Summer Series - The Wizarding World of Influencer Marketing

*Our Summer Series airs Thursdays and Saturdays at 11:30 on CBC Radio One.*

This week, we peek into the emerging world of influencer marketing. Today, the most popular social media Influencers aren't celebrities, they're regular people. Bloggers, Instagrammers, YouTube stars and Snapchatters have amassed millions of followers, promoting products using only the trust of their fans as currency.
We'll look at a single YouTube review that shot Patti Labelle to the top of the baking industry, why J.K. Rowling only needed seven people to promote the biggest movie attraction of the year and exactly what happens when influencers break the trust of their loyal followers. It all comes down to integrity and transparency.

When Dale Carnegie was in college, he was too small to make the school football team.

But he did make the debating team.

Carnegie was a persuasive speaker. He was dynamic and he was a good storyteller. Impatient to begin his career, he left college early to pursue a path he thought he could excel in:

That was salesmanship.

He got a job selling meat and soap to small shopkeepers. And he was good at it. Then he moved to New York and got a job selling Packard cars and trucks.

At night, he tried writing books, but failed at his first two attempts.

Then in 1912, he decided to teach public speaking, and convinced the YMCA in Harlem to give him classroom space in return for a split of the profits.

His course outlined his rules and principles for presentations and speechmaking. It was an instant success because it was the right message at the right time. Industry was booming and it was creating a growing number of white-collar workers who needed to develop communication skills.

One night, Carnegie ran out of things to say in the classroom, so he invited his students to stand up and talk about what made them mad.

In a heartbeat, the students shed their shyness and began to speak in front of the class. It was an epiphany to Carnegie:

Talk about what you know.

One day, a book publisher takes the class. He is so impressed, he asks Carnegie to write a book. But Carnegie is gun-shy, having failed twice already as an author.

So the publisher brings a stenographer with him for the rest of the course and she writes down everything Carnegie says.

When Carnegie sees the notes, he agrees to turn them into a book. And in 1937, How to Win Friends and Influence People was printed in a small run of 5,000 copies. Then the book publisher hit on the idea of marketing the books to the graduates of the Dale Carnegie public speaking course.

Even though it's Depression times, the book takes off.

People are hungry for work skills. How To Win Friends and Influence People started selling 5,000 copies a day.

The book shot to the top of the bestseller list and stayed on that list for 10 years.

Critics called it silly and simplistic, but people around the world loved it. Its core message was summed up by Dale Carnegie himself in a radio interview:

How To Win Friends and Influence People still sells 200,000 copies per year. It never goes out of style because Dale Carnegie had a unique understanding of human nature.

And that's why the book still influences people today.

Influencing people has been a 150-year study in the marketing world.

And with the advent of social media, influence has taken an interesting turn.

We now have a sub-set of marketing called Influencers. They are regular people who have amassed huge social media followings. They offer tips, give advice and recommend products.

And sometimes, those Influencers are paid by companies to recommend those products.

And that's where it gets interesting…

A lot has changed in the world of marketing since we started our radio show back in 2005.

We began the same year as YouTube. Back then, there was no podcasting, no iPhone, no Twitter, no Instagram, no Snapchat and no Pinterest. Facebook was just one year old.

One of the reasons we retooled our show and changed the name was to reflect this upheaval in the marketing world. This shift from persuasion to influence.

Suddenly, it wasn't only brands that could broadcast their messages.

Social media has given voice to anyone with access to the Internet.

The implications of that are astounding and nuanced and fraught with complications.

One of the most controversial forms to emerge in this new world is Influencer Marketing.

In the broadest definition of the word, celebrity endorsements were the "influencers" of their day.

And while celebrities are still influencers, there is a big difference now.

Today's most successful "Influencers" are regular people who have become massively popular by offering their opinions, tips, recommendations and expertise online.

They are bloggers, Instagrammers, YouTube stars and Snapchatters.

