Why Influencer Marketing Is Venture Capital’s Hottest New Market
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Influencer Marketing Venture Capital Economy: The Current Marketplace
In 2018, 70% of marketers are reported to be boosting their influencer marketing budgets. Influencer marketing is predicted to be a $5-10 billion market by 2020.
With the astounding growth of social media channels (Instagram has reached 1 billion users and YouTube has 1.8 billion monthly users) and a general trend of declining TV audiences and revenue, influencer marketing is beginning to see the shift of billions of ad dollars.
While calculating return on investment (ROI) from influencer marketing initiatives has been challenging for marketers, a report by Tapinfluence indicated that influencer marketing ROI can be up to 11x higher than traditional advertising. However, there is still no universal consensus on the numbers or topic. That said, research by Activate found that 71% of surveyed marketers believe influencer marketing has helped them grow awareness, with 67% saying the practice has allowed them to reach a more targeted audience.
As the polls and surveys continue to be evaluated, interest around the topic trends, with searches for “influencer marketing” increasing almost 50-fold over the last five years.
With the potential influx of billions of dollars of annual ad spend, influencer marketing has also attracted the interest of venture capital. The influencer market is prime for investment from venture capital as there have already been a string of successful acquisitions and being blue ocean territory, there’s much technology to be built to funnel those billions of advertiser dollars. The space is much analogous to the shift to programmatic ad buying and ad technology (“Ad tech”) that started in the early 2000’s but started to attract serious venture capital in 2008 and later.
