Influencer trust takes a dive: What marketers should know before hitting ‘Follow’

New Delhi: Why do brands spend money on influencers? The answer is simple: to give a human touch to their endorsements, leveraging the authenticity and trust that consumers have in their favourite content creators. 

Try putting on the shoes of a marketer who wants to advertise products on social media. The marketer signs a contract with an influencer hoping for a good ROI but finds himself in an awkward position being scolded by his senior for not being able to deliver a return on the hefty investment.

What could have possibly gone wrong here? 

Answering the query is a report by iCubesWire stating that 70% of consumers experience negative sentiment from influencers. The report further mentions that 53% of consumers have no trust in influencer content, while the remaining 47% exhibit varying levels of trust. 

Commenting on the findings of the report, Vikram Kari, Senior Director, Product Head, The Goat Agency (INCA), GroupM, suggested that there lies an opportunity for influencers to strengthen their relationship with followers through genuine engagement and honest recommendations. 

BuzzInContent.com decided to dive deeper into the issue in an attempt to paint the true picture of the Rs 2,344 crore (data from the EY report titled ‘The State of Influencer Marketing in India’) influencer marketing industry.

During the pursuit, we stumbled upon an April 2024 report by Klug Klug, an influencer marketing tech platform, which revealed that only 2.48 million influencer profiles on Instagram out of 8 million audited by the platform exhibit credible and genuine followers.

From the horse’s lips itself, Kalyan Kumar, co-founder and CEO of Klug Tech, said, “More than 5.52 million creators have followers, comprising 60% bots. This alarming trend is especially prevalent in the beauty and fashion industry, with influencers resorting to deceptive practices, potentially causing significant financial losses for brands investing in influencer marketing campaigns.”

Leading the way in both buying and selling followers, India stands tall when it comes to fake follower farming. “India, Brazil, and Indonesia are major hubs for fake follower farming, with suppliers primarily located in Russia and Turkey. The cost of buying fake followers can range from Rs 8 to Rs 50 per 1,000 followers on Instagram,” noted Kumar.

Brands! Listen in because Kumar offered an eye-opening insight on influencer marketing. In FY23, L’Oréal India’s promotional expenses increased significantly, as the brand went big on influencer marketing. "Despite spending so much, L’Oréal had a realisation that the female influencers they partnered with, excluding a few, had more than 80% male followers. So, the brand spent a fortune on influencer marketing just to target the wrong audience,” quoted Kumar.

Explaining the current scenario of the influencer marketing industry in India, Jithin Sethumadhavan, VP at Qoruz, said, “Let’s say you own a brand that is launching a product available in Bangalore only but the majority of followers of the influencer you decided to employ for creating awareness are from Delhi or Mumbai and Bangaloreans just make up only 0.5% of their audience. 

Now, if you are expecting the influencer to drive your brand, then you are at fault for expecting something that cannot be achieved. Brands are wasting marketing dollars on unsuitable digital ads that did not include branding in the first three to five seconds of the film, or they simply failed to reach the right audience.” 

As per Kari, “There are successful campaigns and failed campaigns; in the middle of these campaigns lie the majority of influencer marketing campaigns, where the brand puts forward its budget and hires ten influencers to go ahead with. A lot of thought is not put into designing the campaign and hiring the right influencers.”

Notwithstanding Kari’s argument, Sethumadhavan said, “It’s not just about selecting the right influencer but about how you drive the campaign and the core competencies that you bring in. The right strategy with the right basics will still get you the expected ROI and engagement if the content holds substance. Despite having male followers, brands can leverage the popularity of someone like Disha Patani and make the content resonate with female influencers.”

Considering the fatigue around a select few Instagram influencers being signed by every brand, user-generated content (UGC) was once presumed to be the antidote to declining ROI from influencer marketing. Who would a consumer trust more, their friend from the same neighbourhood or a random creator who is being paid to put out a script?

Inspiring confidence in the rise of micro-influencers and UGC, Kari said, “Highest engagement rates were seen among micro-influencers, particularly those with fewer than 25,000 followers. Since Instagram engagement rates have been dropping, marketers are paying more attention to influencers that have a loyal following, even if they have fewer followers. Influencers will profit from a growing number of brand relationships by concentrating on nano- and micro-influencers, which will allow companies to stretch their influencer marketing budgets while working with highly connected influencers.”

