Knockout: Facebook positions to take a piece of global Influencer marketing budgets

Image: Wikipedia

Over the past few months, Facebook has made three changes to the way influencer marketing works. Together, these changes give Facebook Inc. a very strong position in influencer marketing, and a good shot at eating a big slice of the global influencer marketing money pie.

So what have they done?

  • First, they’ve made it impossible to perform influencer marketing on Facebook and Instagram without notifying Facebook itself (Branded Partner Feature).
  • Second, they’ve made it as easy as possible for creators to make loads and loads of high-quality content (Facebook Creator App).
  • Third, they’ve opened a function to allow brands to easily find and engage content creators in any niche (Branded Content Matching).

This is a brutal 3-hit combo. With these changes Facebook has laid the groundwork to take a huge cut of global influencer marketing dollars.

Let’s see how it breaks down.

The Backstory

Influencer marketing is enormous business (estimated between USD $3.2 and 6.3 billion in 2018). Clearly, this entire economy would be impossible without Facebook and Google’s platforms. Instagram and YouTube are the lead platforms for influencer marketing worldwide. But until recently, Facebook wasn’t seeing a sliver of this value enter their bank accounts.

Meanwhile, Google is keeping 45% of every dollar spent on ads bought against YouTubers’ content. Through this ad-based video monetization and other means on YouTube, Google has been making money off influencers for years.

It’s only natural that Facebook would want its slice of that pie as well. We’ve already seen previous moves in this direction.

The Branded Partner Feature

First, in June of 2017 Facebook launched the Branded Partner Feature. This allows influencers to tag a post as sponsored by a particular brand. If an influencer does so, the brand can boost that post with paid support. They can do so by boosting the influencer’s post, without sharing the post on their own page first. (I wrote more about this last August).

Tagging of this type is necessary for regulatory compliance, as FTC and ASA rules require influencer content to be clearly identified as sponsored.

But this also means Facebook knows which posts by an influencer are organic and which are sponsored by a brand. So Facebook could – in theory – strangle organic reach to zero for every sponsored post and demand payment from the sponsoring brand.

After this, Facebook updated their algorithm to prioritize posts by people over brands, raising the relative importance of influencer content to marketers.

Note that Facebook hasn’t yet strangled organic reach on sponsored posts, on FB itself or Instagram. But their track record suggests they are likely to do so – and it makes great business sense.

Enter the Creator App

Now that brands have an incentive to work with creators on the Facebook platform, it’s important for Facebook to ensure that these advertisers have lots of great inventory to work with.

So what’s important to brands?

A vast variety of fresh, high-quality content to sponsor.

That’s why the Facebook Creator App exists. It’s designed to make it easier for creators to create content, manage their audience interactions and content performance.

There’s no explicit creator monetization features for now – but that might be coming. It’s also less important in light of what Facebook announced last week.

Then, Branded Content Matching

Last week Facebook announced a third development to its platform, which increases Facebook’s offer to brands who want to use the platform for influencer marketing.

The Branded Content Matching feature allows brands to locate influencers on the platform based on audience demographics and biographical features. You can use the BCM feature to find influencers with audiences of mostly married people who own houses, for example, or people in a particular city with kids.

Needless to say this is very powerful audience-based segmentation. Exactly what you’d want if you were a brand trying to choose a micro-influencer to work with, based on ROI rather than lifetime follower counts.

Is this the end for the micro-influencer platform agencies?

Because of this change, a whole crop of businesses is potentially going to die.

Micro-influencer platforms have been mushrooming lately as canny entrepreneurs rushed to fill the influencer marketing niche. Platforms like Indahash, TRIBE and others live to match brands with micro-influencers who can feature their products for a fee. The way these platforms work is that influencers have to choose to sign up, and then brands can give them briefs through the platform. Some of these businesses are so specialized that they exist specifically for Instagram influencers.

But as I’ve said for a while, when it comes to micro-influencer platforms there can be only one. Ultimately the market economics of this work according to network effects – any platform with more influencers signed up will tend to attract more influencers, and then more brands, in a self-reinforcing cycle. The money comes from brands, and they are always going to plump for the platform with the biggest inventory. And Facebook has the biggest inventory of all.

So with this move, Facebook could potentially crush all the smaller players in the field.

So where does this leave us?

As marketers, this is good for us. In a way.

Influencer marketing has been a sort of Wild West free-for-all for years. From a marketer’s point of view there has been a confusing profusion of intermediaries, agencies and startups. Influencers can’t even agree among themselves how much they should be paid for sponsored content.

With this change, Facebook is consolidating and simplifying the marketplace. They’ve assembled in one place all the tools needed really effectively find, engage and manage influencers on Facebook and Instagram – two of the main platforms we tend to work on.

On the other hand, this is all going to come at a cost. If I were in charge at FB, I’d start gradually but inexorably lowering organic reach on sponsored content to zero, and making big brands fork over big money to reach those specialized, high-ROI audiences.

We need to get ready for influencer marketing to become more formalized, and more expensive.

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