INFLUENCER ECONOMY
WHAT IS INFLUENCER ECONOMY?
- It is software-based economy created on social media platforms like YouTube, Instagram etc.
- It allows creators and influencers to earn revenue, unlike traditional mode of earning.
- It transforms the way people earn by providing opportunities for self-employment and income from a direct audience.
- It is an economic system built by independent content creators who are connected to their audience and businesses via the internet.
- The key players in the Influencer Economy are creators and influencers who generate revenue through sponsored content, merchandise sales, and direct audience support such as tips, subscriptions, or paid memberships.
GENESIS OF INFLUENCER ECONOMY:
- The professor from Stanford University named ‘Paul Saffo’ suggested that the influencer economy came into being in 1997 as the ‘new economy’.
- Creators during that time were people who worked with animation and illustrations, although, with no discernible marketplace infrastructure to generate revenue.
- The YouTube coined the term ‘influencer-creator’ in 2011 that applied to individuals who were famous on their platform.
- The term has rapidly gained popular acceptance and now applies to individuals who create any type of online content on social media and earn revenue.
HOW DO INFLUENCER ECONOMY MAKE MONEY?
- Influencer monetize their content by sharing it on ad-sponsored platforms, partnering with brands, charging subscription fees, providing services, and much more.
- Some examples of content Influencers are TikTok stars Charlie D’Amelio, PewDiePie, and Addison Rae.
- Influencers enjoy a significantly large following and want to diversify their earning sources from subscriptions, referrals, endorsements etc.
- ADVERTISEMENTS: In this model, they monetize their content by earning a portion of the advertisement revenue that is generated from their channel pages and posts.
- Brand Sponsorship: This model works on exclusive and legal contracts between a business and the influencer.
- The influencer agrees to exclusively promote the business or brand by featuring it in their content in lieu of revenue.
- Subscription based business model: In this model, viewers watch exclusive content, live streams and videos which are otherwise not accessible by paying a subscription fee.
CHALLENGES OF INFLUENCERS ECONOMY:
- HAMPERS COMPETITIVENESS: Smaller companies lack resources to attract high profile influencer figures, potentially exacerbating existing competitive inequalities.
- Collaborations with wrong influencers can negatively impact brand alignment and audience targeting.
- Mistakes in campaigns, like low-quality content, biased content or any controversial behavior, can damage brand reputation.
- The dark side of influencer economy includes influencer misconduct, inflated follower counts, lack of authenticity, deceptive practices, oversaturation of sponsored content, and potential loss of trust among audiences.
BENEFITS OF INFLUENCERS ECONOMY:
- By Shaping Consumer Behavior: As per one survey, around 70% of millennials in India reported that they are influenced by social media while making purchase decisions.
- A staggering 80% of Indian consumers trust online recommendations and referrals from influencers as much as they trust recommendations from friends and family.
- The meteoric and high rise of e-commerce in India is closely intertwined with influencer marketing.
- BOOSTING LOCAL TRADITIONS, CULTURE AND ECONOMY: Influencers focusing on lifestyle and fashion play a pivotal role in promoting indigenous brands and products, traditional attire, handicrafts, and regional cuisines.
- The influencer ecosystem has also given rise to various back-end job opportunities from content creators and photographers to managers and marketers.
INDIA’S INFLUENCER ECONOMY:
- As of 2022, the influencer marketing industry in India was projected at over 12 billion Indian rupees.
- It was estimated to grow at a compound annual growth rate of 25 percent over the next five years.
- The industry’s market value is further estimated to grow at a CAGR of 25% amounting to 28 billion Indian rupees by 2026.
- The startups within the influencer economy in India have raised USD 2.5 billion between 2018- 2022,
- The driving indicators of the Indian creator economy’s growth potential are the fundamental changes in consumer behaviour, consumption patterns and the increasing number of first-time creators showcasing their talent.
- The increasing penetration of digitization of the rural areas of the country is also fueling the growth of influencers ecosystem.
- The fast growth and expansion of the Tier II and Tier III cities of the country means that many more influencers are expected to join the creator community.
WAY FORWARD:
As the influencer ecosystem continues to shape the digital landscape, the key to success lies in building genuine connections with their subscribers, fostering trust with the brands and audience, and staying attuned to the ever-changing trends in social media and digital marketing.