However, UGC is not all hunkey-dory. Diving into the nitty-gritty, Kumar said, “As the industry grows, more categories of influencers in India are buying fake followers. Micro and nanoinfluencers have started buying fake followers, as brands and agencies often choose influencers based on their following."

Pointing out the discrepancies in utilising micro and nanoinfluencers for endorsements, Sethumadhavan said, “All campaigns have a layer of UGC. Nanoinfluencers drive the campaign as they bring in the relatability factor for most people. The only problem with nanoinfluencers is the lack of technological know-how to determine how many of these nanoinfluencers have genuine followers, as the space remains largely unregulated. Bogus followers are primarily linked to influencers, with followers less than 100k.

In an ideal scenario, nanoinfluencers have a better engagement rate, sometimes even 5%. But at the same time, most nano-influencers fail to touch the 5% mark as they resort to just reposting content with brand logos embedded in it, lacking good production quality and authentic content.” 

As Kumar perceives it, “Brands lose 30–50% of their investment in every campaign by onboarding the wrong influencer. Out of 11,000 female profiles tagging the brand Sugar Cosmetics, only 3,000 have a credible following. If a brand selects 100 influencers today, at least 30 of them won’t provide value for their investment," Kumar resolved.

Suggesting the ideal influencer for a brand campaign, Sethumadhavan said, “When working with influencers, consider their profile size of around 15k to 20k followers, even if it’s for a small engagement. They don’t need to have the perfect audience match. Additionally, collaborating with a smaller group (e.g., one or two influencers) can yield better results than working with a large group of 100. Quality over quantity ensures greater value for the investment.”

Adding more substance to the matter, Sethumadhavan added, “The ideal influencers for brands have a CPV of less than one rupee, and their current follower count stands at 15k or 20k but have the potential to balloon up their followers to 100K or 200K in the next few months. Signing creators when they have 20K followers is the right strategy because such influencers charge less and put in their hundred percent in creating quality content.”

To mitigate the crisis of trust and authenticity, Kari advised both brands and creators to sign long-term deals. “While the majority of contracts are short-term in nature, agencies and influencers both prefer long-term contracts. Automotive and smartphone companies usually sign long-term contracts, which helps build loyalty. Consider a scenario where you’re planning a long-term collaboration with influencers; it’s essential to approach this strategically rather than simply focussing on cost considerations.”

Sethumadhavan calls maintaining audience engagement the biggest hurdle in signing long-term deals. Expanding his thought, he said, “Suppose you have one million followers. In that case, repeatedly exposing them to the same message can lead to diminishing returns. 

However, if you strategically collaborate with multiple influencers, you can achieve a broader reach while still maintaining loyalty. Think of a new brand launching a product. The primary objective is awareness. By working with several influencers, brands can reach different segments of their target audience.”

With to-and-fro discussions about the influencer marketing industry, the question of the hour is what brands can do to be on the safer side—getting a good return on their investment. 

For brands frustrated with burning their marketing dollars on pointless influencer campaigns, here’s what Sethumadhavan has to say: “The quality and authenticity of the audience are now more important than ever as they help in identifying the ROI an influencer can deliver. A good influencer for any brand is the one with more than 80% genuine followers but the sweet spot lies between 60% and 80%. Any influencer with less than 60% genuine followers will not be able to drive engagement for the brand.”

It is important to note that “some create content purely out of passion, while others just join the space for monetary benefits. As long as people continue to join the content creation space for monetary rewards, malpractices will continue and brands will continue to lose money,” Sethumadhavan added.

Be it human relationships or partnerships between influencers and brands, the key to having a healthy relationship is trust. Creators will continue to lose revenue opportunities in the near term and their ability to monetise their audience’s trust may even go to zero in the long run if trust continues to decline.

And if this trust topples over for enough creators, it’s game over for people dreaming about being a content creator. 

To wrap it up, as long as creators are partnering with brands they admire and staying true to their audience, the industry will likely continue to thrive.