#Sponsored - The Emergence of Influencer Marketing
#Sponsored - The Emergence of Influencer Marketing
#Sponsored - The Emergence of Influencer Marketing
5-2016
Recommended Citation
Woods, Steven, "#Sponsored: The Emergence of Influencer Marketing" (2016). University of Tennessee Honors Thesis Projects.
https://trace.tennessee.edu/utk_chanhonoproj/1976
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#Sponsored: The Emergence of Influencer Marketing
Steven Woods
University of Tennessee
2016
Abstract
As social media platforms grow and evolve, how are brands keeping up and
staying relevant? The purpose of this honors thesis is to investigate how brands are
utilizing influencer marketing on social media. To further explore this topic, thirteen in-
person qualitative interviews were conducted over the span of a week with those who
have influencer marketing experience and work in the advertising industry in New York
City, the advertising capital of the world. These participants worked at a variety of
agency sizes from small and specialized to large and international. During the 30-45
minute interviews, the discussion topics included the origin of social media influencers,
along with the benefits and risks involved in working with them. Combining the insights
from the qualitative interviews with secondary research, a better understanding of the
Introduction 4
Influencer Marketing 6
Method 9
Insights 11
Impressions/Engagement 13
Trust/Authenticity 15
Compensation/Budget 16
Risk/Creative Control 16
Disclosure 18
Discussion 20
Practical Implications 21
Conclusion 22
References 23
4
Introduction
As social media platforms expand and evolve, the advertising industry has had
to change and adapt to continue to reach consumers. The number of social media
users has sustained growth over the years with approximately two billion internet users
currently using social networks. These figures are expected to increase as mobile
device usage and mobile social networks increasingly gain traction (We Are Social
2016). According to Pew Research Center, in the U.S. 65% of all adults are active on
social networking platforms in 2015, which is up from 7% just 10 years ago as seen
below in Chart 1 (Perrin 2015). These social networks are also very popular among the
generation with the most purchasing power, millennials, with 90% of U.S. 18- to 29-
year olds being active on social media (We Are Social 2016). Not only is the audience
becoming larger in size, the time spent on social is also increasing year over year.
Chart 1
According to the Global Web Index, users are spending 1.72 hours per day on social
platforms, which makes up 28% of all online activity (Bennett 2015). While the
audience is certainly there, the power of influence is too, with 74% of consumers
relying on social media to influence their purchasing decisions (Bennett 2014). With
social media continuing to grow and having a great impact on consumers’ purchasing
decisions, advertisers have been forced to find new and unique ways of reaching
One indication that advertisers are seeing returns on investment in social media
is the fact that they are spending more on paid social every year. In 2014, $17.74
billion was spent on social media advertising, and it is projected to increase by 33.5%
to $23.68 billion in 2015 (“Social Network…” 2015). In 2017, it is projected that digital
advertising spending, which includes social, will surpass that of television for the first
With social media growing in influence and advertising agencies allocating more
strategies to get the most return on investment when it comes to social. One of these
strategies in recent years has been influencer marketing, which is a form of marketing
where the focus is placed on specific individuals rather than a target market as a
whole. It identifies the individuals that have influence over potential buyers, and orients
marketing activities around these influencers (“10 reasons…” 2015). This study is
agency perspective.
Influencer Marketing
You log onto Instagram and a celebrity confesses their love of Chipotle with a
burrito in their hand. Later you are scrolling through Twitter and one of your friends
tweets an image with their Starbucks frappuccino. Both of these are examples of
influencer marketing, the only difference being the first one is paid by advertisers and
the second isn’t. This blurring of the lines between what is a genuine endorsement and
what is a paid one through content-rich platforms is what makes influencer marketing
are much more likely to positively perceive and react to a message that comes from a
trusted friend or persona over a sponsored post that comes from a company.
family over all forms of advertising (Whitler 2014). Advertisers are trying to capitalize on
this by communicating their messaging through social media influencers, who are
trusted nearly as much as a friend. According to a joint study by Twitter and analytics
firm Annalect, 56% of users surveyed said they rely on recommendations from friends,
while 49% said they rely on influencers (Swant 2016). Taking this trusting relationship
and combining it with a large following on one or more social networks, it is no wonder
advertisers are paying these influencers to post favorably about their brand or product.
