Gig sector on the edge amid dip in influencer business
The looming threat of a recession could drive social media influencers or marketers out of business, as many companies continue to slash their marketing budgets.
Experts are, however, predicting that brands will still rely on influencer marketing — albeit abstemiously — as they seek the right balance to weather an anticipated advertising downturn while keeping their businesses profitable.
“In tough economic times, you don’t want to make any mistake when selecting the influencers to work with,” says Assil Dayri, head of AMD Consulting Group.
Adding: “One of the great advantages of working with influencers is that regardless of the size of the brand or the audience you want to reach, there are nano, micro, and macro influencers who are skilled at reaching that target market and can work within your budget.”
Influencer marketing, Dayri says, will remain indispensable to most Kenyan consumers, “who will also feel the impacts of this economic instability”. The public will continue to turn to content producers they trust to seek references on where to safely put their money, he notes.
“Collaborating with key personalities to promote a brand will become even more essential, based on the trust and credibility they have,” he says.
Incremental budget cuts on marketing and advertising by brands have happened over the past year, owing to a cocktail of challenges including the war in Ukraine, rising inflation rates, tighter monetary policies, and Covid-19 outbreaks.
These challenges continue to confine economic growth both locally and globally, and have ultimately threatened the advertising industry — eating influencers’ lunch.
Decline in business
Inflation is an increase in goods’ prices, whereas recession is a steep decline in business activities. Where inflation is seen as an unavoidable reality associated with every economy, nations go out of their way to avoid a recession.
Influencer marketing loosely translates to social media marketing involving endorsements and product placement.
In Kenya today, social media sites such as Facebook, Twitter, Instagram, and TikTok are overflowing with influencer marketing content ,as tens of Kenyans eke a living off the thriving trade.
Corporate brands have reliably, over the years, relied on social media influencers such as Erick Omondi, Crazy Kennar, and Sauti Sol, as well as YouTuber Eve Mungai, to boost product sales and services.
Indeed, YouTube is now a go-to source for both influencers and businesses seeking influencer-based marketing.
There’s no clear view of how big the changes might be, or how exactly businesses will react in the long term as inflation concerns continue to threaten their survival. But Dayri says that consumers will begin to have less confidence in macro influencers, as they understand how many of them think more about the financial aspect and not the value that the brands they promote bring to the public.
“To prepare for these changes, influencers need to find ways to make their content relevant and genuine. Considering the cut in marketing budgets we could see in the next year, influencers need to be consistent and creative to be chosen to collaborate with brands in these times,” he notes.
Instagram still leads the influencer marketing space in terms of professionals using the platform, as well as the amount of budget they invest, but a lot of firms are embracing TikTok.
Influencer marketing, according to digital marketing expert Neal Schaffer, has proven to be effective.
“According to studies, it’s eleven times the return on investment (ROI), than marketing using banner ads. On average, businesses and brands earn $5.20 for every dollar they spend on influencer marketing. Because of this, 66 per cent of brands will be increasing their budgets on influencer marketing this year,” he notes.