Many of them have amassed huge social media followings – from thousands to millions.

Their skill is content creation.

Influencers attract huge audiences by creating a constant stream of original content. Their specialty may be make-up, or fashion, or food, or fitness or even Mom blogging.

They use their own voice, their own personal channels and their own aesthetic to create that content.

Trust is the currency. If followers trust an influencer, and believe their opinions are authentic, their advice unbiased, their motives genuine - they will stay loyal.

Trust is critically important to Influencers – because it is so easy to unfollow. 

While many Influencers promote products they like of their own volition, many of the top Influencers are paid by companies to recommend their products.

And that's where it gets tricky.

It used to be easy to spot Influencers – they were either established celebrities or widely read journalists or critics.

But today's Influencers are freelance, they aren't limited by geography and they're young.

A survey of U.S. teens conducted for Variety magazine found that YouTube creators took eight of the top ten spots in a survey of Influencers – outranking traditional celebrities like musicians and movie stars.

Millennials, aged 18-34, also point to digital content creators as major influencers in their purchasing decisions.

That is a huge shift in popular culture.

It's no small industry, either.

Bloomberg reported that $255 million is spent on Influencer Marketing every month.

In the next five years, it will grow to become a $5B to $10B market.

When brands search for influencers to hire, they begin by digging into their customer's social media pages and seeing what they like, who they follow and what they share.

They look for bloggers or social media stars with sizable followings – anywhere from 50,000 to millions.

Advertisers also employ tools to identify the best Influencers - using social media analytics websites like Klout or Hootsuite.

To underline how established Influencer marketing has become, there are even talent agencies that represent Influencers.

They connect brands to Influencers, and provide management, strategy, planning and measurement.

Viral Nation, a talent firm located just north of Toronto represents over 150 Influencers.

That firm breaks its clientele down into three categories:

1: Community Influencers – those that reach a small but engaged audience.

2: Social media-savvy celebrities – Traditional TV or movie celebrities who reach big audiences.

And 3: Social Media Super Stars – Those who generate huge followings online without being a movie or television star.

While a top influencer can make over $100,000 per year, some social media superstars make over $100,000 per post!

That's a lot of money for a short video. And it is a ton of money for a single tweet.

It's reported that social media celeb Kendell Jenner makes up to $300K for a single post and sis Kim Kardashian has charged over $1M to promote a product on her social media channels.

It's big money.

When a company is deciding on which Influencers to hire, they look for people who not only have big social media followings, but also someone who aligns with the brand's image and tone of voice. They have to be relevant and highly engaged with their audience.

While the majority of Influencers want monetary compensation, some are motivated by exclusive experiences.

Take the Harry Potter franchise.

JK Rowling and her team rely heavily on social media Influencers rather than mainstream journalists when launching various Harry Potter properties.

In 2007, for example, a new Harry Potter attraction was opened at Universal Studios Orlando.

To launch the attraction, Rowling's team sifted through all the Harry Potter fan sites and identified just seven bloggers as major Influencers.

These handpicked seven Influencers were super fans that held sway with millions of other fans. First, these Influencers were told about the attraction before the press was alerted, which gave them a valuable scoop. Then they were invited for special VIP tours.

The bloggers got backstage passes, behind-the-scenes content, exclusive interviews and were given permission to host to live streaming video.

The result: Those seven Influencers got the news out to over 350 million Harry Potter fans – making open day of the "Wizarding World of Harry Potter" attraction an off-the-charts success.

When Rowling & Company wanted to launch new Harry Potter movies and DVD sets, they identified 43 bloggers as major Influencers that could maximize content sharing, generate conversations and stimulate big buzz.

These 43 Influencers were invited to exclusive events, they enjoyed never-before-seen content and were given access to closed movie sets. While the mainstream press found it nearly impossible to get anywhere near Rowling for in-depth interviews, the Influencers got invitations to JK Rowling's home for half-day recorded chats.

