Influencer marketing presents brands with its challenges, ROI biggest concern

Brands that embraced influencers for their reach, authenticity and affordability are recalibrating strategies, as they target maximum bang for their marketing buck. For several consumer brands that swept over YouTube and Instagram thanks to the wide reach of influencers, returns on investment (ROI) are beginning to nag.

Influencer marketing in India may grow from ₹2,344 crore in 2024 to ₹3,375 crore in 2026, according to an April report by EY, which also noted that the biggest challenge for marketers was determining ROIs of their campaigns.

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“While there is no set definition of ROI, brands generally measure it on the basis of views, clicks, engagement and affiliate link sales an influencer’s post generates for them. However, it may or may not be possible to measure all these on every occasion," said Shankar Prasad, founder of Plum, a beauty and skincare brand that has partnered creators since 2016.

Budgets trimmed

Plum, which used to spend 20-30% of its marketing budget on influencers till three years ago, has now trimmed it to 15%, Prasad said. “Initially, when influencer marketing was a new thing, everybody overestimated it. Now that we are getting a data-driven perspective, we are trying to calibrate and size it to the optimum level," he added.

While some brands decreased their budgets, others are allocating them differently for optimum returns.

Sidhant Keshwani, founder of ethnic wear apparel brand Libas, said that the company is focusing on creator-driven commerce by tracking sales through affiliate links and coupon codes unique to creators. “By doing so, brands can invest more effectively, compensating revenue-generating creators on a commission-based model that aligns closely with their profit and loss objectives," he said.

Others are going for the smaller influencers. According to the EY report, “Nano influencers had the highest engagement rate compared to other influencer categories." Besides, since they have below 10,000 followers, they charge less as well. There is just one catch though—Influencer management agencies mostly represent and push for top influencers.

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“Many of the smaller influencers have a good reach, and it is cost-efficient for brands like us to work with them. But, I don’t think the influencer marketing agencies do a good job at collating and representing these creators," said Ganesh Sonawane, founder of consumer healthcare brand Frido. Hence, his company has hired an executive to coordinate with influencers directly, avoiding agencies. Sonawane said the executive reaches out to about ten small influencers each day and picks two of them who can meet the brand's requirements. Frido prefers running whitelisted ads on Meta since they perform better than other formats, he said.

“It’s important to match the right brand with the right creator," said Akshita Kant, associate director of influencer marketing firm IPLIX media. "We need to understand their objective of the campaign, if it’s for awareness, ROI or sales. Creators, if given enough context and creative freedom, can bring ample results for brands," she said, adding it is important for the brands to work with the right agency that has a good mix of both big and small influencers represented fairly.

Whitelisted ads

Whitelisted ads are ads that run on a social media platform through a creator's account rather than the brand's own account. This helps the brand leverage the authenticity factor.

Meanwhile, some brands riding the wave of influencer marketing are experiencing hardships but are not taking any particular steps to resolve them.

Perfora, an oral healthcare brand invests around 15% of its ₹30 lakh monthly marketing budget on influencers. The company, which is working with influencers for the past nine months said it sees every two of five collaborations not doing well. However, its founder Jatan Bawa, sees this as “part of the process." The brand has not increased its influencer marketing percentage in its marketing budget. To be sure, its marketing budgets has grown as the company grew.

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According to Ayaz Abr Ahmed, an influencer on Instagram who posts lifestyle content to his 151,000 followers, user-generated content works better than scripted content from brands, in terms of reach and ROI, thanks to its authenticity. "Brands need to ensure that the creator promoting or reviewing their products has personally used it. They also need to have a certain level of trust in the influencer they are working with and give them a little freedom to create and be innovative with the content," Ahmed said.