A groundbreaking influencer marketing study by professors Ryan Dew and Raghuram Iyengar from Wharton School has unveiled fresh perspectives on the cost-effectiveness of mega-influencers versus micro-influencers in advertising campaigns and other influencer marketing strategies. Their research, in collaboration with Zijun Tian of Washington University in St. Louis, challenges the conventional wisdom that more followers always lead to better returns on investment.
Their influencer marketing research was titled ‘Mega or Micro? Influencer Selection Using Follower Elasticity,’ the researchers delve into the relationship between an influencer’s follower count and the engagement their posts receive. They introduce a novel metric, ‘follower elasticity of impressions’ (FEI), which quantifies the percentage increase in views relative to the percentage increase in followers, providing a more nuanced understanding of an influencer’s reach and impact.
The findings indicate that while mega-influencers like Cristiano Ronaldo—who earns upwards of $3.23 million per Instagram post—garner more views, they do not necessarily achieve proportional engagement, such as comments, likes, or shares. The study reveals that engagement rates are higher among mid-tier influencers, those with about 7,500 to 10,000 followers, suggesting a more intimate and potent connection with their audience.
Professor Dew explains that the return on investment declines as influencer popularity increases. “For every additional follower you’re paying for, you’re getting less and less for that,” Dew stated in an interview with Wharton Business Daily on SiriusXM.
However, the study also notes exceptions. Certain types of influencers and content, like gaming, which naturally have a vital social component, show higher FEI at higher follower counts. Similarly, trust and authenticity, crucial in specific campaigns, also fare better with micro-influencers.
The researchers also found that contests, where consumers create template videos about a product, perform uniformly across influencer popularity levels. In these instances, leveraging mega-influencers can be as cost-effective as employing micro-influencers.
This groundbreaking study challenges the prevailing belief that more followers mean better marketing outcomes, advocating for a more nuanced approach based on the type of content and campaign goals. Follower elasticity should be considered a key performance indicator (KPI) in influencer marketing, comparable to established metrics like price and ad elasticity in other marketing fields.
The implications of this research are profound, potentially prompting a strategic reassessment of influencer marketing benefits and how brands distribute their influencer partnership budgets. It underscores the need for data-driven decisions in a rapidly evolving digital marketplace, where the proper influencer selection can make or break a campaign.
