Influencers often have a reputation for flexing their lavish lifestyles. Although aspirational posts are the bread and butter of content creators, this can be viewed as insensitive and tone-deaf at a time of rising costs of living.
However, perhaps surprisingly for some, influencers are also currently facing uncertain economic times. Indeed, with the current economic downturn, it is projected that marketing budgets in the UK will be cut to account for stalling consumer spending.
To better understand how this concretely impacts content creators, HypeAuditor conducted a survey last month among 141 influencers based in the US and UK. The findings revealed that from cancelled campaigns to late payments, influencers feel the hit as brands rethink spending due to the economic downturn.
Despite the current need for brands to withdraw partnerships with influencers, marketers should not forget the importance of effectively managing their relationships with them to ensure future successful partnerships when the economy recovers. In addition, influencer marketing remains one of the most efficient tools to connect authentically with audiences – something that matters even more currently.
The future of influencers: finances and concerns
The economic downturn is affecting the relationship between brands and influencers. According to our survey, since March 2022, 36.7% of UK-based influencers reported that they have been asked to lower rates. This is compared to 22.2% of US-based influencers. Furthermore, 14 reported a staggering 30% or more reduction in fees for influencers who had lowered rates, while 36 said the drop was between 5-20%.
In addition to having campaigns cancelled by brands, influencers surveyed reported the lack of work available, or brands pushing for gifted partnerships only and lower budgets for campaigns.
Besides the relational impact on brand partnerships, it is also more difficult for influencers to market to their audience, who are tightening their belts. Indeed, according to recent findings, almost half of consumers in the UK are buying less clothing and shoes, while over two-fifths are buying fewer electronics. Instead, over a third (37%) of low and middle-income consumers are now only buying essential items.
As consumers are re-evaluating their purchases; influencers will likely face a lower engagement rate on products or activities viewed as less essential. This may force some content creators to rethink what they post and how they communicate with their audience, forcing them to adapt to what their followers are now expecting, to ensure they don’t appear tone-deaf.
Ultimately this impacts the way influencers view the future of their career. In our survey, most influencers reported having a second source of income and 27 out of 141 surveyed have diversified or are in the process of diversifying their income.
Authentic marketing cannot be replaced
However, despite these challenges, influencer marketing remains an effective tool for brands. Influencer marketing is shown to be just as effective as TV advertising regarding brand recall. Research on campaign engagement in 750 UK adults found that 12% recognised the test advertiser in ads compared to 13 per cent via influencer marketing.
The advantage of influencer marketing is that it is unique and personalised. It is the most authentic connection between brands and their audiences. Audiences have chosen to follow the talent; therefore, they are more likely to be drawn to this form of marketing.
Despite general cynicism and controversial reputation around influencers endorsing a product or service, audiences still value influencer marketing due to its authenticity. With the current economic hardship, consumers may in fact be more likely to welcome aspirational posts for temporary escapism offering an excellent opportunity for brands to connect with their audiences.
Brands should also be mindful of their relationship with influencers, especially if they hope to resume their partnerships with them in the future. Cancelled campaigns or delayed payments have concrete impacts on influencers’ financial well-being, especially nano-influencers who rely heavily on deals to support themselves financially.
Let’s not forget that the pay standard for influencers has been an ongoing issue in the UK. The digital, culture, media and sport committee made it clear in the past that payment from brands “varies wildly”. This also echoed reports from the Competition and Markets Authority (CMA) which highlighted that influencer compliance rates with UK advertising regulations are still unacceptably low. In the current economic slowdown, brands should ensure they act as trusted partners for influencers.
Despite the current challenges, marketers need to remember the value of influencer marketing. Its effectiveness is based on its uniqueness and authenticity – something which other forms of marketing lack. They also must be mindful of their relationship with influencers and should avoid severing relationships with them, to ensure they can continue to rely on effective partnerships when the economy recovers.