Welcome to the new website for the Your Digital Marketing Coach podcast!
Oct. 8, 2018

130: An Insider's Look at the Influencer Marketing Industry [OpenInfluence Interview]

130: An Insider's Look at the Influencer Marketing Industry [OpenInfluence Interview]

What are the biggest issues facing the influencer marketing industry today? And how can marketers best navigate the influencer landscape? Join me for an exclusive insider's look at the influencer marketing industry in this interview with Eric Dahan, CEO of the leading influencer marketing technology company OpenInfluence.

Transcript

spk_1:   0:00
What's up, Les? Go Welcome to the Maximize your social podcast. Follow me. Discover the latest social media marketing techniques from the world's leading experts from top to bottom. This is the podcast where business professionals come together to master social media without all the confusing mumbo jumbo with no further ado. Turn it out. Here's your host, the one and only Neil Shaper. Everybody, this is Neil Schaefer. And today we have a very special guest. Erica Hahn, from open influence. Those of you that know me know that open influence. I've recently co wrote a book on influence of marketing and how artificial intelligence is going to revolutionize the influence of marketing industry. And today we wanted to offer it up. E book was looking to the future. Today we want to look at influencer marketing into here and now and answer a lot of questions that a lot of you marketers asked about how to improve your influence or marketing programs. Eric, thanks for hopping on the interview today.

spk_0:   1:00
Of course. Thank you for having me.

spk_1:   1:01
All right, so we'll just get started here. We We like to make these interviews, you know, quick and painless. Instead of dragging on for an hour. We try to keep it within 15 or 20 minutes. So I thought of a few questions based on what I often get, asked Eric, and let's just go through them and see where the conversation goes. So I guess the first question is brand struggle with the marketing mix. And brands are always in this traditional world of whenever there's something new that comes around, they never invest enough in it. So let's look at, you know, compared to other marketing generals that are out there, how powerful is influencer marketing and doesn't have the potential, you know, in certain industries to be the most powerful channel for brands out of all the different ways they could spend a marketing budget?

spk_0:   1:47
Yeah, yes, influencer Marketing is an extremely powerful form, a marketing right. There's a reason why it's really organically taken off, with the early adopters being a lot of the direct to consumer e commerce brands that have built their business solely off influencers. I like to think that the ad industry really does a good job, actually, of vetting new channel, the new forms of marketing right. They start off with experimental budgets, those experimental Bunches turns, the test budgets, those test budgets for the bigger passed budgets and so on and so forth until you know, that new channel for marketing has been able to really convey that it not only has strong returns that it could generate, but also consistency and scalability. And so what we saw is a lot of the early adopters being in the commerce space in the fashion space of impulse from the marketing that built their business solely on it. You know, at a time when metrics warrants is clear or the industry wasn't as mature as it is today, they were able to roughly track what, though that lift wasn't whatever friend was because was converting into sales. You fast forward to today we have a lot more granularity and how we can measure the aspect of this oven influence your campaign. Ah, and essentially on an individual influencer.

spk_1:   3:13
So it sounds like what you're saying is we're already beyond the experiment to test the pilot. We're almost at the emergence of influence of marketing, as as a mainstream marketing channel. Correct, Because of the availability of data of past. Are y you know successful reason will have you.

spk_0:   3:33
Yeah, definitely. Right. I think you know the reasons why influence your marketing and so successful is pretty straightforward. You know, there's so much information out there. There's so many ads out there, we're being bombarded by ads. Wherever we go, right, we go to a website. There are a whole series of banner ads and click ads that we run into, you know, even for New York City riding the subway, their ads everywhere they're billboards everywhere. So we've been really good at tuning out advertisements on So it makes sense that when you have an influencer that you already following already consuming the cause that they create when they, you know, integrate, uh, a piece of branded content with with their with their normal content scream, it just resonates a lot better, right? It has the social validation. Uh, the confidence is integrated as much higher quality than just a normal ad. And so you see it converting a lot higher, right? And it breads understood the theory. That was the thesis that, uh, the industry's really testing out. And brands now have proven that peace is through essentially this trial by fire going through all the different tests faces. So I'd say now influence marketing has really become a lion and budget of virtually all advertisers. Some they can't, you know, corn front and center for their business. I was just having it being a key part of the marketing mix.

