Are Influencers Recession-Proof?
By: Kaitlyn Hieb, Strategist, R/GA
January 15, 2020
With growing talk of an economic downturn, it would seem that an industry built on convincing people to spend money, might be headed for trouble. Granted, there are the KarJenners of the world who, being celebrities first, can lean on their fame to make up for any dip in influencer revenue, but the majority of influencers are just as dependent on their audiences’ spending as we are on our corporate paychecks.
Despite this bleak picture, there is evidence that influencers would not only survive, but quite possibly thrive in a recession. The outcome will vary, especially for such a disparate group of people, but overall there are three main reasons why influencing as a whole may actually prove to be a recession-proof career:
- The strength of micro-communities. As the phrase goes, “When times are good you should advertise, when times are bad you must advertise.” Not every company has the luxury to advertise throughout an economic downturn, but many financial heavy-hitters, including Forbes, encourage brands to continue to advertise through a recession in order to take advantage of decreased advertising prices and quieted competitive noise. This is where influencers come in. When dollars must be stretched, return on investment becomes ever more important. The strength in influencers lies in their access to niche audiences, creating a direct line from brand to engaged consumer. Thus, hyper-targeting through the right influencer allows brands to earn higher ROI on their social advertising investments.
- The value of content creation. In the early years, influencers relied on aspirational aesthetics to capture attention and drive sales. Now, as Gen Z leads the demand for more authentic content—especially in video—influencers are stepping into their role as content creators. TikTok, the fastest growing social media app, is a breeding ground for influencers who shine on channels where witty, unique and relatable videos perform best. Unlike YouTube, TikTok videos are not monetized which means these younger influencers are relying on brand deals to pay their bills. Fortunately, brands are starting to understand the value of content creators who not only cut production costs, but also create content that resonates best with target audiences, thus saving money and, once again, driving ROI.
- The power of persuasion. Influencers provide product reviews, recommendations, and referrals to millions of people every day. This guidance represents the rational side of influencing—the side that becomes even more helpful during a recession when consumers are more cognizant of their disposable spending. But more important than the rational is the emotional. Influencers provide their followers with a strong sense of community and connection, which people crave during hard times. Brands must tap into both to stay culturally relevant. Backing this claim, Cannes Lions-winning influencer marketing company Whalar’s Trends: 2020 report found that audiences are seeking greater purpose in the content they consume.
As Mike Hondorp, CMO of Whalar puts it, “Now, more than ever, the need to be culturally relevant within the social space is crucial for brands, publishers and creators alike. Relevance comes from connection, and the best creators achieve just that with their audiences.”
He adds: “For brands, aligning with passionate creators who aren’t afraid to take creative risks can increase equity exponentially. What could be better than a consumer speaking to other consumers on behalf of a brand they love? It’s real, it’s genuine, and it’s relevant.”
This combination of rational application and emotional leverage gives influencers an irrefutable edge that they can offer any company’s marketing mix, budget-conscious or not.
While it may seem nearly impossible to divine exactly what will happen with the economy, Bloomberg predicts that there’s only a 26 percent chance of a recession hitting in the next 12 months. That said, scars of recessions past have primed anxious minds to consider how they might prepare for the next financial downturn. The problem, or opportunity rather, is that we haven’t seen a recession in a world as connected as the one we live in today. An Information Age recession could look completely different than those previous—perhaps creating a world where influencers not only thrive, but keep our retail economy afloat.
Kaitlyn Hieb is a strategist in R/GA’s Austin office.