Influencer Marketing To Be A $5-$10 Billion Market Within Next 5 Years
Why Influencer Marketing Will Be A $5-$10 Billion Dollar Market In The Next 5 Years
In just over half a year, the average monthly search for "influencer marketing" has increased nearly five-fold (from 500 to 2,400 U.S. Google searches). According to Google Trends, interest in influencer marketing has more than doubled within the year. This is a significant increase from the previous year which saw almost a 40% increase (Google Trends).
For many brands in 2015, influencer marketing has proven to be an effective marketing channel supplementing or replacing other channels affected by the growing ad blocking movement. With key demographics spending significantly less time in front of a TV, these "cord-cutters" (many of whom will never consider traditional cable service "cord-nevers") receive their everyday media content solely through social media channels, apps, and platforms.
Although influencer marketing seemingly became popular overnight, many brand-influencer advertising sponsorships started as early as 10 years ago. What started with popular bloggers and blog advertising has now spread into other influencer channels including Snapchat, Instagram, and YouTube. As viewership, audiences, and social platform growth continues to rise, so too will ad dollars seeking to capitalize on the untapped reach and exposure of these marketing channels.
Here are the overarching trends affecting growth in the global influencer marketing market:
- Close to a five-fold increase (5X) in monthly influencer marketing interest over last 6 months. This is at a greatly increased rate from 2014 where interest also increased five-fold but over a twelve-month span.
- Quickly collapsing TV viewership in demographics where marketers are pouring in money to reach (according to an infographic from Adweek, 500% more than other demographics combined). Conversely, 2015 marked the first time time spent on mobile apps (198 minutes) exceeded time spent on TV (Bloomberg).
- Accompanying the decline in TV viewership is the increase in digital ad spend forecasted to overtake TV ad spend in 2016 (WSJ). Although some sources point to a later overtake, the existing US TV advertising market represents roughly $70 billion (PWC).
- Ad-blocking in 2015 is projected to have cost advertisers $22 billion dollars. In 2016, that amount is forecasted to be $42 billion (PageFair).
At present, we estimate the existing influencer marketing spend to be roughly $500 million. Based on the existing TV advertising to digital ad spend market ($70 billion), the reallotment of ad dollars available from ad blocked channels, and the existing rate of increase in influencer marketing, we conservatively estimate the total ad spend in influencer marketing to increase to $5 to $10 billion dollars in the next 5 years.
The Growth Of Social Media Influencers & Audiences
As more of today's audiences become "cord-cutters," declining TV viewership is quickly being replaced with mobile screen time. From 2011 to 2015, traditional TV viewership has dropped by 35% for viewers 18-24 years old (Neilsen). In place of TV, younger demographics are spending increasingly more time online and especially in front of their mobile phones. As reported in Mary Meeker's mid-year Internet Trend report, time spent on mobile media is demonstrating significant growth representing roughly a $25 billion dollar opportunity in the U.S. alone.
With their adjoining reach and targeted groups of subscribers and followers, demand (and therefore sponsorship rates) for top social media influencers is growing. At one point, these advertising rates amounted to hundreds of dollars accompanied with free product. Now, top influencers command rates of tens of thousands for a single Instagram post to substantially more for dedicated YouTube videos and longer-term collaborations. Advertising rates and influencer marketing opportunities for top social media stars (e.g. YouTubers, Instagrammers, Viners) have increased to the point where many traditional talent agencies are now facilitating the next wave of brand deals.
Influencer Marketing Provides Both Content & Distribution Solutions, Solves Ad Blocking Conundrum
Walt Disney's roughly $1 Billion dollar purchase of YouTube MCN (multi-channel network) Makers Studio demonstrates the overarching direction and demand of both content and distribution for today's audiences.
In the later half of 2015, the debut of Apple's ad blocking technology in iOS9 brought ad blocking as a global movement into mainstream prominence. Since then, several notable reports including Adobe and PageFair's "2015 Ad Blocking Report," have indicated the severity of the problem with loss to publishers in 2015 alone to be $22 billion and on pace to hit ~$42 billion in 2016. With billions of advertising dollars at risk, brands and advertisers are searching for the most effective alternative ways to the masses online. As one of the few viable ways advertisers can connect with audiences online unaffected by ad blocking, marketing with top social media stars will continue to see rapid growth.
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December 21, 2015 By Evan