What is Influencer Marketing? – The Ultimate Guide for 2023

The growth of influencer marketing has unequivocally proven it’s not a fad. A company and an influencer collaborate to boost brand awareness and sell a product or service. It’s expected to grow to $24.1 billion by 2025.

Even a cursory glance at our social media feeds reveals the power and range of influencer marketing. The fact that influencer marketing seems to be everywhere doesn’t mean it’s easy to understand how it works and how it’s changing.

This blueprint helps you understand influencer marketing as it exists today. Learn how the tactic works in practice and what you need to know before adding it to your marketing plan.

Influencer marketing: the basics

How does influencer marketing work? Influencer marketing is word-of-mouth marketing on steroids: An individual or team with clout endorses a business and its products, services, or experiences. 

Influencer marketing first became popular in the digital age through blogging. These days, it’s mostly used on the biggest social media sites, including: 

• TikTok
• Instagram
• Facebook
• YouTube

Influencer marketing has untold benefits to offer brands who haven’t gotten in yet (we’ll discuss those briefly). However, perhaps its most appealing feature is that it humanizes brands and facilitates company-consumer trust through branded content marketing strategies.

A recent study found that nearly half of consumers today take their purchase cues and recommendations from influencers2. Companies ranging from Alo Yoga to small independent restaurants rely on influencers to promote visibility, reach their target markets, and boost sales.

Influencers: what are they?

A successful influencer marketing strategy relies on influencers. It’s great to have Prince Harry endorse our business, but influencers offer a range of reaches, audience segments, and personal tastes. 

While traditional celebrities are natural mega-influencers, others who lack fame through traditional channels can still hold sway online–sometimes even more than those with multi-million followers. 

These could be:

• Fitness professionals
• Photographers
• Foodies
• Travel vloggers
• Social media personalities
• Bloggers
• Authorities (dermatologists are massive on TikTok)

Essentially, influencers are everyday people whose social media presence can influence purchasing decisions.

Influencer ecosystem: 4 types to know

There are different types of influencers, such as social media influencers, content creators, and bloggers. There are four categories of Influencers:

• Nano-influencers have a following of 1K to 10K. Despite their limited reach, they are usually highly engaged with their audience. For retailers in a hyper-specific niche and local businesses, nano influencers can be an excellent option.
• Additionally, micro-influencers – These tastemakers have followings between 10K and 100K. As with other influencers, they are generally known for cultivating close relationships with their followers and are chosen for their relatability and authority.
• Macro-influencers – These people have followings between 100K and one million (some agencies cut off at 300K).3 Usually, these are people who have established themselves on platforms like TikTok, YouTube, and other social media sites – the Jeanuiseats and FashionJacksons of the bunch. They might be specialized in a single area, like food, or be popular for simply being themselves.
• Celebrity influencers, like Kim K, have astronomical followings, sometimes in the tens of millions. Although mega influencers can fuel brand awareness, people generally follow them because they are famous-not because they are looking for product recommendations. The majority of teens trust non-celebrity influencers more than celebrities2.

Each type of influencer has its pros and cons for brands. There are different tiers of influencers, each with a different level of management and creative collaboration.

What is the cost of influence marketing?

An influencer marketing campaign’s cost depends on factors such as:3

• Identifying potential influencers (i.e. nano- vs. mega-influencers)
• Your influencer marketing campaign’s scope
• Use of social media platforms (Instagram, YouTube, TikTok, etc.)
• Expertise of the influencer
• Content used by your influencer campaign (e.g. TikTok videos, Instagram reels, photos, etc.).

A barter partnership occurs when influencers are compensated with a brand’s products or services. Commissions are paid to others. The time, effort, and reputation of influencers are usually compensated financially.

How much does an influencer marketing partnership cost?

There are so many variables involved with influencer marketing that the cost can vary dramatically:4

• A single Instagram marketing post from a nano-influencer, for example, may cost anywhere from $10 to $100. A macro-influencer could charge between $5,000 and $10,000.
• Youtube influencers tend to be compensated more than other influencers. It is common for nano-influencers to earn $20 to $2,000 for videos; macro-influencers can earn up to $20,000.
• The average compensation for TikTok videos varies from $5 for nano-influencers to $2,500 for mega-influencers.

Influencer marketing can be challenging to determine how much to pay influencers, and how much of your marketing budget should be allocated to it. With the help of an influencer marketing agency, you can calculate a fair exchange between you and your collaborators.

Influencer marketing: what are the benefits?

Investing in influencer marketing relationships may come with a hefty price tag, but they also have the potential to yield significant ROI. 

However, there are more benefits than just financial ones. Among the long-term advantages of influencer marketing for brands are:

• Especially if you’re just starting out, it can help you establish your brand’s legitimacy
• Your target customers will feel more trusted and authentic if you use it
• An engaged customer base is promoted by it

• You can find new customers with it
• You can learn more about what your target audience wants from it
• Your brand’s scalability is boosted

Today, brands have to ask themselves not whether influencer marketing is effective, but rather how they can create partnerships with influencers.

Promoting your product with influencers

A contract between a brand and a social influencer raises the stakes for both parties. Consumers trust brands that have influencers behind them. Also, companies want their products promoted by influencers who have strong connections with their audience.

Before deciding how to approach an influencer partnership, there are a few things to consider:

• Identify influencers who will resonate with your target audience – Your target audience should dictate who you work with. Who do they follow and engage with regularly? Is there an influencer that will add more value to your product by association?
• Multi-hyphenate influencers work across platforms, but different channels can benefit different brands. A TikTok MD could help promote a pharm-to-door medication delivery service, while an ASMR YouTuber could be perfect for an up-and-coming meditation app.
• Engagement is more important than follower count – Social media engagement has a significant impact on your marketing strategy. Macro influencers may seem like a natural way to increase visibility. Brands can lose money if they don’t engage with their followers (not to mention the persistent problem of fake followers). Focus on influencers with loyal followings and engage with them actively, consistently.
• Influencers who consistently post about body positivity are more likely to partner with brands that share the same values. Be clear about your objectives and why you chose them as a brand ambassador. As well, you should investigate other partnerships they’ve set up to ensure there are no conflicts between what you represent.
• Organize an influencers event – Influencers events allow you to communicate directly with multiple prospective collaborators at once. Identify who represents your core values and why a partnership with you is more valuable than a partnership with your competitors. Your business may benefit from some pivotal connections that could last a long time.
• Use a connector agency – Influencer marketing can be lucrative, but finding the right influencers and managing partnerships takes expertise and time. In addition, it’s an ever-changing strategy that requires constant attention. Influencer marketing may look and work differently in the future. From identifying the best opportunities to managing content influencers use to promote your brand, a digital marketing partner with its own Tiktok agency or social media management team can help. Digital marketing agencies who are worth their salt will have a team of trusted influencers to work hand in glove with brands, whether they are household names or newcomers.

With Power Digital, you can get more from influencer marketing

Brands that want to expand their presence, reach their target audiences, and make good on their ROI should invest in influencer marketing. Consumer trust can be advanced without having a personal relationship with celebrities like Gwyneth Paltrow.

Power Digital connects brands with thousands of influencers across sectors, specialties, and audiences. In conjunction with NOVA analytics, our data-driven approach evaluates your marketing needs, finds your ideal partners, and executes a digital strategy (while taking care of your partnerships’ fine print).

Are you ready to get started? Contact us today to take your business to the next level.