spk_1:   5:01
Awesome. So that's all really sets the stage, I think, for the remaining question. So you know, we can assume that everybody listen to this already has an influence of marking program or has already invested an influence of marketing because that's what the data is showing us. So the next question comes, uh, you know often about the types of influences that brand should be investigating or working with or lying. So, you know, you have a lot of different terminology. You have micro influences. You have the power middle. You have celebrities. You know, when you work with a brand, how do you sort of help them define what type of influence, or in terms of their following that they should be working with? Or do you have a completely different approach to answering that question?

spk_0:   5:47
Yeah, yeah, I mean, at the end of the of the day, you know, there's no one size fits all strategy, right? For a very simple level, you have three components, right? Give the message, the messenger and the audience and all those three things have to be aligned to have something really resonate are and be effective. And so first you know the first step is we understanding with the brand? What are they trying to say? And who are they trying to reach? Right. So what's the message and who's the audience? And then from there it comes up to selecting the right messenger, being the influence or deliver that message, and so it could range right? And it depends on the goals as well. So so picking the right type of messenger depends on what exactly is being communicated, of course again, back to God inside. But then, in terms of size of the influence, or whether we're talking, you know, more of a social celebrity what we call a short tell influencer or a micro influence, or what we call long tail influencer. That really depends on the more specific A ll, and to give you an example, you'll work with social celebrity if you're really looking to build some fast, eh? Have someone, uh, that could really be an ambassador or face of the brand. Theis issue is with that it's expensive and results for risk. Tiger Brandt of Brand Ambassador. We've seen countless times brands and have partnered with celebrities for endorsements on Lee. Have the celebrity have some sort of scandal that blew back on the brand on the micro influencer side? You know, micro influencers are really touted as being, uh, you know, some of the most effective, which there's a lot of truth and that right there, engagement rates are higher. They have a paper core audience. They're you know, they're less expensive to work with on a cost per post basis. The issue that that most people don't understand that are new to the industry is there's a certain amount of war on to engage with those kind of influencers and typically allowed that work is on the brand side with them just approving those influencers or communicating or liaising with those influencers or contract and then enforcing quality control all the different things, ah, lot of which can be automated, a lot of which cannot, and so sometimes, depending on your strategy. And depending on what you're trying, you're trying to create the juices and with squeeze working micro influencers, you actually end up paying a lot more on a cost per view basis on a concert engagement basis. So that's we tend to see in our industry the sweet spot really being in the detail. And that tends to be sort of the, you know, sort of ah, standard for a lot of brands made. Taylor are influencers, you know, that are necessary social celebrities, but you know, have outgrown being a micro insults. Or so your cost for measures again are much better. I can't really give exact range is because it's different for industry. But, you know, a kind of rule of thumb ballpark for mid Phyllis once would be anyone with 50,000 to 500,000 followers on their finery platform.

spk_1:   9:03
Gotcha. So So if you're asking what type of influence you should be engaging with, you really need to start back with that strategy, I think, is the main message that is so true. You know, marketers want to look for short bus on the formulas right on with recommend influences, as you know, best you really need this holistic approach, Correct?

spk_0:   9:22
Yeah, absolutely. And the example would be like, let's talk about an automotive brand, right? There's no such thing as that are really a quote unquote automotive influencer. I mean, yesterday, Flusser talk about cars. But realistically, if your car bread, But the way you're going to market your pickup trucks are completely different than the way you're gonna market your minivans, right? And so if you think about it from that context, the influence percent is gonna be completely different. The social platforms we're gonna work on are gonna be completely different. And so you really want to figure out again, Who's the audience? What are you trying to communicate? And then the messenger comes last.

spk_1:   9:59
Awesome advice. Thank you very much. Let's, uh, let's move on to the next question. So I think we've already seen potential for the mistakes that ranch make when engaging with influencers or when creating or managing influencer marketing campaigns. In your opinion, you know, with open influence, you have worked with countless numbers of brands and influencers and engage with campaigns. What is So did the low hanging fruit that you've seen that you think Rance can immediately improve upon.

