How the growth of social media is boosting India's influencers

Feb 28, 2023
How the growth of social media is boosting India's influencers

Posting content online about her lifestyle started out as a hobby for Upasana Kochhar in Delhi.

But when the former strategy director for a large advertising agency was stuck at home during the pandemic-induced lockdown in 2020, Ms Kochhar says she had more time to devote to her videos on Instagram, and things quickly gathered pace.

More and more brands approached her to tie up for partnerships to promote their products — to the point where she was able to quit her job to become an influencer full-time.

“I’m able to earn much more than I was earning in my job,” says Ms Kochhar. “I shoot for approximately three to four clients in a day.”

The videos and photos Ms Kochhar shares on Instagram are typically focused on beauty products, spas, food, events and clothes.

“Advertising has always been my field,” she says. “Communication has been my field. But this is another platform of communication, right?”

As influencer marketing has grown globally, India is seeing rapid traction in the nascent sector.

Marketing spend on influencers in Asia's third largest economy reached about $400 million in 2022 and is expected to increase to up to $3.5 billion in 2028, according to Redseer Strategy Consultants.

“Influencer marketing has definitely been on the rise in India over the past few years,” says Satya Satapathy, the founder of Creation Infoways, a digital marketing agency in India.

“One of the main factors contributing to this growth has been the increasing use of social media platforms by Indian consumers.”

Social media use received an added boost during the Covid-19 pandemic. There are 467 million social media users in India, according to global digital insights platform DataReportal.

This is facilitated by the country’s large — and expanding — internet user base, which has been helped by rising smartphone ownership in the country amid the availability of budget devices and some of the cheapest data rates in the world.

In response, companies have been shifting their spending on advertising to digital media channels.

But against a backdrop of some economic uncertainty and an expected stall in digital advertising spending growth in India, brands “are wary of ballooning digital advertising spends and high cost of customer acquisition”, according to a report by Redseer.

“Leveraging influencer marketing for the niche audience with its higher power of advocacy can be a viable alternative,” it said.

“Brands often find that content generated by micro and macro influencers gives the biggest return on investment on advertising.”

Research from India’s Business Insider reveals that micro-influencers on Instagram, with between 10,000 and 100,000 followers, would typically get 10,000 rupees ($120) to 30,000 rupees per post, while a mega influencer, with more than a million followers, can charge more than 400,000 rupees for a post.

“Influencer marketing has become a massive opportunity for brands to reach and engage with their target audience in India,” says Vikas Mangla, the founder and chief executive of Digital ROI, an advertising services firm.

He says that the country’s popular dairy brand Amul and Nestle India are prime examples of the many companies that are focusing on their influencer marketing strategies.

Amul for years has teamed up with food influencers who share recipes using their products.

Nestle India, meanwhile, has partnered with parenting influencers to promote its baby food range.

“Traditional marketing methods are becoming less effective due to shifting content consumption habits,” says Abhishek Vyas, the founder and chief executive of My Haul Store, an influencer marketing agency in India.

While brands are taking notice of the sector, its growth is also attracting the attention of the authorities, with the government recently announcing new guidelines for influencer marketing to safeguard consumer rights.

“Influencer marketing has rapidly become one of the most effective online advertising strategies, but it also poses potential risks for consumers and presents regulatory challenges,” says Mr Vyas.

The sector is becoming too big to ignore.

Mukesh Vij, the founder of Hashtag Orange, a digital marketing solution provider, says that “it appears that influencer marketing is becoming an increasingly important part of many brands' marketing strategies, and as such, they are allocating a larger portion of their budget to this channel”.

Instagram, owned by Meta, is the most popular platform for influencer marketing in India, while YouTube and Facebook are also widely used.

Beauty, fashion, food, travel and entertainment are the main sectors for influencer marketing.

“Influencers have built their following by being authentic and credible,” says Mr Vij.

“As a result, they can influence their audience’s opinions and purchasing decisions, making influencer marketing a powerful tool for brands in India.”

It can also be a cheaper way to reach audiences than traditional advertising, and it allows companies to target specific communities and effectively reach people across different languages and cultures, he says.

Even micro-influencers are being used by large brands to target niche groups of consumers.

As influencer marketing expands, the Indian government last month issued new guidelines for social media influencers, requiring them to clearly disclose on their posts when they were being paid by brands to endorse products and introducing penalties for sharing misleading information.

Those who fall foul of the rules — including manufacturers, advertisers and endorsers — can face fines of up to 5 million rupees.

Influencers can also be banned from paid promotions for up to three years for posting misleading adverts.

Consumer affairs department secretary Rohit Singh said that these steps were being taken because of the growing size of the market and the impact that influencers have on consumers' purchasing decisions. Therefore, the government has decided that steps are needed to protect consumers.

“Social media influencing is here to stay and it will only grow exponentially,” Mr Singh said in announcing the new guidelines.

Upendran Nandakumar, the founder and chief executive of digital marketing firm Ayatiworks, says it is no surprise that the government is taking a keen interest given that influencers could potentially sway political opinions.

“This influencer segment matters a lot to the government,” says Mr Nandakumar. “Tomorrow, he or she can become anything, if they have a huge fan base.”

Industry insiders say that there is no doubt that the fresh rules are shaking up the influencer marketing sector.

Legal compliance can lead to higher costs for brands and influencers.

“Brands and influencers are confused about the shift, which could have a detrimental effect on the influencer marketing sector in the days to come,” says Ritika Garg, founder and chief executive of AvancePR, a public relations agency.

The move comes amid a movement on social media known as “de-influencing”, where people are posting clips in which they discourage from buying certain products, in a challenge to overconsumption and products being pushed by influencers.

Ms Garg says that as influencers have to label their content as a paid promotion, the viewer perceives it in a very different way.

“Especially in the micro and nano-influencer categories, the disclosure obligation is likely to have an effect on influencers’ brand sentiments and audience perceptions,” she says.

“When posts are marked as ‘paid partnership’ or ‘sponsored’, engagement rates on social sites drop right away.”

Many influencers and companies may have to think more carefully about their partnerships in light of the guidelines.

“Some brands are now being more cautious about how they work with influencers,” says Mr Mangla.

But “in the long run, these guidelines are expected to help build greater trust and transparency in the influencer marketing industry in India”, says Mr Mangla.

This, however, will “depend on how effectively they are enforced and how the influencer marketing industry in India responds to them”, he adds.

Ms Kochhar says she is adding much clearer disclaimers when her posts are advertising content. But otherwise, she does not feel she is being affected much by the move.

Mr Satapathy also believes that regulation will have a positive impact on the industry in the long run.

But he says “there has been some confusion and uncertainty around how to comply with these guidelines”.

“Some influencers and brands are unsure about how to disclose sponsored content in a way that meets the government’s requirements, leading to some reluctance to engage in influencer marketing altogether,” he said.

There are some challenges that still have to be addressed,

“One of the biggest concerns is the issue of fake followers and engagement, which can make it difficult for brands to measure the effectiveness of their campaigns,” says Mr Satapathy.

But as the sector continues to evolve, experts say companies across a broader range of sectors are experimenting with influencer marketing in India.

“I am also seeing a growing number of brands from other categories, such as technology, finance, and health care, experimenting with influencer marketing as a way to build brand awareness and connect with their customers in a more personal way,” says Mr Satapathy.

“Influencer marketing in India is still relatively new, which means that there is a lot of room for growth and innovation.”

Source: thenationalnews