This marketing technique has taken off and become very popular in the
North America at Mindshare said, “Influencers are such an important part of what
brands are doing today. The question (from clients) isn’t, ‘We want to do something
with influencers; what do you think?’ It’s, ‘What’s the influencer strategy for this
launch at least one campaign involving an influencer in the next 12 months (“Marketers
Pair Up…” 2015). In addition to more influencer campaigns, budgets are growing for
them. Augurs’s study also found that 61% of US marketers planned to increase
results advertisers are seeing. A joint research study found that influencer marketing
has the ability to trigger 11 times more return on investment than other forms of
association exists as identified in another joint research study. In this study, around
40% of respondents said they have purchased an item online after seeing it used by an
influencer on Instagram, Twitter, Vine or YouTube. Also, 20% of respondents said they
shared something they saw from an influencer, while one-third of millennials said they
follow an influencer on Twitter or Vine (Swant 2016). This would explain why advertisers
are investing more in this type of marketing, and why those who have already
attempted an influencer campaign were happy with the results with 81% saying their
influencers for content promotion and more than half (59%) reported using influencer
marketing tactics for product launches and content creation (“Marketers Pair Up…”
2015).
finding them monetary opportunities and helping with contract negotiations. The
influencer agencies also have a relationship with the advertising agencies, where they
typically take a fee out of the influencer’s compensation for their services. The number
influencer agency acquired by Twitter, the number of influencers in the pool to choose
from has grown from 6,000 to more than 24,000 in a year (Swant 2016). This can
partially be explained by the increase in influencer marketing budgets and also the
There are potential ethical and legal implications associated with influencer
marketing. An ethical implication could be the influencer does not believe in or use the
product, but they still post a positive review because they are getting paid to do so.
This is misleading and practically lying to consumers. If not disclosed properly, the
advertiser could get into trouble with the Federal Trade Commission and the influencer
could lose credibility among their followers. In 2015, the Federal Trade Commission
published a list of endorsement guidelines for this type of advertising. If caught not
the FTC and potentially losing the trust and relationship built with consumers due to
paid endorsement by including the words or hashtags: #ad or #sponsored in the post.
There are many creative ways to disclose the paid relationship, however, these two are
With the use of influencer marketing becoming more common, more research
needs to be done to investigate beyond the quantitative benefits and examine the
designed to further explore this trend of influencer marketing among those who directly
work with influencer campaigns from the advertising agency perspective. To guide this
study and to find out more about the advertising agency use of influencers, one
Method
this study consisted of those who had experience in this area and work in the agency
setting. Based on the purpose of this study, the method of in-depth, personal interviews
was chosen to collect data. Before beginning the recruitment procedure and
interview guide was created and included questions related to the advertiser’s use of
influencer marketing in previous campaigns. Some of the key questions are listed at
participant in their workplace. The interviews took place during the span of a week in
sampling was used to determine participants based on relation to the researcher and
participants lived and worked in New York City, the advertising capital of the world.
These participants were employed by nine different advertising agencies across the
city. The agency sizes ranged from small and specialized (niche agency, non-
traditional agency, under 100 employees) to large and international (operates under
holding company, traditional agency, more than 100 employees.) A sample profile of
Consent forms were signed by participants detailing the purpose of the research and
the specifics regarding confidentiality. Along with extensive notes being taken during
each interview, the interviews were also audio recorded and transcribed to provide an
emerged.
1. “Have you included social media influencers in a social media strategy before?”
4. “What does the process look like when partnering with an influencer?”
6. “Do you make sure the influencer discloses that they received compensation for their
posts/endorsements?
