As consumer shift toward digital persists across countries and categories, fast-moving consumer goods (FMCG) companies are spending the same amount or more on influencer marketing despite nearly a quarter suffering financial losses of up to $250,000 from a negative influencer experience.
That’s according to a new report from Duff & Phelps and Kroll that surveyed over 900 marketing and brand managers within the FMCG market in June. Respondents were from companies in cosmetics, food and beverage, clothing and consumer electronics across the US, UK, Ireland, Spain, Netherlands, France, Italy, Germany and the United Arab Emirates (UAE).
Kroll’s research shows that today, 22 percent of FMCG companies worldwide spend between $1.1 million and $5 million on influencers and nearly half (45 percent) usually work with 51-100 influencers at a time.
During lockdown, two-thirds of FMCG brands either maintained their influencer spend at pre-COVID levels or increased it slightly. Nearly a fifth (19 percent) increased it significantly.
Among FMCG companies globally, the average amount spent per influencer is $22,151 per year. At around $29,972 per year, Italian companies pay its influencers the most, whereas US companies pay its influencers the least, at around $13,153 per year.
The sales increase to expense ratio of influencers was the highest in the UAE (82 percent), the UK (74 percent) and the US (56 percent). However, in some countries where spend on influencers increased the most during the lockdown, the return on investment (ROI) was the worst—those include the Netherlands, Ireland and Italy.
In France, FMCG companies use the most influencers on average (109) followed by companies in Spain (90). On the other hand, US companies use 71 influencers per company while UK companies use 66.
Globally, 32 percent of FMCG businesses said their most successful influencer campaign generated between $250,000-$500,000 worth of sales. Similarly, 28 percent saw a $500,000-$1 million sales uplift, an effect most likely for companies in the UK and Ireland. For companies with more than 500 employees, their best influencer campaign generated between $1.1 million-$5 million in sales.
Kroll’s research also indicates what type of influencers companies use the most. For example, 41 percent of FMCG companies partner with micro-influencers (10,000-50,000 followers) and 34 percent work with mid-tier influencers (up to 500,000 followers).
Respondents said that mostly all mega-influencers (more than 1 million followers) often or always hit the targets set for them by the brand they’re representing and the same goes for 74 percent of nano-influencers (less than 10,000 followers).
Influencer marketing has its risks too, in terms of both reputation and finances. Kroll found that 85 percent of FMCG companies worldwide have had their brand negatively impacted due to an association with an influencer and 24 percent of these companies reported that they were adversely affected more than once. The issue is most prevalent in Spain, Italy, France and Germany.
Macro-influencers (up to 1 million followers) have cost brands the most in damages. In fact, nearly a fifth (18 percent) of macro-influencers have caused a $1.1 million-$5 million financial hit to the brand they were representing due to a negative event. Mistakes by mega-influencers cost brands up to $100,000.
To maximize the benefits of your influencer marketing spend, make sure to conduct an in-house audit of your influencers or enlist a third-party company to do so, as influencer fraud is still rampant but not unnoticed.
It’s interesting to note that as company size increases, there’s a higher likelihood that firms will report multiple negative events with influencers. This could be due to the fact that, as Kroll’s data show, companies with 250-500 employees are least likely to use a third-party specialist to verify the credentials of an influencer.
By 2021, 46 percent of FMCG companies expect to spend 31-50 percent of their total marketing budget on influencers—a 20 percent increase compared to the average spent between 2018-2020. Nearly one in 10 will spend over 70 percent of their total budget on influencer marketing.
Thinking about working with influencers or want to know more about how an influencer program might help you or your brand? Drop us a line. We’d love to chat: email@example.com.