The Instagram influencer market reached $5.24 billion in 2019

In it's recent report, HypeAuditor wrote that the Instagram Influencer market reached $ 5.24 billion in 2019.

Let's figure out what is Influencer Marketing and what $5 billion is going for.

What is Influencer marketing?

If simplified, Influencer Marketing is the broadcast of your message through the influencers and creators (accounts with a large number of followers).

If a brand buys ads directly from the platform, then brand only receives views of its ads, which can be blocked by ad blockers.

If a brand buys placements from an influencer, then in addition to viewing its message, it also gets more engagement with the audience due to the influence of the creator.

It is believed that if the brand selects the right influencer, which has not only followers, but also a real influence on its subscribers (the community around the influencer) and if the values of this community resonate with the brand values, the brand will strengthen its message and will get at least $6.5 in Earned media value for each $1 spent.

Moreover, in the future, the brand will be able to take the content produced with the help of an influencer and use it in further advertising companies, including as social proof of its solvency.

Instagram is the main platform for influencer marketing

Historically, Instagram has become the main platform for Influencer Marketing.

The main advertising tools for influencers are Posts and Stories.

The market turned out to be very democratic. With a lot of players.

Over 380 new influencer marketing-focused agencies and platforms established in 2019.

$5.24 billion are shared by hundreds of Influencer Marketing Platforms, Public Relations firms, Influencer Marketing agencies and millions of Instagram Creators.

Influencers themselves, in addition to dividing into personal accounts and brands, can be virtual influencers, pet influencers, beauty and travel bloggers, nano, micro, mega(in terms of the number of followers). They can post about their lifestyle and conduct Instagram with TikTok t and YouTube in parallel, or they can be part of meme public networks and distill subscribers from one public to another.

Pricing is individual for each influencer. It may happen that a blogger with 10,000 subscribers will ask for $ 500 for the post just because he wants to, and an account with 1,000,000 subscribers will sell ads for $100, because 95% of the subscribers are bots.

But by default, influencers charge on average $15 for post per 1000 subscribers.

Some influencers can work with Brands on a barter basis (a stop at the hotel, a new pair of sneakers). Newer brands love sampling among influencers..

The main characteristics of influencers that are available to everyone are the number of followers and the Engagement Rate. (Percent of the audience who like or comment the posts).

Major Influencer Marketing Players

The goal of an influencer is to grow to such a size as to collaborate with brands and sell their products.

The brand's goal is to find an influencer with an authentic community that fits the portlet of the brand's target audience, who unconditionally believe the influencer who will post the brand message for minimal money.

The goal of PR managers is to sell the brand of influencers.

The purpose of the platform is to give the influencer to sell himself and make a commission.

Direct brand advertising through influencers is quite difficult.

It is necessary either to form a department for working with influencers in house or to turn to platforms or specialized influencing marketing agencies or public relation companies.

If the brand has small budgets, then platforms are quite suitable, though there are a lot of commercial accounts that are created for the purpose of monetization through advertising and there is no community behind them.

PR companies and Influencer marketing agencies, as a rule, have a pool of their bloggers, which they sell, but if necessary they are ready to sign any blogger to you (with their commission, of course)

To survive and get a piece of $5 billion pie, firms use strategies proven in other businesses: they niche and gain a competitive advantage through technology.

It's easier to niche than to master technology, so there are many small agencies on the market that specialize in pet influencers, virtual influencers, cannabis influencers, etc.

As for technology, companies can either develop their technology or buy someone else's (for example HypeAuditor's technology) Influence marketing takes place on a digital platform,and most of its main processes can be digitized.

$5.24 billion is a lot or a little?

In 2019, Instagram earned $20 billion on advertising.

It turns out that business officially paid Instagram $20 billion for official ads placement and spent about $5.24 billion on influencers through platforms, public relations agencies and directly.

25% of Instagram's annual revenue revolves on its platform, but pass by it and are not controlled by Instagram.

Let's try to understand why and what Instagram can do with it.

$5.24 billion may seem like a lot of money, but if you figure out what it consists of, then it will cease to be so impressive.

About 80% of this amount of money is remuneration of influencers and 20% commission of platforms, PR managers and other intermediaries.

$4 billion are divided among millions of creators and $1 billion is shared among hundreds of relations firms and platforms.

What Instagram is doing with Influencer Marketing?

Instagram took the first steps to get a piece of that cake

1. Instagram introduced a collaboration with advertising posts so brands can turn influencer's posts into ads and promote them.

2. Instagram started to test it's own Influencer Discovery tool.

But we need to understand that in many respects, Influencer Marketing is not only technology but to a greater extent communication with influencers, inventing creativity, control and analysis. This is the human expertise that it is not yet possible to fully digitize, namely, it takes most of the remaining billion.

Instagram will try to launch a platform where the brand will be able to find an influencer and agree with him on the placement. Perhaps this will be a useful tool and part of small advertisers and brands with their in-house departments will go to it.

But Instagram will definitely not show the number of fraud audiences, and this is essential when choosing an influencer and negotiating a price.

And Instagram cannot be specialized as niche agencies do.

Instagram will become just one of the players, one of the platforms, but will not greatly change the situation on the market.

It is not profitable for him to put obstacles in the wheels of influencers.

After all, it is they who create the best and most demanded connection on the platform for the sake of which millions of people come there every day.

$5.24 billion is not enough. The market must and will grow.

Read next: Facebook To Finally Start Featuring Ads On Instagram IGTV, Plans To Share Revenue With Content Creators
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