Scrolling through your Instagram, everyone is promoting something. Whether it’s a detox tea, a resort in Tulum, or a new app, newsfeeds are flooded with promotional content. This new wave of influencer marketing is taking over social media as it is quickly growing into a $10B+ industry. Another hot marketing trend conquering the internet is affiliate marketing. So what is the difference between influencer and affiliate marketing? Let’s break it down so you know how these two marketing strategies work and how they relate to your business.
How does influencer marketing work?
To put it simply, influencer marketing is when an influencer promotes a brand or product, typically through their social media channels. It happens when a company pays (or trades goods or services) an influencer to post about them. The influencer, in turn, endorses the product and “influences” their fans to try it out. Followers look up to this influencer and look forward to their content, therefore these fans are impressionable when this influencer posts about any product.
So what makes someone an influencer? An influencer is someone (or something since for example, dogs can be influencers too, like Tuna) that has a loyal community of followers. Technically, anyone with over 1,000 followers is considered an influencer but the more the followers, the more the influence – and cost to work with them. Mega influencers charge up to $1M per post! CMS Wire broke influencers into these categories:
Mega-Influencer: 1M+ followers
Macro-Influencer: 100,000 – 1M followers
Micro-Influencer: 1,000 – 100,000 followers
Nano-Influencer: <1,000 followers
How is that different than affiliate marketing?
Keeping it simple, influencers get paid to post about a product while affiliate marketers don’t make money until they drive a sale. Influencers often use affiliate marketing to double down on their profits. Let’s take an example and pretend we’re a pet food company. We would pay Tuna (or rather his owner) to post about our kibbles and hope that his followers would 1) learn about our brand, 2) trust we’re awesome because Tuna says so, and 3) buy our product. Say we also have an affiliate marketing program so Tuna can promote a referral link to our online store. Now when people buy our product, we know if they came from Tuna’s influence, and we would pay him a commission for this sale.
Influencer marketing creates immediate brand exposure to a diverse range of people while affiliate marketing widens your chances for direct sales.
What does this mean for your business?
Both affiliate and influencer marketing are vital strategies to consider for any business, no matter how big or small. Small businesses can highly benefit from influencer marketing by focusing on local nano or micro-influencers. Affiliate marketing may not be for every business. If you don’t have a high price point, a low commission payout may be difficult to attract affiliates. Also, it demands an online store. If you’re a local small business, try creating a referral program instead or something to reward loyal customers and capitalize on the beauty of word-of-mouth marketing.
Regardless of which road you choose, it’s important to be well-versed in these two popular strategies. Even if they’re not right for your business, you’ll think twice when you’re contemplating an impulse purchase on Instagram!