HypeAuditor: Instagram’s Influencer Marketing Sector To Reach $22.2B By 2025

According to HypeAuditor data, Instagram’s influencer marketing sector will grow by $8.4 billion over the next three years and reach $22.2 billion by 2025. Despite the impact of economic uncertainties, which in turn resulted in a decrease in investments from Venture capital investments, startups in the creator economy pocketed $2.5 billion, last year. 

The relatively good health of the sector is a clear indication that there are a lot of opportunities for both brands and influencers for monetisation, building personal brands and creating long lasting authentic relationships with key audiences. 

The potential of influencer marketing is very clear and marketers are increasingly turning to creators to launch campaigns, instead of relying on traditional advertising channels which have become less effective since the pandemic. In 2023, we predict that marketers will continue to turn to digital platforms including social media, to make the most of the range of personalised advertising options they provide.

Marketers and brands need to thread carefully in order to fully reap the benefits that digital platforms can provide, especially when it comes to adhering to rules and regulations. The Online Safety Act 2021, which came into effect in January 2022, aims to make Australia’s existing laws for online safety more expansive and much stronger. The Act has significant implications for online service providers and online platforms because it makes them more accountable for the online safety of the people who use their service.

The Online Safety Act gave eSafety new investigative and information-gathering powers to combat violent content, online harassment and scams over social media platforms. If content that has been deemed harmful is not removed by the platform, then an eSafety commissioner could issue a $US111,000 fine to the person who shared it. It could also penalise the platform for failing to respond to the victim’s report within 24 hours and issue the company with a hefty $US550,000 fine. Similarly, social media platforms like Twitter have 24 hours to remove an intimate photo or video of someone that was posted online without the person’s permission if the platform has received a removal notice by an eSafety commissioner.

If brands ignore the Online Safety Act regulations, they can potentially face significant reputational damage as well as financial losses. As such, marketers should take every step to encourage better conduct online and adopt a transparent approach to it. They should monitor any new regulations enforced by social media platforms as well as the industry to ensure they are compliant and seek legal advice when necessary. Moreover, before partnering with influencers, a thorough check should be done to ensure that content creators have not posted or engaged with any controversial content historically, or conducted themselves improperly online.

Marketers should take important steps to ensure authenticity and transparency before partnering with content creators and maintain a focus on safety and responsibility while creating engaging, creative and effective campaigns. 

However not everything is within the marketers’ control. Against the backdrop of economic woes and a global downturn, it is not surprising that companies around the world are adopting a more cautious approach to decision-making and their spending. Economic impacts such as inflation in the Australian market not seen since the 1990’s, a series of relentless interest rate rises and Australian retail turnover falling 3.9% in December 2022, have started to impact ad-spends.

While fluctuations in advertising budgets can cause short-term challenges for marketers, there is still long-term potential for both brands and content creators to thrive. Marketers are increasingly redirecting their advertising budgets to social media to prioritise short-form, swipeable content. In fact, according to a new report by Pathmatics, Facebook scored 63 per cent of social media budgets across Australia’s top 20 digital advertisers in the past 6 months, while Instagram took 27 per cent, TikTok seven per cent and Snapchat three. This means that overall, Facebook and Instagram’s parent company, Meta, secured close to 90 per cent of the social media budgets across those advertisers.

The more brands spend on digital ads on social media platforms, the more opportunities it represents for creators. On top of getting paid by brands, creators can now also get a share of the ad revenue pie on social media platforms such as YouTube and TikTok. In May 2022, TikTok unveiled its first revenue-share programme known as TikTok Pulse whereby the social media platform provides monetisation opportunities to creators in the top 4% who constantly produce the most engaging videos, in categories including beauty, fashion, cooking, gaming and books. The platform is also planning to use contextual advertisements, which means sport ads will be displayed in sport videos, beauty ads on beauty videos, and so on. 

By offering creators 50 per cent of ad revenue from Pulse, TikTok has outperformed YouTube Shorts’ upcoming ad revenue split. Indeed, recently YouTube took the highly unpopular decision to reverse its long-term agreement to give the majority of the revenue generated by content creators back to them. Now, YouTube is taking the larger portion of 55 per cent while creators receive only 45 per cent of it. 

As the creator economy is slowly getting more regulated and as marketers are increasingly seeing the value of social media ads and the benefits of leveraging influencers for their marketing campaigns, marketers and content creators alike need to ensure they always have a finger on the pulse. The booming sector will continue to expand, move and change at a rapid pace and marketers, brands and creators will all need to keep up if they want to maximise their gains.