spk_0:   10:29
Yeah. I mean, one of the most of the most common mistakes brands, May and the sad. The advertisers have actually picked up on this, which is good, but they focus more on talents and names rather than metrics. Right? So a lot of decision making is still very subjective. I follow these influences personally. I want to work with him. Brother says, hey, which influenced her base of their metrics, is gonna perform the best for my brand. Which influencer is gonna have the best measure from a cost per standpoint or conversion stand feeling for my audience. And so a lot of marketers, unfortunately, are focusing on the wrong things. In some cases. Another mistake brands and marketers make they think influencers are, You know, they treat him like programmatic, add units or, you know, a little bit better sometimes, like uber drivers, right? They arranged. Okay, I'll engage with this influencer. They'll pick me up at point A will take me to point the no problem whatsoever. It doesn't work like that, right? It's not a utilitarian product like going, you know, 10 blocks away, maneuver, right. It's this trunk and being created influences our personalities. There are a lot of moving parts, but there's subjectivity always when it comes to confident there. And so if you don't plan, it's one those things. If you If you don't plan for those aspects of the process, you find yourself, you know, essentially doing 10 times the work because you're back, you're backtracking and you're redoing your reshooting. And so a big part of what we do is we know that these were part of the process. We know that there's a part of that we can't fully automate. What we do is we build it in so that we're able to really account for it throughout. So, for example, constant approval is something that you don't want to necessarily do in an automated fashion. But we make sure it's easy because impulses could have blood multiple pieces content according to the breeze, and were then able to go through and finally able to go through improve that swans and even comment further on the ones that they approved to make the last minute tweaks and adjustments, whether it's the text or to the image or video itself. And so these are the sort of things that are Keith. Another, more concrete example there is that they were doing an ad for under Armour and the influencers drinking a Starbucks right? We don't want the focus on that piece of content to be on the Starbucks Cup. We want to be on the under armour floating, and so our team will go through an airbrush out to start off slow go. And unfortunately for Starbucks, I think we've actually removed more Starbucks as that we've created ah over the course of our five year.

spk_1:   13:22
Yeah, I'm so glad you brought up that treating influencers as as, you know, add units, because I see a lot of that from the other end of brand saying, You know we want you to pose. It has been instagram story only three frames. You must look at this product in this store, but feel free to be creative. It's it's funny, the boundaries that ran foot on influencers and trying to treat them as add units. As you say, so thanks for bringing that up. It's it's really plenty, actually. Sometimes on this show you've seen some funny ones as well. Oh, definitely. All right. So let's look at another thing that, um that I know that you have a very, very strong opinion on which our influence of marketplaces. So in front of market places, if you do a search for influencer marketing on Google, you're bound to run into these marketplaces, and sometimes they look like they're tools, but they're really tools access the marketplace. Other times they're just pure marketplaces, meaning that they offer a database of influencers and allow you to contact them and what have you. And it's really funny because a lot of them re sheltered me as well. And when you enter yourself as an influence in these marketplaces, they're basically saying, Hey, give us a bio. Let us, you know, authorize your accounts. But categorize yourself. Sometimes they give you like a maximum of five categories because I do more of you to be influenced. Marketing. I rarely see like a business category, right? It's always like technology, your news. But why do you think they do that, Eric, and is it the best practice? And really, you know, what is your advice for brands that are still spending a lot on influence? The marketplaces, when they may be missing out on the bigger picture because of the way that they work.

