Over the last decade internet users have flocked to social networks to build online communities and share their experiences and opinions. As audiences on these platforms continue to grow, a small but specialized segment of users have evolved into social media influencers. These users have a significant number of followers that may range from several hundred to several million. This in turn has given rise to influencer marketing. In this form of marketing, an influencer is compensated by a brand for providing endorsements and/or recommendations to help shift perceptions about their products/services.
The influencer market, estimated to be worth $2 billion in 2017, is projected to reach $10 Billion by 2020. While celebrity influencers are great for driving awareness of a product, the ROI increases when micro and mid-tier influencers are engaged for campaigns. A survey conducted by Collective Bias discovered that 30% of consumers are more likely to purchase a product endorsed by a non-celebrity blogger. Of that number, 70 percent of 18 to 34 year-olds had the highest preference for “peer” endorsement.
In order to maximize campaign reach and impact, some brands want to utilize thousands of mid-tier and micro-influencers simultaneously. However, the problems with scaling a particular campaign are directly correlated to the total number of influencers involved. This is due to the fact that there are currently numerous inefficiencies within the influencer marketing campaign process. Brands spend a significant portion of their budget on manual campaign tasks, such as contracting, post verification, and payment settlement. These inefficiencies are a critical problem and blockchain technology can be used to reduce the time spent on manual processes via smart contracts. Here are the ones that currently plague influencer campaigns:
The process of contracting is time-consuming and heavy on human resources. For each influencer that a brand engages with, the brand must draft an agreement, negotiate terms, and get the influencer to sign the agreement. If a brand works with under 10 influencers this process can be easily accomplished, but if a brand ramps up and engages with 100+ influencers, than the process is both unscalable and laborious.
The payment settlement process includes sending out a W9 for completion, receiving and processing the W9, receiving an invoice, and tendering payment. Similar to contracting, this process is labor intensive and can not successfully scale.
Post verification is also plagued with laborious tasks. This process includes both verifying that an influencer posts content, as specified in their contract, and verifying the engagement levels of the post. Currently, brands accomplish this by having a representative review each post and/or the influencer documents the post in a report.
To successfully scale influencer marketing campaigns, the process problems in the workflow need to be addressed. Blockchain smart contracts can be used to automate contracting, post verification, and payment settlement into an easy-to-use solution for brands to efficiently scale their influencer marketing campaigns. Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code.
How it Will Work
A brand (let’s call it Nikey) wants to pay an influencer $500 to post a picture of a pair of sneakers on his/her Instagram account.
- Nikey creates an “opportunity” outlining the task requirements for an influencer to agree to (terms programmed into a smart contract).
- Nikey inputs their allocated budget of $500 into a system (budget held in a smart contract).
- An influencer (Jon) logs into a mobile app and the Nikey “opportunity” is presented to him (the database intelligently determines the best influencer for the “opportunity”).
- Jon agrees to this “opportunity” (smart contract).
- Jon posts the content and completes his required tasks per the “opportunity” requirements written into the smart contract.
- The post is verified by the system (via an oracle).
- The $500 holding in escrow is released to Jon’s wallet within the app (smart contract).
- The transaction is completed.
In a world of automated workflows, brands and marketing agencies need improvements to the manual contracting, post verification and payment settlement processes that are in place today. The laborious inefficiencies that are rampant in the today’s influencer marketing industry need to be eliminated.Blockchain technology will save brands time and money while providing the ability to successfully scale influencer marketing initiatives. In addition, it will help influencers increase their revenues generated from brand engagements.