1 Female 26 Large
2 Female 26 Large
3 Female 30 Small
4 Male 51 Large
5 Female 27 Large
6 Male 29 Large
7 Female 31 Small
8 Male 37 Large
9 Female 25 Large
10 Female 29 Large
11 Male 28 Large
12 Male 24 Large
13 Female 24 Large
Insights
When questioned about their experience working with social media influencers,
the participants provided unique and ample responses. Several key insights emerged
The first key insight to emerge was how influencer marketing originated. Social
media influencers are present on most social platforms, however, Instagram as a social
media channel is one of the first to come to mind when the topic is mentioned. This is
due to the visually engaging nature of the platform and the 400 million user base it has
accumulated (We Are Social 2016). Today, brands can pay to have their content
featured on Instagram in the form of sponsored posts, however, that was not always the
case. One participant disclosed the reason for why and how influencers emerged on
Instagram.
“(Working with influencers) was the main avenue before you could have
Instagram sponsored posts. This was the way brands did it to promote
themselves on Instagram, because you can only promote to your
followers and not to other people before you could pay to do so. What
people did was they worked with influencers who had like hundreds of
thousands of followers on Instagram to then seed in their content. We did
it with Instagram” (Participant #6).
Social media influencers, in part, began this way out of necessity for brands to
have a presence on these platforms. At this time, Instagram had not allowed brands to
integrate content onto the platform as to have a better user experience and build their
audience, so advertisers had to find a solution and ended up paying users with a
advertisers. One participant acknowledged the use of these companies and the
“We use a lot of influencer companies who have all these influencers as
clients, like an agent or agency. They’ll come to us and be like here’s our
top youtube influencers that we think will be great for (your brand)”
(Participant #13).
A plethora of these companies exist and a simple google search can help you
locate them. IMA, Mediakix, Evolve!, Socialyte, and Viral Nation are all examples of
influencer marketing agencies. None of the participants revealed the names of these
companies, however, the majority of them acknowledged the use of them. These
companies provide lists of influencers that might work for a brand, and the advertiser
then evaluates them individually at their discretion. If the advertiser decides they want
to partner with an influencer, they must go through this company, which represents the
influencer like a talent agency. Some brands even go so far as to have a board of
influencers that are used on a consistent basis and at the disposal of the brand as one
participant stated.
The brand this participant was referring to was one of the top advertising
spenders in the industry. For most brands, this may not be feasible to have a list of
influencers consistently on the payroll, however, this brand is spending lots of money
Impressions/Engagement
For any medium, advertisers have ways of measuring the reach and frequency
people that saw an ad and frequency is how many times they saw it. With social media,
it is no different and actually much more accurate, but instead of the terms reach and
frequency, impressions and engagement are used. Impressions are the number of
people who viewed an ad and engagement are the number of interactions with a post
such as likes or shares. Influencers can greatly increase these for a brand. One
participant said that an influencer “gets more impressions and also gets this residual
for users to follow that brand, which is how they build this residual following. Increasing
the number of followers for a brand will allow for more people to see and engage with
the brand’s content in the future. The real power of working with influencers in
advertising is to get the followers of the influencers to share and amplify the post about
“What’s really great about (influencers) is that not only do you get the
engagement from fans who are excited to see their favorite celebrity in a
post, but then you get these people with all these social media followers,
so all they have to do is retweet it. That’s where the reach comes in and
that’s why reach is so important when gaging the performance of a
campaign and seeing how many people saw it” (Participant #1).
case of social media, it is like a snowball effect. An influencer can get the ball rolling
and reach a large, engaged audience, who then shares the post with their followers
and then with their followers and on and on. This scalable reach is how something
goes viral. Virality is ideal for every advertiser, however there is no formula for this. Not
only do influencers provide an engaged audience but also a captive one. One
participant stated:
“(Influencers) are used a lot, because that’s who the consumers are
looking at” (Participant #5).
However, when the advertiser’s message comes through an influencer, it is liked and
influencer, or otherwise they wouldn’t be following them. By utilizing the influencer for
their audience and voice, an otherwise ignored advertisement can become a favorable
Trust/Authenticity
Even though a follower is aware the influencer is being compensated due to the
Federal Trade Commission requiring a disclosure in every paid post, followers still view
“I think that the way we are living in the Kardashian era where … full on
endorsement deals don’t feel as authentic. So there is like this hybrid
influencer world, where we kind of believe that they really like it and doing
it even though we know they are all getting paid, but it’s that application
into a real life that really helps put some context around products and see
how the people that we trust are using them. It’s inspirational, or that’s the
hope” (Participant #10).
