The influencer economy is on the edge amid fears of a recession

By Steve UMIDHA

The looming threat of a recession could drive social media influencers or marketers out of business, as plenty of companies continue to slash their marketing budgets.

Experts are, however, predicting that brands will still rely on influencer marketing – albeit abstemiously as they seek the right balance to weather an anticipated advertising downturn while keeping their businesses profitable.

“In tough economic times, you don’t want to make any mistakes when selecting the influencers you work with,” offers Assil Dayri – the CEO of the AMD Consulting group.

Adding, “One of the great advantages of working with influencers is that regardless of the size of the brand or the audience you want to reach, there are nano, micro, or macro influencers who are skilled at reaching that target market and can work within your budget.”

Influencer marketing, Dayri says, will remain indispensable for most Kenyan consumers, “who will also feel the impacts of this economic instability,” and the public will continue to turn to content producers they trust to seek references on where to safely put their money.

“Collaborating with key personalities to promote the brand will become even more essential based on the trust and credibility they have,” he says.

The incremental budget cuts on marketing and advertising by brands have happened over the past year owing to a cocktail of challenges including the war in Ukraine, rising inflation rates, tighter monetary policies, and Covid-19 outbreaks which continue to confine economic growth both locally and globally and have ultimately threaten the advertising industry – eating into influencers’ lunch.

Indeed, Kenya’s annual inflation rate has accelerated over the past months hitting 9.6 percent in October from 9.2 percent in September and above market forecasts of 9.5 percent. It was the steepest inflation rate in May 2017, breaching the upper limit of the central bank’s target range of 2.5 percent-7.5 percent for the fifth month.

Inflation is the increase in goods prices, whereas recession is a steep decline in business activities. Where inflation is seen as an unavoidable reality associated with every economy, nations go out of their way to avoid a recession.

Influencer marketing loosely translates to social media marketing involving endorsements and product placement from influencers.

In Kenya today, social media sites such as Facebook, Twitter, Instagram, and TikTok are overflowing with influencer marketing content with tens of Kenyans eking out a living off the thriving trade.

Corporate brands have reliably over the years relied on social media influencers such as Erick Omondi, Crazy Kennar, and Sauti Sol among others as well as YouTuber Eve Mungai to boost product sales and services with YouTube now a go-to source for both influencers and businesses seeking influencer-based marketing.

While there’s no clear view of how big the changes might be or how exactly businesses will react in the long term as inflation concerns continue to threaten their survival, Dayri says that consumers will begin to have less confidence in macro influencers, as they understand how many of them think more about the financial aspect and not the value that the brands they promote bring to the public.

“To prepare for these changes, influencers need to find ways to make their content relevant and genuine. Considering the cut in marketing budgets we could see in the next year; Influencers need to be consistent and creative to be chosen to collaborate with brands in these uncertain times,” he notes.

Instagram still leads the influencer marketing space in terms of professionals using the platform, as well as the amount of budget they invest but a lot of firms are embracing TikTok.

Influencer marketing, according to digital marketing expert Neal Schaffer, is proven to be effective.

“According to studies, 11x the ROI than marketing using banner ads. On average, businesses and brands earn $5.20 for every dollar they spend on influencer marketing. Because of this, 66 percent of brands will be increasing their budget on influencer marketing this year,” he notes.

The article first appeared on People Daily.