spk_0:   15:03
Yeah, Yeah, I'm actually not a fan of the influence for marketplace model. A lot of these companies treat it like, you know, influence your displays of prize brands Go on, searched categories, select the influence or engage. I don't think that model generates a lot of value for advertisers. Uh, the reason why my co founders and I, we have a background in economics and so, you know, believe me when I say we love nothing more than dynamic marketplaces and being able to extract efficiencies with transparency, the issue we found with a lot of these marketplaces is influence or pricings all over the map. It really builds out an incentive scheme. And and it allows for influencers to overcharge customers and over anchor pricing rather than putting the power on the demand side, which is the advertiser side to help Dr Pricing down. And so, you know, I think the right approach is identifying the right influencers and then shopping from those influencers, having them compete against one another for opportunities. And that's a really good forcing function for driving, you know, costs down and value up. But the other issue that that I have with a lot of those companies and I like to sit by virtually every other company in this space is Howard categorizing Howard. So one of the challenges we saw early on, we did what? You know what everyone else started doing. And we're early to the industry, so we're able to to see the downsides of first. But we've categorized influencers in these really predefined verticals, right? And so you know, you bucket the influencers and other beauty or fashion or automotive or business, or what not and you know, that's fine if you have a very finite set of influencers. But once, once we started scaling, we encountered a ton of issues. One was there was a lot of subjectivity. You know, if we were categorized in the influences internally, the different people would categorise different people on our side would categorize the same influence or differently. Right? So you know, you have blogged. You're a business author, right? You millions. Your own areas of focus within that right business. A very broad category. But like, you know, you might also have a pet. You might also be into fitness, right? You're playing, You play soccer, you play other sports. And so, you know, depending on the most recent content, that how Coordinator was looking out of yours, they might categorize you differently. So it's not that black or white in terms of what you fall into. And so that's a big challenge. It's just a subjective your categorizing yourselves, right? Well yourself. What we saw it's up a lot of influencers. When we gave him categories. Every single influencer was Ah, hi. Luxury influencer. Alright, Right. And every influencer was a fitness influencer of food influencer Muslim had pesto their pet influencers And like no Nell, you know s Oh, there's a lot of bias that yes, there are ways to tweak for that and for sort of narrow it down, But it's overall pretty sloppy in your category business, business, community, 1000 different things in an extremely broad category. And so I'm looking for someone who's an expert in social media and influencer marketing. If I'm looking through business for that, well, there's gonna be a lot of noise before I find, you know, right then I'm gonna probably have to come through, you know, 15,000 other profiles and most of which are relevant. And I still don't get a good sense for who they are. And and and a lot of those platforms have a rolling ex approach, which is like, Hey, here's here's the influencer. Here's a headshot and hear some basic stats, so you will thank you, but I can't do anything with this information as a marketer. Um, and so the approach we've taken is we removed all the subjectivity in the bias. We removal the noise, and rather than going after these categories that are very arbitrary, really don't know anything, we look at individual keywords. We analyze each piece of content that you create so that we can say, OK, I want to find an influencer marketing expert and I could run a search and have you pop up top of that list because you're extremely relevant to that category,

spk_1:   19:33
right? So you know, in all fairness, I obviously worked with a lot of different companies, and I know a lot of market places that are out there on some of the CEOs of them, and they also have very successful case studies of how their clients generated are wise. So I suppose that for those brands that have only worked with marketplaces uh, well, they might have had successes. They should definitely be looking at it the other way of working with an open influence to see what the differences in our ally might be. And and they might be surprised by that

spk_0:   20:04
crack. Yeah. I mean, correct. Yeah. And not not to shoot down the market place while through much. I mean, there are companies that are able to perform and do well and compensate for it. But, you know, we started as a marketplace as well very early on. Then we've evolved it because they're definitely inherent shortcomings into the model, right? And so a lot of market places have their way of retrofitting and overcoming it and, of course, their ways to generate our ally. But we really believe that in the direction things were going, um, you know, we wouldn't be doing our job if we weren't thinking 10 steps ahead of where the industry's going and holding ourselves to a higher standard than then the markets will be ourselves to

spk_1:   20:46
gotcha. Great. And, uh, who knows? Maybe we'll have a rebuttal of broadcast after this one, but it's definitely food for thought. And obviously, like I said, there's just a lot of noise in the market I think I had on. You'll see. Hopefully you've already downloaded and read how a eyes revolutionary revolutionized influence of marketing and you'll begin to, uh, fully understand what Eric was talking about here. So I wanted to finish this with one final question. You know, we've talked, and when we talked about in the creation of me but destruction between supply and demand, you mentioned how you're all have economist backgrounds and we talk about market places. So with this friction of supply and demand, um, you know, what do marketers need to know about it, and where should they be focusing their efforts going forward.

