Source: Kylie Cosmetics
The past decade has seen a rapid rise in the of selling products online through ecommerce platforms such as Shopify, Magento, Big Commerce, and WooCommerce, which has made it easier than ever to launch products to a wide audience without having to invest in costly venues or stores. Companies who develop and sell their own products have never had more opportunity to bring their products to market. Because of this availability and affordability, the number of brands is inclining the quickest it ever has.
The challenge remains to make prospective customers aware of new product and brand launches. While influencers are now the daily norm for cosmetics companies, it has also proven to bee an extremely expensive marketing strategy, with influencers demanding higher and higher fees and brands struggling to justify the cost and track the benefits. It’s no doubt influencer marketing can be a powerful force for growth, but soe brands don’t want to be making those expensive gambles. Perhaps counterintuitively, going small means going big.
Online influencers can demand hundreds of thousands to millions of dollars for promoting a brand in an online blog or social media post. In some cases, as with Kylie Jenner and her Kylie Cosmetics line, the influencer is the brand. But, for brands who don’t yet have such reach, can word-of-mouth marketing methods like influencer marketing, affiliate marketing and referral marketing generate good ROI? And, when there are millions of dollars at stake, how can smaller, up-and-coming brands leverage influencers without breaking the bank?
The industry is changing
Fortune magazine recently wrote that it took L’Oréal’s Lancôme cosmetics brand 80 years to reach $1 Billion in sales. Estée Lauder’s Bobbi Brown took 25 years to hit that number. And now Kylie Cosmetics is soon to take the lead, with Coty valuing the brand at $1.2 billion. But influencer marketing doesn’t begin and end with million-dollar names. In fact, macro-influencers (those with fewer than a million followers) and micro-influencers (those with fewer than 10,000 followers) get up to ten times more engagement per follower than mega-influencers, and marketers have started to switch their attention (and their budgets) accordingly.
These different classes of social influencers can present highly cost-effective options for brands with smaller budgets. And, while in the end numbers do matter, brands will use influencer’s engagement rates as the primary consideration when evaluating their ability to bring referral traffic to an eCommerce site.
Brands will tend to also look at the following factors:
- The number of followers they have on a given platform
- The platform(s) on which the creative content will be posted
- The number and frequency of posts
- The number of images taken
- The service provided (eg. modelling, blogging, product giveaway)
Why should I invest in more small influencers than one big one?
In addition to some of those stratospheric costs, there are other reasons why spending on big-ticket influencers can backfire for an influencer and a brand.
1. Drama, drama and more drama
Household-name celebrity influencers can represent major risks to brands who advertise with them. After all, celebrities are human, and mistakes do happen.
- Kendall Jenner’s famously misstepped with her ill-advised Pepsi ad, and – at least temporarily – paid the price.
- Influencer Zoe Sugg was blasted on social media at Christmas time 2017 for promoting the sale of a largely worthless $65 Advent Calendar through one of her high street retail partners, and her online brand paid the price.
- International recording artist Alicia Keys was dumped by smartphone manufacturer Blackberry from her role as Creative Director after a social post went out from her iPhone.
- Gaming influencer PewDiePie with over 65 million subscribers – was dropped by Disney-owned Maker Studios after posting anti-Semitic content on his YouTube channel.
2. Finding the right influencers
Beyond the high costs and inherent risks of trusting celebrities with your brand, cosmetics companies have a couple of other important considerations. One of the biggest challenges reported by marketers is reaching the right influencers. The rise of influencer marketing platforms and consultancies clearly demonstrates that web searches and Instagram hunts are not enough to help brands find the most suitable influencers for their product lines. Not even mentioning the 1 billion users Instagram has monthly. And the rising popularity of influencer marketing – both among brands and practitioners – means that it’s a seller’s market, with brands struggling to find the right kind of influencer, with the right reach, at the right price.
Having a savvy team of influencer marketing experts to assist with finding and engaging the correct influencer will make all the difference in building a successful referral marketing campaign. Brands who go it alone will struggle with the overwhelming choice and confusion associated with finding influencers from scratch.
3. How do I know who’s sale this is?
Another significant challenge with the influencer marketing industry is attribution. Attribution is the assignment of credit for a particular sale to a given source. This is easily done when a customer clicks on a digital advertisement, then makes a purchase: the sale can be attributed to the online ad. It turns out that it’s much harder when it comes to influencers. Econsultancy’s analysis showed that 65% of brands say that measuring the ROI is the biggest challenge in working with influencers. Two-thirds of marketers who’ve tried influencer marketing think that influencers don’t actually care where or not the paid post will ever generate traffic for the brand. And 60% of brands admit that they don’t have an attribution model in place to assign credit for influencer sales.
Go small to go big
At Buyapowa, we believe very strongly in all aspects of word-of-mouth advocacy for brands. Brand advocates come in many shapes and sizes, as measured by their ability to influence a company’s growth rate. Paid advocates come primarily in the form of influencers and affiliates.
Influencer marketing has its promoters and naysayers, but many brands still pay the big bucks to engage influencers to promote their brand. From mega-influencers to those with 10,000 or even 1,000 followers, influencers can help cosmetics brands build their audience, but only provided that the right balance of cost and ROI can be found. Affiliate Marketing works – provided secure platforms are leveraged where link stuffing and other questionable methods can be minimized.
Unlike most influencer programs – and all affiliate marketing programs – referral marketing programs reward a brand’s customers for driving measurable sales, whether online or in-store. Sometimes the rewards for these referrals are monetary but, sometimes, they’re non-monetary – such as gifts with purchase, invites to special events, access to exclusive content, you name it.
But, in all cases, referral programs leverage statistical principles that have proven themselves over time.
Your existing customers are already influencers – you just don’t know it yet
Refer-a-friend programmes are 1-2-1 influencer programmes that are made to provide success. Referred customers have a number of important characteristics:
- Referred-in customers trust their friends and family’s opinion more than they trust your advertising.
- They are more loyal, making more purchases over time than customers acquired through other methods.
- They spend more than your regular customers.
- They are more likely to refer their friends and family to your brand.
To learn more about how referral marketing programs can benefit your brand, reach out to us.