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Marketing Academy.

Virtual Influencers created with AI are among us. Here's what you need to know

Influencer marketing has become an essential strategy for brands that want to increase awareness and drive sales. However, the influencer landscape is evolving rapidly with the emergence of new types of creators. Brands now have more options to choose from: traditional celebrities with millions of followers, micro-influencers with smaller but highly engaged audiences, and even AI-powered virtual influencers . But what type of partnerships with influencers work best? In this article we analyze the unique value proposition of each influencer category and provide data-driven recommendations for marketing agencies and their clients.

Let's start from the evidence that emerged from research conducted in China among Gen-Z.

Traditional endorsement with Celebrity

Celebrity endorsements have been a marketing staple for decades. Brands enter into endorsement deals with famous people such as athletes, musicians or actors to capitalize on their fame and public recognition. The main advantage of celebrity endorsements is their unparalleled reach.

We have dedicated an entire in-depth study to endorsement and how to get the best out of this practice.

For example, football star Cristiano Ronaldo has more than 427 million followers on Instagram – partnering with him gives a brand instant access to a massive, global audience. Even B-list celebrities have follower counts in the millions or tens of millions. Big names also bring credibility and aspirational qualities that resonate with consumers. 67% of Gen Zs say their purchasing decisions are influenced by their favorite celebrities . Brands can easily generate visibility and “buzz” by rubbing shoulders with popular public figures.

However, traditional celebrity endorsements come with significant drawbacks:

  • High Costs: Top celebrities can charge millions of dollars for a single post or brand endorsement. The tariffs are out of reach for many small and medium-sized brands.

  • Limited Engagement: Although celebrities have many followers, their posts generate lower engagement rates than influencers. For example, micro-influencers with between 5,000 and 100,000 followers get an average engagement of 4.5%, much higher than that of a typical celebrity.

  • Risks of reputational damage: If a celebrity faces a scandal, the brands associated with them can also suffer from negative PR and a loss of trust. For example, Peloton shares dropped 11% in one day after the celebrity they sponsored had an on-screen heart attack.

Put yourself in the shoes of the brands that have activated millionaire contracts with Chiara Ferragni (this article is from February 2024, at the moment Ferragni is under more spotlight due to many scandals).

While celebrity endorsements offer unbeatable reach, they can be prohibitively expensive, provide low levels of engagement and put brands at risk in the event of litigation.

Celebrities
Celebrities give brands enormous exposure, but at what risk?

Micro-Influencers

Micro-influencers are content creators, bloggers, or social media personalities with a small but highly engaged following, usually between 10,000 and 100,000 followers.

What micro-influencers lack in reach, they make up for in engagement and relevance:

  • Micro-influencers tend to focus on specific topics rather than general lifestyle topics. Their specialized expertise makes them more trustworthy to followers who recommend them.

  • Their audience feels more connected to them than distant celebrities. This translates to 3 to 5 times better engagement rates for branded content.

  • On average, micro-influencers charge $100 to $500 for each sponsored post, a much more accessible price than celebrity offers.

For these reasons, 82% of consumers are inclined to follow the advice of a micro-influencer on the products to buy. Micro-influencer campaigns also generate an ROI of $5.20-21.00 per dollar spent, outperforming other digital marketing channels.

Compared to celebrity endorsements, micro-influencers offer a better return on investment through higher levels of engagement and conversion rates. Their authenticity also minimizes the risk of reputational damage for partner brands.

However, micro-influencers have a relatively smaller reach within their niches. Brands need bigger budgets to work with enough creators and achieve awareness at scale. Additionally, it takes more effort to manage relationships with hundreds of smaller accounts than just a few big-name partners.

Virtual Influencers

The latest addition to the influencer spectrum is virtual influencers: fictional computer-generated characters who have their own social media accounts and fanbase. Some examples are Lil Miquela , Knox Frost and Imma Gram.

Virtual influencers combine the scalability of broad celebrity reach with the niche focus of micro-influencers:

  1. They are not limited by human limitations in creating high-volume social content. Virtual influencers can generate posts, Stories and Reels non-stop thanks to artificial intelligence and computer graphics.

  2. Brands have full control over their design, personality, post style and messaging. This ensures optimal alignment with the brand identity and campaign needs.

  3. Production costs are minimized after the initial investment in character development. Virtual influencer campaigns have been proven to be 7 to 10 times more cost- effective than human influencers.

However, 60% of consumers still prefer content from real people rather than digitally created characters. There are also limitations in conveying authenticity and creating genuine connections through computer-created fictional characters.

If the technology behind virtual influencers improves over time, they represent an interesting middle ground between traditional celebrity endorsements and micro-influencer marketing.

Virtual
Are we ready for virtual influencers?

Recommendations for entrepreneurs and marketers

Based on their unique capabilities and limitations in terms of reach, relevance, costs and risks, here are recommendations on which influencer partnerships might work best for businesses, professionals and agencies:

Focus on a hybrid strategy

Leverage both micro-influencers and virtual influencers to capitalize on the strengths of both. Micro-influencers increase engagement and conversion rates, while virtual influencers offer a broader reach at a low cost.

Prioritize long-term partnerships

Instead of one-off campaigns, repeatedly collaborate with the same micro-influencers to build brand affinity within their niche over time. Provide additional incentives to make them become true brand advocates. Note that this evidence is consistent with advertising management advice: never stop it .

Get assistance in vetting influencers

As a client, get support from agencies and social media experts. Analyze audience demographics, content style, previous brand collaborations, etc. to maximize results.

Closely monitor campaign performance

Track metrics such as impressions, engagement rate, clicks, conversions and ROI of influencer efforts. Report performance transparently and optimize based on data insights.

Mitigate risks proactively

Carry out thorough checks on potential influencer partners to minimize the risk of damage to customer reputations. Also consider crisis management coverage.

Conclusion

Influencer marketing offers brands powerful opportunities to tap into existing social media audiences and achieve measurable goals. As the industry matures, marketers have options ranging from major celebrities to micro-influencers and even virtually created personas.

Each type of influencer offers unique benefits that smart brands should utilize in tandem . Marketing agencies can offer maximum value to their clients by combining micro-influencers and virtual influencers to achieve authenticity and scale. Customers must at all costs avoid going it alone and making mistakes. Long-term partnerships must be built with creators to root brands in communities over time.

With the right influencer marketing strategy, companies have an impactful tool to cut through the noise and achieve awareness , engagement and sales goals for their clients' campaigns. Performance monitoring and risk mitigation are key to demonstrating the ROI of these initiatives. By leveraging data and customer relationships, influencer marketing can become a sustainable growth engine for brands.

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