During the last few years, the influencer marketing industry has exploded. Between 2015 and 2018, the number of influencer marketing platforms and agencies jumped from 190 to 740, according to a 2019 report published by Influencer Marketing Hub.
At least once a week, reps from influencer marketing agencies pitch me via LinkedIn and email. Their queries often boast a unique value proposition such as “access to a larger pool of Canadian influencers.” After all, they need to differentiate themselves from the increasingly fierce competition.
In the middle of 2018, we hired an influencer agency. As a rapidly growing direct-to-consumer e-commerce brand with Insta-worthy personal care products, investing in influencers seemed like a strategy that would be guaranteed to succeed.
For most of the first year after we hired the agency, our marketing team agreed it was performing well and delivering results. Our Instagram followers increased from around 10,000 to more than 50,000 — an impressive figure for an early-stage startup.
The agency did the majority of the work when it came to finding the influencers, establishing contracts, maintaining relationships and ensuring they promoted our brand. But we found ourselves committing a lot of time to the logistics, from metrics reporting to shipping products to influencers.
It eventually became difficult to justify the budget we were dedicating. About two months ago, we bid farewell to the influencer agency. Then we hired a full-time in-house influencer marketing manager. We still believe influencer marketing is an essential strategy, but we want to try a different approach.
Like hiring influencer agencies, bringing the operation in-house is also a burgeoning trend. Each of these approaches has its benefits and challenges for a company. Based on our experience working with an influencer agency, there are a few things every team should consider to ensure the investment is worthwhile for your budget and brand.
For us, every week our developer spent hours helping the agency track and report metrics, such as clicks on coupon codes. Because the influencers often misused these coupon codes, we would occasionally see customers ordering hundreds of dollars worth of products for free or only a fraction of the normal price.
Furthermore, our customer support and operations teams dedicated a chunk of their workweek to shipping boxes to influencers. And of the hundreds of influencers we paid or shipped free products to, only a fraction of them regularly converted people to paying customers.
Until a few months ago, we didn’t consider all of this labor when auditing the cost of influencer marketing. We should have included this factor from the beginning. People’s time is valuable, perhaps more so than the products we were gifting.
To determine the true cost of hiring an influencer marketing agency, ask your employees how many hours a month they spend on influencer-related work. Tally up the money based on their hourly rates or estimates based on salary. Then add that amount to the retainer you’re paying to the influencer agency. Remember to count meetings and calls.
Even the best influencer agencies will most likely not do all the work for you. In terms of customer acquisition, I’ve found that influencer marketing does not provide as much measurable return on investment as advertising and content.
It depends on what metrics are valuable to you and how much you’re willing to pay for those results. Contracting an influencer agency makes sense if you are looking to gain earned media, social media followers, brand awareness, etc.
During the launch of our menstrual care products, for example, having an influencer agency was invaluable. The goal was to reach as many people as possible and create a lot of buzz, and the agency delivered. Our Instagram grew even faster than usual, and mentions of our brand increased exponentionally.
Before you sign with an influencer agency, agree on these types of goals, but be more specific than we were. Can the agency give you one million Instagram impressions a month? Would that result benefit your business, even if you couldn’t directly connect the figure to customer acquisition?
Make sure to press the agency on exactly what goes into executing influencer campaigns. Who sends the boxes? Who tracks the codes? Is it the agency’s team or your team?
Agencies do have advantages compared to bringing someone in-house. With an agency, you’re benefiting from the collective contacts and experiences of many people, as opposed to one employee. I’d imagine that most agencies would be able to generate way more earned media than a single full-time influencer marketing manager.
For cost-effective customer acquisition, an in-house approach might be a better solution for some brands as it was for ours. Ultimately, before choosing to work with an agency or hire an in-house team member, it’s critical to identify your influencer marketing goals and expectations to make sure the direction you choose has the most potential for success.