FMCG cos across the globe to boost spending on influencer marketing: Report

Hemani Sheth Mumbai | Updated on November 04, 2020 Published on November 04, 2020

Fast-moving consumer goods (FMCG) companies are shifting focus towards influencer marketing according to a Face Value report by Duff & Phelps and Kroll.

According to the report, FMCG companies have either remained consistent in their influencer spending or have increased the same during the Covid-19 lockdown.

“Two-thirds of FMCG companies have either maintained their influencer spending at pre-Covid-19 levels or increased it slightly, while nearly a fifth (19 per cent) upped it significantly,” the report said.

According to the report, 46 per cent of FMCG companies are expected to spend 31-50 per cent of their total marketing budgets in influencers by 2021.

Influencer spending

Companies are globally spending an average of $22,151 per influencer annually on an average, as per the report. United Kingdom accounts for highest per influencer spending with an average $18,602 per influencer.

UK’s sales increase to expense ratio stood at 73 per cent as compared to the global average of 46 per cent. Companies are also increasing the number of influencers that they hire. 45 per cent of companies stated they usually work with 51-100 at a time.

“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,” Michael Weaver, Managing Director Valuation Advisory Services at Duff & Phelps, said.

“We can’t deny that the lockdown and subsequent restriction measures have also played a part in boosting the industry. But regardless, we don’t expect influencer marketing to slow down post-Covid-19 either,” Weaver said.

Risks with influencer marketing

However, influencer marketing also poses certain risks. As per the report, 85 per cent of companies have had a negative impact on the brand due to their association with an influencer, with 24 per cent of them claiming to have been adversely affected multiple times. 25 per cent of FMCG companies have reported losses between $100,00 and $250,000 from a negative influencer experience.

“Companies spend years creating brands built on trust and loyalty, characteristics which are hard-won but can be quickly lost, and are difficult to regain. When a negative incident with an influencer occurs, the reputational damage that follows can have long-term commercial impacts,’ Benedict Hamilton, Managing Director in Kroll’s Business Intelligence and Investigations practice, said.

“Companies need to do their due diligence and not just take an influencer at “face value.” We are seeing increasing demand from brands to investigate influencers’ online activity and identify potentially sensitive issues, including those posted many years ago, to allow brands to establish whether or not an influencer’s values match their own, and ensure they are making informed decisions about their influencer programmes,” Hamilton added.

The report is based on a survey of over 900 marketing and brand managers within the FMCG sector across nine markets excluding India. This includes UK, US, France, Germany, Ireland, Netherlands, Spain, Italy and the United Arab Emirates.

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Published on November 04, 2020
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