It was a smart strategy. First, Rowling didn't have to pay the Influencers – they were thrilled just to have access.

Second, Rowling's rabid fan base was largely immune to whatever criticism the film might have got from the press and movie critics.

Third, Rowling wanted to reward the young fans who actually bought her books, and communicated almost exclusively with them as each successive book, movie and piece of merch rolled out.

Lastly, the Influencers did the majority of heavy lifting when it came to sharing content – moving it further and deeper into the Internet than the mainstream press could have - and were excited to do so.

Rowling maintains that the phenomenal marketing success of Harry Potter is due in no small part to the fact they broke the rules by deviating from the standard marketing plan.

Instead of courting the mainstream press, they relied on Influencers.

But even Influencers have to play by the rules…

Even though the concept of Influencer Marketing is fairly new, there are strict rules and regulations in place already.

Those rules were triggered by "Astroturfing."

Astroturfing is the practice of making a sponsored message look like it's coming from a neutral third party. The term "astroturfing" comes from astroturf – the synthetic carpet designed to look like natural grass.

Recently, Warner Brothers Home Entertainment was sanctioned by the FTC when Influencers placed glowing reviews of its latest video game but were instructed by Warner Brothers to place the disclosures in an information box on a second page, where viewers had to click a "show more" option to see the disclaimers. The FTC saw that as an attempt to hide the disclosure.

Bell Canada was fined $1.2M for having its employees post fake reviews for its MyBell Mobile app.

So to combat astroturfing, Influencers must clearly disclose if they are being paid or if they are being given something free to promote.

That disclosure can take several forms. In the UK, for example, a YouTube Influencer must state disclosure within the video – not just in the video description. That rule is also coming to Canada and the U.S. later this year.

If a disclaimer is currently posted in the video description, it must be above the fold – meaning, the viewer must not have to scroll to read the disclaimer. It must appear on the same page as the video.

Disclosure hashtags are often used in other mediums like Twitter and Instagram. But there are rules here, too. Influencers must use #ad or #spon – meaning sponsored.

Influencers often include a long list of hashtags on every post so it will be seen by the most viewers. So if it was a post about make-up, for example, the list of hashtags might include:

In the early days of conforming to disclosure regulations, Influencers would stuff the "ad" or sponsored hashtag in the middle of that long list, essentially burying it.

That's not allowed anymore. The disclosure hashtags have to be front and centre.

Smart Influencers spend a few weeks with a product before promoting it to make sure they like it and believe in it.

Then they can tell their followers they are being compensated to promote the product, but their followers know their views are still authentic and honest.

We found one Influencer contract online that was most interesting. It stated that the Influencer's opinion must be honest and truthful. Yet it also stated that the Influencer must not make any negative statements at any point during the campaign or for six months after. And it also stated that all content had to be approved by the advertiser.

That's a pretty restrictive contract.

One quick way to discern an inauthentic voice is when a blogger raves about a product as the best thing he or she has ever seen - then never mentions it again.

That is a one-time payday.

There have been a couple of hilarious Influencer faux pas' along the way.

When supermodel Naomi Campbell was posting a rave endorsement for Adidas on her Instagram account for her 2.9 million followers to see, she accidentally posted the actual instructions the Adidas marketing team gave her.

Reality TV star Scott Disick of Kardashian fame made the same mistake when he promoted a Bootea protein shake on his Instagram account. Along with a photo of Disick holding the shake, his post also included the marketing team's instructions. It said - quote:

A big influencer endorsement AND the advertiser's instructions all in the same post.

It's too funny.

In 2012, the Milk board in the States was trying to boost the sales of chocolate milk.

It began talking to chefs, scientists and nutritionists about health, fitness and nutrition to better understand the habits and trends of athletes.

By doing so, they discovered a previously untapped fitness occasion that chocolate milk could slip into.

The post-workout recovery period.

