Influencers moving one more step ahead: ITC (Influencer To Consumer) Brands

Despite of the recent buzz, influencer marketing is not a new practice as it has always been there. All of us have asked for advice or learned from experiences of our friends and family or had idols that inspired us. In fact, Nielsen Global Trust and Advertising report says that 83% of consumers around the world say they trust recommendations of friends and family.

The definition of the term influencer as we usually use it now was officially included in the English dictionary in May 2019. According to Merriam-Webster, an influencer is “a person who is able to generate interest in something (such as a consumer product) by posting about it on social media”.

The first dated influencer was the King of England, back in 1760. King George III endorsed the pottery of Josiah Wedgwood, giving it his royal stamp of approval. Mr. Wedgwood used his newfound “celebrity” endorsement to advertise and sell his products.

There are some outstanding examples of influencers in the 20th century: from Coco Chanel in the twenties to Michael Jordan in the eighties or some actresses such as “Rachel” from friends in the nineties.

The changing profile of the influencer in the digital revolution

Based on what was observed in the late nineties, it seemed that the bigger the celebrity, the better for brands to engage with her to promote their products.

But the rise of internet and, especially, the proliferation of the “bloggers”, who created their own content and shared them with a legion of followers, made marketing teams from brands turn their eyes to those apparently regular people that were able to tell stories that connect and influence a target audience.

By 2004, the era of influencer marketing as we know it nowadays had started and its success was based on the principle that influencers are genuine and they would only promote brands they sincerely stand behind.

And prospects say that influencer marketing is a pushing business: according to Business Insider, the influencer marketing industry is projected to be worth up to $15 billion by 2022, representing a five-year compound annual growth rate (CAGR) of 38 percent.

Different levels of engagement with influencers: from transactional to relational

With the rise of (visual) social media such as Instagram or Facebook, digital influencer marketing for many fashion and luxury brands turned to engaging with the celebrity that had the most followers in those platforms. Brands considered celebrities exclusively as the vehicle to reach a large audience as within a well defined brand strategy.

Probably because of the transactional approach, influencer marketing was a bit in turmoil challenging some influencers’ credibility some years ago, which provoked that both companies and governments to push more and more toward creating regulations and standards.

Nowadays, the word influencer has been dissociated from the word celebrity, as brands understand that, in many cases, it is not about the number of followers but about having the right followers. In other words, building a community through influencers is the new black.

Therefore, brands have been reaching further levels of intimacy with its influencers, signing long term partnerships to become brand ambassadors or even launching capsule collections, such as Katie Sturino for Eloquii, or recently Negin Mirsalehi for Express.

The rise of Influencer-to-Customer Brands

The natural evolution of ways to monetize followers, once influencers have successfully launched capsule collections (one study reveals that 60 percent of influencers worked with an established brand or retailer to create a capsule collection before launching their own brands), is probably creating a brand.

The most representative example of ITC may be Glossier, currently a $1 billion company whose founder Emily Weiss started with Into the Gloss, a beauty blog in 2010. Other beauty ITC brand that recently resonated is Kylie Cosmetics, owned by Kylie Jenner, who sold 51% of the stakes to Coty for $600 million.

But there are several other influencers that have succeeded creating brands, such as Chiara Ferragni with chiaraferragnicollection or Moti Ankari and Marcel Floruss with their men’s shoes site ankari·floruss.

Challenges and prospects for ITC brands

Main challenge upfront for these new influencer-based fashion and beauty brands is their ability to deliver on promise, as partnering with brands to promote products or even being the designer of a capsule collection is a completely different effort than running an end to end business.

Apart from the required economic investment to buy, design, make and sell goods, there are completely new functions and capabilities that are mandatory to run a fashion brand. Although the current digital revolution has allowed outsourcing most of the organization capabilities to focus on core competencies (in this case, digital marketing and maybe design), the main difference is dealing with inventory, which is an (owned) asset that, if not sold at the right time and right price, may provoke a huge negative impact in the new, not yet mature company.

And last but not least, once the influencer owns a brand whose success is based on influencer’s credibility on what he/she recommends, there is a risk to lose equity from both sides in the mid-term, from the brand’s side because of the dependency on influencer’s impacts on followers and from the influencer’s side because of the risk of losing credibility if willing to push the owned brand too much. One way to solve this situation would be Glossier’s approach to micro/nanoinfluencers, who, to make the story short, spread the word in small communities.

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