As these businesses are increasingly focused on using social media influencers in their campaigns, marketing promotions for fast-moving consumer goods (FMCG) companies are steadily turning towards digital forums. This is mainly because after the coronavirus outbreak, customers spent a lot of time on digital devices and this has supercharged the influencer market.
Two-thirds of FMCG companies worldwide have either retained their influencer spending at pre-covid-19 levels or increased it marginally during the lockdown imposed to curb the spread of the virus, while almost a fifth (19 percent) lifted it dramatically, a report by consulting firm Duff & Phelps and its Kroll division said.
By 2021, according to the study, almost half of FMCG firms (46%) are projected to spend 31-50 percent of their overall marketing budget on influencers, up 20 percent from the average spent between 2018-2020. More than 70 percent would invest about 8 percent.
The Face Value Study highlights the findings of a survey of over 900 FMCG sector marketing and brand managers across nine global markets, except India. It offers insights into the importance of marketing influencers, as well as the financial and reputational effect of adverse encounters with influencers.
Among FMCG firms globally, the average amount spent per influencer is $22,151 per year. The UK, however, spends an average of $18,602 and enjoys a strong revenue rise to a cost ratio of 73 percent, which is 46 percent above all countries on average.
Usually, FMCG businesses would distribute their spending through hundreds of influencers. Approximately 45% of businesses said they currently work with 51-100 at a time, and this may increase as the influencer marketing strategy becomes more entrenched. The lowest number of influencers tends to be used by UK businesses at about 66, relative to the global average of 81.
In India, FMCG companies such as Hindustan Unilever Ltd, Nestle, and PepsiCo have aggressively begun to partner with influencers through social media channels for a range of products including skincare (Ponds), instant noodles (Maggi), and snacks (Lay’s).
The promotion of influencers often comes with some threats. Around 25 percent of FMCG firms record losses from a negative influencer experience of between $100,00-$250,000.
“FMCG businesses are pleased with influencers’ return on investment and are diverting marketing spending away from other conventional advertising and marketing strategies to keep the momentum going,” said Michael Weaver, Duff & Phelps Managing Director, Valuation Advisory Services.