Over the past few years, we’ve seen the use of online influencers shift from an afterthought to a key budget line in a brand’s marketing plans. Brands like Boohoo and Gymshark have boomed through their clever grasp of influencers and social media. Not to mention Kylie Jenner, the world’s youngest self-made billionaire who built her eponymous cosmetics brand by harnessing the value in her own profile. When we consider the target demographics, this industry is only going one direction. Simply put: estimated at $6.5bn for 2019, the influencer marketing industry has become big business and even the FT's talking about it.
As the FT says, there are indeed still concerns about regulation, measurement and even follower fraud. However, it’s clear that the industry is maturing from a compliance standpoint whilst also, critically, demonstrating more robust measurability. Market trends like clearer labelling of ‘sponsored’ content and a more common blending of agency and platform services are seeing to this. From what we see, the firms that are having the most success are embracing these changes along with occupying more touchpoints in the social sphere like Social Chain and The Goat Agency.
That said, the global market is still fragmented with over 700 players currently and M&A in this space has been fractious and infrequent too. Whilst 2018 saw some interesting activity, a fair bit of time has passed since some of the industry’s more noteworthy deals (You & Mr Jones bought theAmplify in April 2016 and Google bought Famebit in the same year). It seems, though, that we have now reached a turning point. The major marketing groups are coming to terms with the risk of cannibalising their own, more lucrative, traditional advertising revenues to ensure they can offer contemporary influencer marketing services. This obviously requires investment and whilst organic growth is a no-brainer, acquiring the right target provides a quick way of bolstering their arsenal.
So, it’s quite likely we’ll see a wave of consolidation in this market. Successful smaller players merging, larger incumbents expanding inorganically through bolt-ons and the major marketing groups making strategic moves are all possibilities as this industry continues to expand. Private Equity is never far away from this conversation either.
We could be looking at a very different landscape in the near future; one with a lot more hashtags.