A good influencer is one that has built up the trust with their audience to where a
paid product placement in a post seems authentic even though it is known they are
with their followers, influencers gain the trust and confidence of those who follow them.
The application of a product into a real life also entices followers to view the product
favorably, especially if it is used by someone they admire and trust. Celebrities are
technically influencers who have a following and are admired by society, but one
participant shared why they are not always the best advertising decision over a social
media influencer.
This sense of credibility and trust of an influencer again comes from the
application into real life. A celebrity can not provide this as they are viewed as higher
class society and therefore not as relatable as an everyday social media influencer.
Compensation/Budget
brought up the fact that influencers are paid very well and “more than you can
“You should stop what you are doing now and go be an influencer,
because we pay them so much money” (Participant #3).
During this process, a contract is formed and compensation is defined. For the
advertiser, influencers are treated as creative entities and the money for this comes
from the media budget, which is compensated by the brand. The amount of payment is
determined by the level of influence. For example, an influencer with a million followers
would be paid more than one with one hundred thousand followers. If an influencer
Risk/Creative Control
When deciding on who would make a good influencer for your brand, many
factors must be considered, but an important one is whether the influencer’s voice and
image matches up with the brand. For example, a controversial influencer may not
“Their voice needs to be the same as yours and aligned with your brand
ethos” (Participant #1)
When it comes to aligning with your brand at its core, more has to be
considered than just voice and image. The target audience must also align. A different
participant added:
“You have to look at their audience and make sure it lines up with yours,
and also how they portray themselves. What’s their brand? What’s their
voice? Make sure everything is relevant and lines up with the brand”
(Participant #5).
When partnering with any influencer, there is a certain level of risk the advertiser
is taking on, which is why the vetting process is a long one. One participant explained
why:
campaign launches is a real risk, and one that must be considered when working
them. Negative attention brought to the influencer can bring negative repercussions to
the brand that partners with them. Not only does the advertiser take on the risk of a
future negative association, the actual collaborative work with an influencer can also be
“The thing with influencers is that you lose a little bit of creative control. It
is not the same as a client that can literally tell us to move a word.
Theoretically you are tapping into these people for their expertise in
whatever they are talking about so you have to trust that they know what
they are doing and that they are going to do it right, because they have to
be true to their audience as well as true to the brand that is paying
them” (Participant #2).
This creative control is outlined in every contract formed between the influencer
and the advertiser. Giving up this creative control is what makes influencer marketing
so effective and authentic to the followers. If the message was not in their voice, the
influencer could lose credibility with their followers, which is a loss from the influencer
and advertiser standpoint with both brands losing fans. Working with well-established
influencers comes with its own challenges as well as another participant points out.
“You have to be very careful, especially with influencers who already have
a big following and who are already making a lot of money. They don’t
really need you. There’s always that agreement that they get to keep their
voice and the whole point of using influencers is to sound like its coming
from them and not the brand. It’s tricky because the brand really only gets
to make suggestions on the content and ultimately they are going to post
what they are going to post, so it’s a dance to make sure that what you
want posted gets posted” (Participant #5).
The risk is still there no matter the level of influencer. By partnering with an
when something goes wrong. To minimize a portion of this risk, some agencies have
“They can’t post anything without our approval, and by our, I mean (the
agency) and the clients” (Participant #2).
This strict approval process can have implications for both the advertiser and
influencer. The advertiser is trading off authenticity and originality in voice of the
influencer for a reduction in risk. The influencer is trading off having creative control for
a gain in risk in losing followers for not appearing genuine. The details of the approval
process are outlined in the contract signed by the two parties and varies depending on
Disclosure
advertiser’s responsibility for what others say in social media, it states that “advertisers
need to have reasonable programs in place to train and monitor members of their
network” (“The FTC’s…” 2015). In this case, their network is referring to anyone paid by
their social media campaign as part of the regular process, there is a lot of grey area
surrounding these guidelines. However, all those interviewed stated they do the best
they can to follow the FTC guidelines and be transparent when partnering with
“In all our social posts, we make sure to say “From our partner,” and so
that’s always a disclosure, because we have to comply with FTC
regulations” (Participant #3).
