Influencer Marketing as an Emerging Digital Marketing Channel

EXECUTIVE SUMMARY: INFLUENCER MARKETING AS AN EMERGING DIGITAL MARKETING CHANNEL
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Executive Summary: Influencer Marketing as an Emerging Digital Marketing Channel
Background and Introduction
The art of consumer marketing is complex, broad, and (for most) confusing. Its foundations used to be rooted in traditional media like radio, newspaper, and television. However, that has long passed. Another force has watched its flag fly on this hill of commerce for a long time – digital marketing. Yahoo Finance (2021) stated that the market size for digital marketing and advertising was (in 2020) estimated to be US$350 billion. Further, the market is projected to be US$786 billion in size by 2026 (Yahoo Finance 2021). If anything, this forecast indicates that digital marketing is going to be around for the foreseeable future. While one can take that to the bank, the nature of digital marketing may morph, transform, or change dramatically in the coming years. As more intelligent algorithms and platforms come online, they will dramatically change the face of digital marketing. For this reason alone, businesses must maintain an alert posture to exploit the advantages of new marketing tools before their competitors.
According to Varadarajan et al. (2021), the rising cost of digital marketing is an even more compelling reason for businesses to maintain this alert posture. The cost of acquiring a new customer has risen steadily in the past few years as increasingly more businesses flood online for digital media buying. In other words, it is becoming more competitive and (therefore) costly for marketers to advertise online. The increasing demand for digital ads vis-à-vis Google’s, Facebook’s, Instagram’s, or TikTok’s limited inventory continues to operationalize a fundamental law of supply and demand, pushing competition high and prices with it (Choi et al. 2020; Lee & Cho 2020, pp. 556–564). Digital advertising platforms have tried to supplement their inventory by partnering with third-party data sources to stretch their inventory. Still, as more businesses flood the market, competing to get their message in front of a limited inventory of eyeballs, these prices will only go higher. This reality is already biting most businesses. According to the 2023 Shopify Commerce Trends, “Brands are losing a record average of $29 for every customer they acquire—a 222% increase in the last eight years” (Shopify Plus 2023, p. 19). Despite change being a constant in this market, price is (undoubtedly) the force that will force businesses to adapt and innovate, becoming one of the forces that will transform the face of digital marketing.
Businesses are change agents in the digital marketing scene through their choices on which platforms they invest their marketing spend. The cost of digital ads is only going to soar, as this article has established. As this trend unfolds, businesses will incur higher costs to reach the same audience size (Lee & Cho 2020). It will also force businesses to exploit available avenues to maximize their return on investment (ROI) – specifically, their return on ad spend. These avenues include strategies like raising prices of certain core products, introducing sound backend programs to upsell and generate return purchases, reducing returns, improving ad and landing page design, and increasing product value (Lee & Cho 2020, pp. 323–327; Varadarajan et al. 2021). However, these avenues only offer a slight relief to businesses as the price of ads will continue to rise. A more sustainable adaptation strategy for businesses will involve (as mentioned earlier) maintaining an alert posture to scout potential sources of competitive advantages through digital marketing. This paper explores influencer marketing as an emerging channel for businesses to find growth opportunities in digital marketing.
Influencer Marketing
Influencer marketing has been around for many years. Nonetheless, it is an emerging channel on account of its forecast growth. According to Leung et al. (2022), the influencer industry is estimated to grow to US$21.1 billion in 2023 from US$16.4 billion in 2022 (a 29% growth) (Leung et al. 2022; Geyser 2023). According to Geyser (2023), the industry grew from US$1.7 billion in 2016. This growth paints a positive picture of the industry and a trend that marks influencer influencing as a suitable digital marketing channel for smart business leaders to exploit. Furthermore, for an industry estimated to be US$786 billion in 2026, this influencer market growth is astounding. Indeed, as pay-per-click and other forms of digital platforms’ ads become prohibitively expensive, outcompeted businesses will look to invest their digital marketing budgets in other channels like influencer marketing, pushing this growth even further.
Much has been said about influencer marketing. Many have called it a bubble in the past (Zak & Hasprova 2020; Femenia-Serra & Gretzel 2022). Others still consider it inferior and view it as an unsustainable marketing channel (Richards-Carpenter & Tafoya 2019). However, such perceptions appear suspect, considering more than three-quarters (75%) of global brands allocate a portion of the marketing budget to influencer marketing (Leung et al. 2022). While the prices of partnering with an influencer vary widely, it is clear that it has become an important channel for customer acquisition with measurably sustainable impacts. In their massive study on the Chinese influencer market, Leung et al. (2022) discovered that increasing a brand’s influ...