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FMCG firms shift ad spends to influencer marketing, says Duff & Phelps report

Consumer devotion to digital devices during the pandemic has supercharged the influencer industry which is seeing increased focus by FMCG firms on employing social media influencers in their campaigns. (AFP)Premium
Consumer devotion to digital devices during the pandemic has supercharged the influencer industry which is seeing increased focus by FMCG firms on employing social media influencers in their campaigns. (AFP)

  • During lockdown, two-thirds of FMCG companies globally either maintained their influencer spending at pre-covid-19 levels or increased it slightly, while nearly a fifth (19%) upped it significantly, stated a report by advisory firm Duff & Phelps and and its division Kroll

New Delhi: Not just sales but even marketing promotions for fast moving consumer goods (FMCG) firms are gradually shifting towards digital as they increasingly focus on employing social media influencers in their campaigns. Consumer devotion to digital devices during the pandemic has supercharged the influencer industry. During lockdown, two-thirds of FMCG companies globally either maintained their influencer spending at pre-covid-19 levels or increased it slightly, while nearly a fifth (19%) upped it significantly, stated a report by advisory firm Duff & Phelps and and its division Kroll.

According to the findings, by 2021, nearly half of FMCG companies (46%) are expected to spend 31-50% of their total marketing budget on influencers—up one-fifth compared to the average spend between 2018-2020—while nearly one in 10 (8%) will spend more than 70%.

The Face Value report highlights results of a survey of over 900 marketing and brand managers within the FMCG sector across nine global markets, excluding India. It provides insights into the value of influencer marketing, as well as the financial and reputational impact of negative influencer experiences.

The average amount spent per influencer among FMCG companies globally is $22,151 per year. However, the UK spends on average $18,602 and boasts a high sales-increase-to-expense ratio at 73%-above the "all countries" average of 46%.

FMCG companies will typically spread their spending across dozens of influencers; 45% of companies stated they usually work with 51-100 at a time, and this could rise as the influencer method of marketing becomes more entrenched. UK companies appear to use the fewest number of influencers than other countries at around 66, compared to the global average of 81.

Influencer marketing also comes with certain risks—85% of FMCG companies have had their brand negatively impacted due to an association with an influencer, with almost a quarter (24%) of these companies claiming to have been adversely affected multiple times. Around 25% of FMCG companies report losses between $100,000-$250,000 from a negative influencer experience.

The survey found that over two-thirds of FMCG companies (69%) had doubted an influencer’s follower count on one or multiple occasions compared to just a quarter (26%) who had never had any concerns. It is noteworthy that in the UK, where just over half of businesses (51%) had never had such doubts about followers, the use of third-party influencer verification specialists was among the highest at 32%, compared to the global average of 27%.

“Marketing teams once relied on securing the most expensive celebrity they could afford for a television campaign or billboard, but this strategy is increasingly obsolete in the digital age. FMCG companies are satisfied with the return on investment from influencers and are diverting marketing spend away from other traditional advertising and marketing tactics to keep the momentum going. We can’t deny that the lockdown and subsequent restriction measures have also played a part in boosting the industry," said Michael Weaver, managing director, valuation advisory services at Duff & Phelps.

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