In many of the agencies, disclosures are handled by their legal department and
also in the influencer’s contract. Advertising Age published an article detailing the
FTC’s best practices when working with influencers. Their advice was “when in doubt,
disclose, disclose, disclose.” (Ad Age) Another participant outlined the rationale of why
“If it were ever to come out that it was advertising or was sponsored and it
wasn’t noted before, you could be facing a lot of backlash and then
potentially not only do yourself a disservice, but also do a disservice to
that (influencer). It’s definitely important, whether it is like a hashtag where
it says ad, sponsored, or in partnership with. They find a lot of different
ways to spin it so that it doesn’t seem like a commercial, but yeah it’s
really important” (Participant #5).
a $250,000 fine by the FTC and potentially the distrust from consumers for misleading
them (Rodriguez 2015). This risk of not disclosing outweigh the rewards, which is likely
why all participants stated they do their best to follow the FTC guidelines.
Discussion
The current study explored the emergence of influencer marketing from the
advertising agency perspective and several key insights were revealed after the
The origin of social media influencers was born out of the lack of an opportunity
to advertise on social platforms. Advertisers would seed in their content via influencers
so consumers would see the message and content. Influencer marketing agencies
arose out of this trend and serve as middlemen between advertising agencies and
influencers. One of the main benefits of using influencer marketing is the reach and
engagement it can garner. Influencers are “who the consumers are looking at” as one
participant said, and when they amplify a brand’s message via a virtual word of mouth,
they are able to remain a trusted and authentic source to their followers. The
application of a product into a real life entices their followers to view the product
favorably, since it is used by someone they admire, trust, and can relate to. Influencers
advertisers. They are well compensated and their fees come out of the advertiser’s
When advertising agencies are deciding who would best represent their brand,
which was inquired in question three of the interview guide, they expressed that the
most important thing they are looking for in an influencer is that their voice and image
align with the advertiser’s brand. Since these influencers are an extension of the
brand’s voice, there is risk involved in giving up creative control by using the
Commission that the consumer is aware of the paid partnership between the advertiser
and influencer. This is done in a variety of ways, most commonly by using the hashtags
#ad and #sponsored in the post. In question six of the interview guide, the participants
responded by saying they always follow the FTC guidelines. If they were caught not
disclosing and misleading consumers, both parties would suffer. The advertiser could
face a hefty fine of $250,000 and reap negative attention, and the influencer could lose
Practical Implications
The current study has practical implications. With advertising agencies increase
their spending on social, they have had to change their agency structure to keep up
and be effective. Agencies have taken different approaches to how to best accomplish
this. One method is to outsource the social component of the campaign to a social
agency. There are a multitude of these agencies born out of this social revolution, who
are dedicated to providing social-first solutions for their clients. Another approach
agencies are taking is to hire an entire social team on an individual client basis. This
team would consist of social strategists, managers, and creatives. Thirdly, agencies are
creating entire social media departments to service all their clients. In this
configuration, agencies often also have social listening departments to respond in real-
time to consumers directly on the social networks and respond quickly in an event of a
crisis. A fourth way agencies are incorporating social media is by integrating it into
their public relations offerings. Tim Hellige, partner at Bandy Carroll Hellige, said their
agency uses this method because “(social media) is strongly linked to brand
reputation. Public Relations makes the most sense” (Stines 2015). These are just four
common ways agencies can configure their social media efforts. Depending on the
their clients.
Conclusion
Influencer Marketing is a new research area that has the potential to be explored
further. Future research could examine influencer marketing across the U.S., instead of
just the use in New York City agencies, and internationally. Another possible research
direction would be to investigate the use of influencer marketing among more agency
sizes and brand sizes, whereas this study focused primarily on large agencies and
corporate brands with large advertising budgets. In addition, future research could
perspective.
popularity as more advertising dollars are allocated towards it. While working with
influencers can be a tricky process, the returns on investment are unparalleled if well
marketing to become much more prevalent in their feeds in the near future.
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