that’s making billions of dollars reviewing and commenting on different kinds of products. It’s extremely competitive, very cutthroat. If you look at the blogger community, that’s where most influencers arise from and there is a race. There is a lot of competition in terms of generating followers. And yes, some of them use unfair means and it is extremely competitive. And you can see, over time, the amount companies are willing to pay for posts or to pay for positive posts is declining over time.

So how are social media influencers paid?

There are four basic or four standard formula or formats that are used. The first is a fixed fee, typically used with media influencers where they are paid huge sums of money to just be a spokesperson for the brand and everything is contractually decided in terms of the number of posts they will post each week or each day, the scheduling and what they’re going to be posting about. So that’s the fixed fee method of payment.

Then there is a pay-per-post. With major celebrities, a pay-per-post can be anything from 2000 to 20,000. But a regular bloggers or power users like makeup artists or even gym instructors, personal trainers, it could be anywhere from 150 to $200 per post on an average. Some influencers are also paid in terms of the referral they generate, the number of people that basically follow or share a particular message. And finally the last one is the pay-per-conversion, typically used in the B2B arena. Most firms choose to use the ladder tool that is paying for each referral or paying for each post in terms of compensating their influencers.

Okay. Next question. Do specific hashtags such as #ad, signify the individual is a social media influencer?

Yes, and thank you, that’s a very important question. And this goes back to social media and social media posts and ads being used as a rubber yardstick. In traditional media, when a spokesperson or an influential individual talks about a brand, they are expected to declare whether they are getting compensated for their positive feedback. That did not exist on social media until last year. The FTC basically litigated against, complained against some major brands that were using paid influencers to generate positive word of mouth for their brands without informing consumers that those posts were generated in response to payments. So the FTC now requires or advises brands to use the #ad to signify that a particular post was a paid post by a paid influencer. So this is the FTC trying to level the playing field between traditional media, like TV, radio and newspaper, and social media, which is a new medium and does not have as much of a regulatory framework, basically enforcing its rules. So as of last year, June, 2017, brands are expected to use the #ad to signify that a particular post was a paid post.

Okay. We have one final question. If there’s any other questions, feel free to ask them. Our final question is how can influencers maintain their influence?

Influencers can maintain their influence primarily to ensure that their role on social media is to develop relationships and maintain relationships and generate value for the networks first, to generate value for the followers first. Which means even if they’re paid for their comments or for using products in their videos, in their tutorials, they need to keep the follower in mind, which means calling out on brands that are basically sponsoring them when the brands make mistakes or when the products don’t work. Most influencers these days are very astute and have in mind that their relationship with their brand is a temporary paid relationship. But their relationship with their followers is authentic and has to last beyond their contractual agreement with a particular brand. Many influencers use multiple brands and they might declare that they are being paid by a particular brand, by one brand.

But they will use the brand along with products from another brand. And they do that because by doing so, their network, their followers, trust their opinions more because they know they are not a sellout or they’re not selling them out to a particular brand. So influencers need to first keep in mind that they are in that position because of the value they generate for their follower base. And so they have to be true to their followers. They have to be honest with the followers and should not be scared about calling out their sponsors when they feel the need to, when such a move is justified.

Okay. I want to thank you Dr. Chatterjee for your time, as well as all of you who joined in on this week’s Feliciano Live. We’ll see you next week at 1:00 PM as we continue on a different topic. So thank you all and have a good day.

Thank you.