What is influencer marketing?

Influencer marketing is a collaboration between popular social-media users and brands to promote brands’ products or services.

Sphere of influence. Once it was Mary Kay cosmetics and coiffed ladies driving pink Cadillacs. Now it’s waist trainers, hair growth gummy vitamins, and green protein powder supplements. The most glamorous and charismatic among us have always influenced how others aspire to live—including the products people buy to support their lifestyle dreams. But only recently, with the advent of social media, has influencing people become an actual job.

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Influencer marketing is a collaboration between popular social-media users and brands to promote brands’ products or services. These partnerships have been going on informally since the dawn of social media. By 2009, they were sufficiently commonplace for the US Federal Trade Commission to step in and regulate them through the so-called Mommy Blogger law. (China, India, and the United Kingdom have introduced similar regulations.)

Since then, the market has grown astonishingly quickly: over the past five years, it has increased by more than 50 percent on platforms such as Instagram and YouTube (in Western countries) and Pinduoduo and WeChat (in China). This year, the influencer marketing economy was valued at $16.4 billion.

McKinsey anticipated the rise of influencer marketing in 2014 with the completion of a survey involving 20,000 European consumers. The analysis at the time noted that most of influencer marketing’s impact came from so-called power influencers. But the survey also identified an emerging—and largely untapped—market of less active influencers with smaller followings. In recent years, we’ve seen this phenomenon play out with the rise of micro- and nano influencers.

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Brands tap into influencer marketing because it works for them, consumers, and influencers alike. Social media already had a significant impact on consumer purchase decisions when McKinsey carried out its 2014 survey. In 2022, an analysis of more than 2,000 influencer marketing posts found that the strategy does yield a positive ROI for brands.

Plus, there’s no shortage of would-be influencers. In a 2019 survey of several thousand millennials and Gen Zers, 54 percent said they would become influencers if they could. Although we don’t know how long the market will be this hot, social media continues to be very popular. And brands and individuals are making the most of this gold rush while business is still booming.

Beyond shiny hair and a megawatt smile, what makes someone an influencer? And how does influencer marketing work? Read on to learn more about this rapidly growing phenomenon and where it’s headed.

What does an influencer marketing deal look like?

“An influencer is paid a flat rate per post to feature a product or service. This is known as a brand deal. The flat rates can be three to five figures, even for an influencer without millions of followers or a global profile. Celebrities can charge six figures or more per post.”

An influencer posts about a product or service, with a link to a purchase gateway. Every time a viewer buys the product by clicking through the link or using a promo code, the influencer earns an affiliate commission.

Brand Management

Brands have used celebrities to sell products since long before athletes first appeared on cereal boxes. But influencer marketing and celebrity endorsements are not quite the same thing. Celebrity endorsements typically involve a company making a huge investment in someone, but it’s hard to specify the exact return on that investment. With influencer marketing, it’s easier to figure out the ROI because companies can closely monitor likes, shares, online conversations, and so forth.