Influencer marketing is a “hot mess,” according The Wall Street Journal. I tend to agree, as it’s a challenge to build the ideal marketing technology stack. Currently, with influencer marketing technology, there isn’t one solution that comprehensively covers all areas. From discovery to engagement to tracking and reporting, there are many different solutions, but they don’t always fit together.
Sound familiar? Welcome to martech.
San Francisco-based Lighthouse3, a market research and strategy consulting firm, is among the first to attempt to demystify this influencer martech space with their comprehensive report, “The CMO’s Guide to Influencer Marketing Technology” (email registration required).
As Mia Dand, principal analyst at Lighthouse3, says:
This report aims to add clarity to a space that’s been overlooked by most research/analyst firms because it’s not big enough. There isn’t one version of truth out there so most of the information on this industry comes from influencers themselves or the vendors. This provides an unbiased and objective perspective on the influencer space.
The following are some highlights of the report, which outlines some key trends and challenges in the space.
Influencer marketing technology is a fragmented space
With over 133 vendors across five categories, influencer marketing is a highly fragmented industry. There is no one-solution-fits-all.
Lighthouse3 found that three primary trends are behind the growth in the influencer marketing technology arena:
Key trend #1: Decline of advertising due to the massive increase in ad blockers globally
According to Mary Meeker’s 2016 Internet Trends report (slide 47), there are nearly 640 million devices that are blocking online advertising. With iOS now allowing for ad blocking, there are over 420 million mobile devices alone that are blocking ads.
That being said, US advertiser spending on digital advertising is expected to overtake TV in 2016 and hit $103 billion in 2019.
However, not everyone is blocking ads. In fact, my agency is using Facebook ads, LinkedIn ads, Twitter ads, Pinterest ads, Reddit ads and Google AdWords ads to help clients retarget and amplify influencer marketing efforts. They can definitely work together.
Key trend #2: Rise of influencer programs is leading to greater need for efficiencies and proving ROI
More than 83 percent of global respondents in a Nielsen survey say they trust recommendations from people they know, vs. just 42% for online banner ads.
Over one in three marketers say they expect their influencer marketing budgets to increase, and 84 percent expect to run at least one influencer campaign in 2016.
People don’t trust advertising, and they definitely trust people they know. This is why customers and employees are such strong advocates for your brand. Also, people trust the CEO much less than they trust employees. Lighthouse3 plans to cover that more in-depth when they release their customer/employee advocacy technologies landscape in October of this year.
Key trend #3: CMOs are driving the budget increase in marketing technology spend
If you have seen Scott Brinker’s MarTech landscape, you can tell that it’s a crowded space. And with good reason: CMOs are now outspending their IT counterparts in many organizations.
Enterprise martech market size is projected to grow to $25 billion this year, with CMOs driving martech spending to $32.4 billion by 2018. That’s a lot of billions.
More and more of enterprise marketing budgets are going to marketing technology, and the YOY growth is substantial.
Four critical factors are fueling the chaos
Despite martech’s incredible growth, influencer marketing technology is facing some key challenges:
Lack of standard technical capabilities; service offerings and features keep changing.
Unstructured, fragmented market with 133 vendors across five categories.
With over 60% of platforms launched within the past five years, this is still a nascent space.
Lack of scalable enterprise solutions, as many vendors are startups and privately funded.
The five categories of influence marketing technology
The folks at Lighthouse3 reviewed hundreds of technologies and cut through the vendor marketing hype to find that influencer technology is not one single, homogeneous market. It’s a fragmented industry with 133 vendors across five related but distinct categories. Lighthouse3 broke down the number of tools in each category:
Influencer Marketing:
Influencer Discovery — 17 tools in this category
Influencer Outreach — six tools in this category
Influencer Marketing — 38 tools in this category.
Advocacy/Word of Mouth Tools:
Customer Advocacy — 66 tools in this category
Employee Advocacy — 14 tools in this category
PSA: Influencer Marketing is different from Advocacy
An Advocate has a positive sentiment towards your brand, whereas an Influencer may have a negative, neutral or positive view. Advocates are not typically compensated, although they may receive perks like new product trials or coupons.
This differentiation impacts features and capabilities of platforms. For example: Influencer marketing technology platforms typically provide an Influencer rate-sheet, while Advocacy platforms offer gamification features to keep advocates engaged.
Influencer marketing platform “5 Capabilities” model
The Lighthouse3 team created a “5 Capabilities” model to help marketers figure out whether or not a platform is an influencer technology platform.
These five capabilities include:
Discover — Find influencers based on user criteria including online/social metrics, audience, topics (e.g., influencer profile).
Connect — Communicate with influencers via the platform to discuss the engagement (e.g., email integration).
Engage (unpaid) — Engage influencer for an unpaid activity like writing a blog post (e.g., reporting dashboard).
Recruit (paid) — Engage influencer for a paid activity like speaking at an event or creating content (e.g., budget planning).
Measure — Advanced metrics and analytics for performance management (e.g., ROI calculator).
“Influencer Marketing” technologies typically have all five capabilities, while others only cover one area — like “Influencer Discovery,” which just covers Discover.
Influencer marketing is a nascent space
Of the 61 influencer marketing technology vendors, 35 reported receiving total funding of nearly $240 million, according to Lighthouse3.
Most of the influencer martech companies are less than five years old and have fewer than 50 employees. So there is a lot of room for growth and consolidation. Keep an eye on this space as it evolves.
Future influencer marketing technology trends:
There are four main areas where the Lighthouse3 team expects to see the most significant developments in the future:
Standardization of core capabilities for each category.
Continued churn as this space matures and platforms evolve.
Focus on performance-based programs and reporting.
Shift away from silos to integrated solutions.
With the decline of online advertising due to ad blockers and lack of trust with big brands, now is a good time to begin looking into building an influencer marketing program at your company. This report should help guide you in the right direction.
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