Upstart agencies tap into influencers

Influencer marketing agencies in Europe are booming as brands shift their advertising spend from traditional media to social networks. And the financial impact is already apparent in their revenues, as the ‘creator economy’ responds to the way consumers use online platforms — such as Instagram, YouTube and TikTok — to inform their shopping choices.

The whole content creator sector is now expected to roughly double in size by 2027, to be worth nearly half a trillion dollars, according to estimates from Goldman Sachs.

“The market has evolved, we are way more professional as an industry, and the return on investment when influencer marketing is done right is incredible,” says Thomas Angerer, co-founder of BeInfluence, a Belgium-based agency, which is ranked 58th in the latest FT 1000 list of Europe’s fastest-growing companies. It is one of nine companies specialising in influencer marketing to make the list.

BeInfluence, which was founded in 2017, has grown its revenues over the past year to €4mn, Angerer says, and is forecast to generate up to €7.5mn in 2024. He says newcomers to social media have aided growth, such as the European Commission and French government, which are now clients.

This success reflects a huge change in media consumption. The proportion of people watching traditional broadcast television in the UK each week shrank faster than ever last year, according to media regulator Ofcom, as audiences turned to digital services, such as social media and streaming, for entertainment.

Market research firm Mintel found that 69 per cent of 16- to 24-year-olds who follow social media personalities spent more time watching their content online than watching TV.

Advertisers will go where there are eyeballs . . . but they will also go where they can justify that spend

“People have decision fatigue, and short video algorithms reward not having to make a decision about what to watch, [unlike] TV,” says Rebecca McGrath, associate director for media and technology at Mintel.

“We are seeing growth partly because of the changes in the platform formats, with short videos becoming such a big aspect across the [social media] networks. That means consumers have a more passive experience on social media, rather than being active posters, which helps facilitate the popularity of influencer content,” she explains.

Her research found that 28 per cent of 16- to 24-year-olds who follow social media personalities have had their financial choices affected by at least one of these individuals.

For brands, a further benefit of social media content over traditional advertising is being able to gather data on its effectiveness, because digital platforms can show levels of user engagement on posts.

“Advertisers will go where there are eyeballs, advertisers will go where there are emerging generations of spend, but they will also go where they can justify that spend,” explains Becky Owen, global chief marketing and innovation officer at Billion Dollar Boy, another agency in the FT 1000 ranking. “Big money wants to go where big money can be accountable, and traditional means are often quite difficult to assess,” she says, noting that brands “are getting more data on performance in social spaces than they are in other spaces”.

BDB says its client roster grew by 35 per cent last year and, in recent months, brands including Spotify, Diageo, Disney+, Amazon and Dove have committed to spending £11mn with the agency. The company, which also appeared in the FT 1000 ranking last year, is now investing in innovation and growth projects, such as the use of artificial intelligence.

Another area BDB and many others are beginning to expand into is assisting entrepreneurial creators in launching their own products.

“It is a very important part of a career for an influencer, now, to have revenue streams other than advertising, because different platforms have different metrics, short-form video is harder to monetise, and creators are very reliant on algorithms,” says McGrath. “Having direct payments or product ranges is important for a long-term career.”

For the most successful influencers, these revenue streams are more valuable than advertising. US influencer Jimmy Donaldson, known online as MrBeast, with a record 240mn subscribers on YouTube, now sells a range of food products off the back of his social media success.

The 25-year-old says he “loses money” on brand deals as advertisers cannot pay enough for viewership. “There’s only so much money brands are willing to spend on a video . . . for me to get paid a fair price on [a video with 300mn views] . . . it is literally half their entire yearly spend,” he told The Unfiltered Conversation podcast in June last year.

“It is harder and harder to find brand deals for us that keep up with the pace . . . so, it makes more and more sense for me to just build companies that I own because I know if I promote something, that it converts and actually leads to real sales. And so ideally, one day, I don’t have to do brand deals anymore.”

However, one potential challenge for the industry is regulation, as media rules are adapted to include influencers. In recent years, the EU and the UK have introduced specific regulations to crack down on influencer marketing, in the Digital Services Act and the Online Safety Act, respectively. They have focused in particular on social media ac­counts that do not disclose when they have been paid to promote products.

But it is a gradual process. “Until we have a European regulation framework, we have 27 different laws [due to the different member states] . . . and, for a European agency like ourselves, it is very complicated to navigate all the different regulations,” says Angerer.