It was an opportunity for chocolate milk because it has a unique ratio of proteins, carbohydrates and electrolytes to replenish and rehydrate.

And they also discovered that drinking chocolate milk had been an underground buzz for die-hard athletes for years.

So it began positioning chocolate milk as a post workout recovery drink.

To spread the word, the Milk Board hired Influencers. They started with Pittsburgh Steeler star Hines Ward as he trained for an Ironman Championship.

A contest was held and three everyday athletes – a Mom, a med-student and a challenged athlete – won the chance to train alongside Ward.

Those four athletes were then recruited as Influencers and began blogging and tweeting about their training. They promoted the fact they drank chocolate milk after their workouts. They posted an interesting mix of sports and nutritional information along with entertaining videos.

The theme was: "Built with chocolate milk" 

The results were huge.

First, the Milk Board understood the power of athlete-to-athlete influence - which was much more persuasive than traditional advertising.

By reframing the dialogue around chocolate milk and creating a new usage occasion, sales jumped from -6% to +11%.

The Built With Chocolate Milk campaign generated $123M in additional sales.

According to a study, over half of the athletes exposed to the Influencer messaging said they would use chocolate milk as a recovery beverage.

What was once a kid drink was now repositioned as an adult drink.

A massive success – courtesy of Influencers.

Have you ever heard of Patti Labelle Sweet Potato Pie?

No? Well, you've probably heard of singer Patti Labelle.

Back in 2015, singer and cookbook author Patti Labelle teamed up with Walmart to produce a Sweet Potato Pie.

It cost $3.48, Patti's face was on the box, and sales were modest.

Then one day, sales exploded.

The reason was a YouTube review from someone named James Wright:

It was an unsolicited rave YouTube review.

The video hit before Thanksgiving.

Within 24 hours, the video went supersonic.

By one point, Patti Labelle Sweet Potato Pies were selling at a rate of one-per-second!

Walmart sold $2.3M worth of pies that weekend alone.

The retailer scrambled to make more. It had to try and source two million pounds of sweet potatoes to meet the demand. Suppliers were working 24/7.

Walmart thought it had ordered enough pies to last from Thanksgiving to the Christmas holidays.

It didn't have enough to get through the weekend.

While you couldn't find a Patti Labelle Sweet Potato pie for $3.48 at Walmart, you could find one on eBay for $40.

And it was all because of an Influencer working on his own. James Wright simply loved Patti's pie. And people loved his authentic review.

The success was so great, that Patti Labelle capitalized on the exposure by inviting James Wright over to her house for Thanksgiving dinner.

You can only imagine how happy James Wright was.

The video eventually got over 10 million views.

It showed the power of an Influencer video.

Then… the pie hit the fan. James Wright says Patti Labelle verbally agreed to pay him a set amount to thank him for the video's success – but Wright says Labelle never made good on it.

So James Wright sued Patti Labelle for $10M.

As Wright says, he still loves Patti.

But business is business.

We live in interesting times.

For nearly 100 years, only Hollywood and deep-pocketed brands could broadcast nationally.

Now with the arrival of social media, regular people can broadcast their voices internationally.

And with that, comes opportunity for mass influence.

Influencers have great impact because their pitches don't often feel like ads. They aren't disruptive, they slide into the slipstream of everyday conversation.

So they are filtered differently by viewers.

One disturbing stat we found in our research was that 25% of Influencers are still asked not to disclose their connections to advertisers.

Hopefully, stricter regulations and hefty fines will weed out the astroturfers.

On the other hand, there are Influencers who disclose paid posts clearly, they won't promote a product they don't believe in, and their fans stand by them.

That's led to another interesting development. Influencers are becoming so famous they are starting to bring out their own products. Which means the lines are blurring. Influencers are now becoming brands.

That's why it all comes down to integrity and transparency.

It's one thing to influence people, but are you still winning friends…

…when you're under the influence.