Business The Economist April 2nd 2022 51

The future of marketing from the National Bureau of Statistics in

China, where influencers gained promi-
The rise of the influencer economy nence earlier than in the West, estimated
its contribution to the economy at $210bn,
equivalent to 1.4% of gdp. As with many
things digital, the pandemic seems to have
given it a fillip, as more people were glued
to their smartphones more of the time.
PARIS
EMarketer, a firm of analysts, estimates
The business of influencing is not frivolous. It’s serious
that 75% of American marketers will spend

L uxury brands used to speak in mono-

logues. News about their latest collec-
tions flowed one way—from the board-
bling by 2025, according to Bain, a consul-
tancy. And for regulators, they are the sub-
ject of ever closer scrutiny. On March 29th
money on influencers in 2022, up from
65% in 2020 (see chart on next page).
Brands’ global spending on influencers
room, via billboards and editorial spreads news reports surfaced that China’s pater- may reach $16bn this year, more than one
in glossy magazines, to the buyer. In the nalistic authorities are planning new curbs in ten ad dollars spent on social media. Re-
age of social media, the buyers are talking on how much money internet users can search and Markets, another analysis firm,
back. One group, in particular, is getting spend on tipping their favourite influenc- reckons that in 2021 the middlemen made
through to fashion bosses: influencers. ers, how much those influencers can earn $10bn in revenues globally, and could be
These individuals have won large follow- from fans, and what they are allowed to making $85bn by 2028. The ranks of firms
ings by reviewing, advertising and occa- post. Taken together, all this makes them offering influencer-related services rose
sionally panning an assortment of wares. impossible to ignore. by a quarter last year, to nearly 19,000.
Their fame stems not from non-digital Few reliable estimates exist of the size The influencer ecosystem is challeng-
pursuits, as was the case with the a-list of the influencer industry. One in 2020 ing the time-honoured tenets of luxury-
stars who used to dominate the ranks of brand management. Apart from being one-
brand ambassadors, but from savvy use of directional, campaigns have tended to be
→ Also in this section
Instagram, Snapchat or TikTok. Their posts standardised, unchanging and expensive.
seem frivolous. Their business isn’t. 52 App-store wars An exclusive group of white actresses with
For consumers, influencers are at once the right cheekbones was supposed to sig-
53 Shanghai shuts down
a walking advert and a trusted friend. For nal consistency, as well as opulence. The
intermediaries that sit between them and 54 Outsourcing 2.0 same smile from the same photograph of
brands, they are a hot commodity. For the the same Hollywood star would entice
55 Bartleby: Managerial trolleyology
brands’ corporate owners, they are becom- passers-by to purchase an item for many
ing a conduit to millennial and Gen-z con- 56 Vietnam Inc goes global years. Julia Roberts and Natalie Portman
sumers, who will be responsible for 70% of have been the faces of Lancôme’s bestsell-
58 Schumpeter: Of war and wokery
the $350bn or so in global spending on ing La Vie est Belle perfume and Miss Dior,
52 Business The Economist April 2nd 2022