spk_0:   21:30
So, like any industry, like any business, you have supply and demand that are the driving forces. Uh, you know, that determined price saying that determined market dynamics. Historically, the talent business has been a supply side griffin business, which means the talent has been the customer of the main customer and has been with the one holding a lot of power. And what does that look like? that looks like a handful of town agency's representing all the celebrities out there, right? So if you wanna work was the top to your talent. You go through town agency and there's nothing wrong with talent agencies right there. Model is excellent for how they represent you're dealing with, you know, a top level celebrity you in. You are top level celebrity. You want to make sure you haven't Egypt that's there for you and a manager. If they're for you looking after your best interests because there's just so many brands of some of the opportunities that you can take, you need someone who could manage that and for chair of the right business for you. But in today's world, with the emergence of social media with emergence of mobile natives, social platforms, you open the door to you from a handful of celebrities to now hundreds of thousands and millions of people becoming, you know, influencers. Um, so what does that mean? You have the huge increase in supply and those influencers, you know, our big enough perhaps have a dedicated agent for manager, and so you know it's allowed for a shift that happen to the demand side being, you know, uh, the advertiser, right? The advertiser is the one of the budget. The advertiser now has the ability to really more so dictate what what it is they want. And so that shift in supply and demand are from being weighted heavily on this place. Up to the demand side has allowed for Ah, changing model has allowed for ah, shift from, you know, for the bulk of influences from being from Ah ah, you know, a management and representation business to, uh, you know, more of a media buying business, right? And such is also a lot for a big shift, selling away from cachet to selling against metrics. So on buying against natural. So what I mean by that is you're not going out of procuring a talent because there's some big name right. The old with PR companies working with with celebrities is did purely do it based on to that celebrity watts, right? You're gonna work with George Clooney because he's famous throughout. You don't need to look at his staff's, you know who would have stopped for, like, you know, he's a household name and your passports of Dave's World There's so many influences out there, you don't really. You're not really looking at who the individual names are. There's so much interchangeability. You're looking at the metrics, right? And so because there's so much interchangeability, you as an advertiser have a lot more choice of who you can work with. You're not stuck to working with one or a handful of influencers for your brand. You now have hundreds of thousands that you can possibly engage with any given time. And so that's, you know, that was really sort of driving force. And the reason why influencer marketing emerged now rather than you know, 10 years ago, 15 years ago.

spk_1:   24:48
So really, I don't want to use the word or or stay that influences are becoming like commodities. But as that supply grows and you mentioned the interchangeability, the only way to choose going forward really is based on that data, right? Yeah,

spk_0:   25:02
it's based on the data, and the difference is, you know, it's it's not. It's not commoditized. I mean, literally, like you would like in a programmatic had unit right senses it. There's no riel cept price, right? It's not like it's not like you're buying or selling gold on an exchange. Right Are on a marketplace where you know there's a clear market that set for it. And so influence surprising really fluctuates, right? An influencer to drastically change their price depending on other opportunities they have depending on the relationship they have with you, depending on, um, you know, what are the terms that you're asking for? And so there are all these different variables that really affect and influence prices influences our people, and for them, they don't really have a high cost structure, Right? They have their costume essentially their living expenses, but they don't have any. Kostya gets old associate with what they're selling. They could be flexible. Our cost structure, their inventory is not, you know, is not completely specifically limited right to certain number. They can do more or less as they please. So there are a lot of aspects, really keep it from being treated for Kamar standpoint, do their aspect actually important that this industry is, you know, in ad isn't in that influence. The sponsorship isn't an influencer sponsorship. You're not playing paying for placement. You're paying for content creation and and placed on her and distribution. And so it's not like you're saying I'm uploading this piece of creative that already have go places across a bunch of different channels on that your performance. There's a real qualitative aspects for the content being created, and so there's a lot of uniqueness with everything being done. But at the same time, you could boil everything down on a macro scale, too. The metrics and thio, you know, on the subject of the market forces at the end of the day,

spk_1:   26:57
right? That's really great advice. Hopefully, as you're listening to this, it's really a sort of expanding your horizons and made you think a little bit differently about influence marketing. And obviously, as your budget grow, that's where we're gonna see significant impact by following all the advice that that Eric has given us. Compared to the old ways of doing influence market. Erica, I know we're short on time today. I want to thank you for your time. Any final notes, air final advice for our listeners

spk_0:   27:23
know, But I guess they could reach out to us and we'll be happy to answer any questions.

spk_1:   27:27
Yeah. Awesome. Yeah. Open influence. Their global company. They have offices all over the world. They're great people. I love working with them. I have the recommend you recounted them. You're looking to take your influence marketing to the next level, or even if you just want to do a reset on your entire program, built their great resource. So Eric wants can take your time, everybody. I hope you enjoy the show and stay tuned for the next show after this line where we are in the world. Thanks for listening to the Maximize our social podcast. Make sure don't forget to subscribe. Rate the show on iTunes so others can enjoy it to someone to continue the conversation and empower your business. Your social media Visit meals paper dot com Right now. Have a great week. Let's go. We'll see you on the next episode.