Interestingly, our results do not negate past findings that favor macro-influencers. We propose that the rapid growth of social media platforms and the subsequent increase in followership sizes have led to a shift in the influencer landscape. What was once considered a macro-influencer is now potentially falling into the micro category.
Andreas Lanz is Professor of Marketing, University of Basel, Switzerland.
Additionally, past research often did not incorporate complex measures like ROI, primarily due to the unavailability of relevant data. A key aspect of our study is examining the level of engagement before a sponsored post. We follow social capital theory, which suggests that influencers with more followers might encounter lower engagement levels with their followers. We also use language style matching (LSM) to delve deeper into the relationship between influencers and their followers. Our findings indicate that nano-influencers align more closely with their followers’ communication styles, enhancing their relatability and effectiveness in influencer marketing.
Our research suggests that in the ever-changing world of digital marketing, a more nuanced approach to influencer selection is paramount. DTC firms and marketers should consider the powerful impact of nano-influencers and the significant engagement they foster with their audiences. By doing so, they can unlock new potentials in influencer marketing, ensuring that their investments yield higher returns.
Instagram is the most prominent user-generated content network for both brands and influencers, with 3.8 billion annual sponsored postings. For direct-to-consumer (DTC) firms, identifying influencers who drive positive return on investment (ROI) remains the biggest challenge when considering influencer marketing as a revenue channel.
From: Maximilian Beichert, Andreas Bayerl, Jacob Goldenberg, and Andreas Lanz, “Revenue Generation Through Influencer Marketing,” Journal of Marketing.
In what has quickly grown into a $17.4 billion industry, more than 80% of companies in the U.S. are using influencers for marketing purposes. In a swiftly evolving digital landscape, influencer marketing is a significant trend that has been further spotlighted by Instagram’s 2023 expansion of advanced analytics tools for influencers and brands.
Our investigation led us to an intriguing conclusion: nano-influencers, with a smaller following, are more cost-effective in revenue generation compared to their macro counterparts, who boast larger followings. This finding challenges the prevalent industry norm that places a higher value on influencers with larger audiences. We find that the engagement between influencers and their followers plays a crucial role in this dynamic; in essence, a more intimate connection between nano-influencers and their audiences leads to more effective marketing outcomes.
To the best of our knowledge, we are the first to conduct a supply-side, full-fledged, field study for paid influencer endorsements—in addition to analyzing secondary revenue data. This highly managerially relevant comparison helps resolve controversies about whether macro-influencers make use of their greater reach and whether they are more persuasive when it comes to the purchasing decision.
Andreas Bayerl is Assistant Professor, Erasmus University, Netherlands.