brands to control than one or two super-

Growing influence stars on exclusive contracts with good-be-
United States, marketers* using influencer marketing haviour clauses. Though influencers’ shor-
ter contracts make them easier to replace
% of total marketers By social-media platform, % should they step out of line, untoward an-
100 100 tics can be costly. Before the latest clamp-
FORECAST FORECAST down Chinese authorities had already
80 Instagram 80 forced 20,000 influencer accounts to be
60 Facebook 60
taken down last year on grounds of “pollut-
TikTok ing the internet environment”. Luxury
40 YouTube 40 brands are reportedly cutting their influ-
Twitter
encer spending in China in response. Reg-
20 20
Snapchat ulators around the world, as well as some
0 0 social-media platforms, are beginning to
2020 21 22 23 24 25 2020 21 22 23 24 25
clamp down on influencers who do not tag
Source: eMarketer *Companies with 100 employees or more
their content as advertorials.
Such worries explain why some luxury
houses are leery of influencers. Hermès,
respectively, for a decade. Stars and brands colour grading—“Not to mention the light- the French purveyor of scarves and Birkin
alike are tight-lipped about how much ing.” Ms Aina’s 30-second lifestyle TikToks bags, maintains a social-media presence
money changes hands, but the figures are can take hours each to make. that is conspicuously influencer-free. But
believed to be in the millions of dollars. This production value, combined with more feel the benefits outweigh the costs.
One report put the amount spent by lvmh access to the influencers’ audiences, trans- Despite Louis Vuitton’s and Gucci’s live-
on the entire Miss Dior campaign at “under lates into value for the brands. Gauging streaming flops, lvmh and Kering, the
$100m” in the past year. how much value, precisely, is an inexact brands’ respective owners, continue to rely
Such star-led campaigns can feel aloof science. Launchmetrics, an analytics firm, on influencers to create social-media mo-
to teenagers and 20-somethings who prize tries to capture it by tracing a campaign’s mentum. To be a top-ten brand, says Flavio
authenticity over timeless glamour. And visibility across print and online plat- Cereda-Parini of Jefferies, an investment
influencers, with their girl- or boy-next- forms. The resulting “media impact value” bank, you have to know how to play the
door charm, offer this in spades—for a (miv) reflects how much a brand would digital game. If you don’t, “you are not go-
fraction of the fee of a big-name star. The need to spend to gain a given degree of ex- ing to be top ten for very long.” 
best ones are able to repackage a brand’s posure—itself indicative of the expected
message in a way that is harmonious with return from a marketing drive. On this
their voice, their followers’ tastes and their measure, which brands use to see how they App store fees
platform of choice (Instagram is best for stack up against rivals, the three-day wed-
all-stars with over 2m followers and Tik- ding of Chiara Ferragni, an Italian with Store wars
Tok for niche “micro-influencers” with up 27m Instagram followers, a fondness for
to 100,000 followers and “nano-influenc- pink and a Harvard Business School case
ers” with fewer than 10,000). study, generated a total of $36m in miv for
Influencers are particularly adept at brands including Dior, Prada, Lancôme
navigating social-media platforms’ con- and Alberta Ferretti, which made the
Laws and litigation threaten a big
stantly evolving algorithms and features. bridesmaids’ gowns. That compares with
source of Apple’s and Google’s profits
For example, when Instagram’s algorithm $25m for the more conventional—and al-
seemed to begin favouring short videos
(“reels”) over still images, so did many in-
fluencers. As social-media apps introduce
most certainly pricier—video campaign
for Louis Vuitton’s autumn/winter 2021
collection for which the fashion house en-
W hat does it take to rein in two of the
biggest companies on the planet? A
coalition of Swedish music-streamers,
shopping features, influencers are com- listed bts, a hit South Korean pop group. South Korean politicians and Dutch dating
bining entertainment and direct sales- As well as new opportunities, influenc- apps, apparently. They seem to be succeed-
manship. Such “social commerce” is huge ers present new risks, especially for brands ing where America’s federal government
in China, where it was invented. In October whose luxury identities rely on price disci- has failed: to force changes to the way
2021 Li Jiaqi, better known as Lipstick King, pline and exclusivity. Influencer-led live- Apple and Google run their app stores.
notched up nearly 250m views during a 12- streamed shopping events in China by The app stores are big businesses, with
hour streaming session in which he ped- Louis Vuitton and Gucci were ridiculed for combined sales last year of $133bn, three
dled everything from lotions to earphones cheapening their brand. And full-time in- times the total five years earlier (see chart
ahead of Singles’ Day, that country’s annu- fluencers’ large teams can run up quite a on next page). Apple and Google take a cut
al shopping extravaganza. He and Viya, a tab. Adam Knight, co-founder of tong Glo- of up to 30%, which is thought to contrib-
fellow influencer, flogged $3bn-worth of bal, a marketing agency with offices in ute a fifth of the operating profits at Apple
goods in a day, half as much again as London and Shanghai, notes how Lipstick and Alphabet, Google’s parent company.
changes hands daily on Amazon. King’s live-streaming success has fuelled The 30% levy began in Apple’s iTunes mu-
Many influencers manage their pro- demand for his services among brands— sic store and was copied to its iPhone app
duction in ways that traditional ambassa- but also his own kingly demands. Mr Li’s store, launched in 2008. As people came to
dors never could. They are video editors, fees, commissions and exclusive perks use their phones for gaming, streaming
scriptwriters, lighting specialists, direc- only pay for themselves if the event is a and much else, it evolved into a tax on digi-
tors and the main talent wrapped into one. smash hit. Otherwise, Mr Knight says, the tal activity. Sign up to a service like Disney+
Jackie Aina, whose beauty tips attract over client’s profit “just completely erodes”. on your phone and Apple or Google get a
7m followers across several platforms, ex- There are more indirect costs to consid- cut of your subscription for ever. Apps
plains the importance of high-quality er, too. A host of younger and more unpre- have had to use the tech duo’s payment
equipment that can show texture, accurate dictable brand ambassadors is harder for systems, and could not tell users about