MSMEs bet on creator economy ditching traditional forms of marketing

Some have raised their expenditure on influencer marketing by three to four times to reach out to their target customers. (AFP)
Some have raised their expenditure on influencer marketing by three to four times to reach out to their target customers. (AFP)

Summary

  • MSMEs bank on influencer marketing instead of the traditional routes as the former is affordable, helps in creating brand awareness, is trackable and attributable to sales.

Micro, small and medium enterprises (MSMEs) are recruiting influencers for marketing instead of the traditional routes as the former is affordable, helps to create brand awareness, is trackable and is attributable to sales. Some have raised their expenditure on influencer marketing by three to four times to reach out to their target customers.

"Influencer marketing is a very productive medium for MSMEs to build their brand as it is both affordable and targeted," said Anil Bharadwaj, secretary general of the industry association Federation of Indian Micro and Small & Medium Enterprises (Fisme). "A targeted approach helps influencers raise awareness for a product or service among a specific niche group of audiences that fall under the total addressable market," he told Mint.

MSMEs are typically businesses with an annual turnover of less than ₹250 crore, and many of them sprouted during the pandemic, around the same time that social media influencers gained popularity.

Also Read: India’s influencer marketing industry to swell to ₹34 billion by 2026

Ghar Soaps, a Pune-based skincare brand incepted in 2019, has been leveraging influencer marketing "aggressively" for the past two years. "Earlier, we spent ₹5,000-10,000 a month on influencer marketing. But when we realized that it helped us grow our revenue threefold, we started spending up to ₹50 lakh a month collaborating with around 40-50 creators," said Sunny Jain, co-founder of the soap brand, which now has a turnover of ₹50 crore.

Affordability, smaller budgets

Since the budgets are smaller than what a large company can afford, MSMEs look at influencers who are starting out.

Neha Sharma, a beauty influencer with 100,000 followers on Instagram handle @that_dusky_beauty and 210,000 subscribers on YouTube, did her first paid collaboration with Ghar Soaps when she had 50,000 followers in June 2023.

"MSMEs see a higher return on investment in influencer marketing due to its affordability. They are keen to pay us a good price, which is way higher than our regular job salaries, so it is a win-win for both," said Sharma, 60% of her collaborations every month are with MSMEs, while she is also getting offers from larger brands.

Also Read: The lives of India's baby influencers

Some are targeting a younger customer base aged 18-24 years who are more digital savvy, they are building teams to track influencers and get them on board for a contract period of six months.

"Digital marketing tools and social media platforms offer MSMEs low-cost opportunities to reach their target audiences through influencers. Micro-influencers, in particular, are helping small businesses push their brand narratives at a fraction of the cost of larger brands' ad and TV campaigns," said Neha Aggarwal, a partner at Deloitte, who tracks the MSME sector. Micro-influencers are creators with a follower count between 10,000 and 100,000.

Sam and Marshall, a Delhi-based eyewear brand, is collaborating with influencers to push their premium products among young audiences. "As a micro MSME, we want to use our money at places that can bring us higher returns," said Anushka Raj, the brand manager of the company. By spending ₹2.5 lakh a month on influencer marketing, the brand saw a 15% hike in its sales in the last financial year. Since their goal is to create an aspirational value for the brand overall, they recruit fashion and lifestyle influencers.

Also Read: Why influencers are tapping into parallel sources of income

Compared to traditional advertisements like outdoor or commercials on TV, which cost ₹1-10 crore monthly, budget constraints are pushing MSMEs to look at alternatives.

"MSMEs are more profit-oriented than bigger MNCs and do not have dedicated marketing teams. They want to spend on influencer marketing because it does not need upfront investments, and the impact can be easily linked to the sales," said Sahiba Dhandhania, founder of Confluencr, a Global Influencer Marketing Agency.

Startups

Some of the MSMEs are just-born startups that have low marketing budgets.

"Influencers helped us build better brand awareness, especially through videos highlighting our products' unique selling point (USP), which influencers say they have integrated into their daily lives," said Dhruv Verma, co-founder of Rize, a health and wellness-lifestyle brand launched in February 2024.

Rize has worked with Ranaya Singh Banga, a luxury, fashion and lifestyle influencer with 29,500 followers on her Instagram handle @ranaya_singh. Sam and Marshall has collaborated with Dr Shruti Yadav, a dentist cum fashion, beauty and lifestyle influencer with 16,900 followers on her Instagram handle @aestheticsbyshruti.

"Traditional forms of marketing are quite expensive for a new-age brand like us and are only good for brand-building purposes, not sales," Verma added.

Verma noted that the startup has seen 10% higher sales due to influencer marketing compared to outdoor advertisements. The more traditional forms included putting up posters on autorickshaws, etc. The company has clocked a turnover of ₹20 lakh in the past six months and plans to expand the monthly expenditure on influencer marketing to ₹5 lakh from ₹1 lakh.

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