Investing in Influencers

Illustration: Chaitanya Dinesh Surpur

Ten years ago, the only way for diehard Shah Rukh Khan fans to catch a glimpse of the superstar was to camp outside his palatial bungalow ‘Mannat’ at Bandstand in Bandra, Mumbai. The 53-year-old star indulges his fans on his birthday and on Eid by waving to the screaming crowds from the terrace of his high-walled fort. Apart from that, the impenetrable walls of Mannat have managed to keep the reality of the difference between the actor and his fans intact.

But today, social media platforms like Twitter and Instagram have broken down the walls between celebrities and fans, giving commoners unprecedented access into their lives. On Twitter and Instagram, Khan is not just the Badshah of Bollywood. He’s a doting father and a loving husband; he tweets a picture of his unruly imperfect post-shower hair, and Instagrams the occasional bad car selfie clicked on his way to work. He posts motivational quotes as picture captions—often done, but a social media misstep—and is found dancing the night away at a friend’s wedding. On these platforms, Khan is as real as his fans.

It is to tap this relatability that marketers and brand experts are willing to dole out the big bucks. “Social media has allowed us as consumers to have a stronger feeling of proximity to our favourite celebrities, becoming part of their daily life, and being able to buy into the products and lifestyle enjoyed by those we admire most. Influencer marketing utilises and leverages this increased intimacy for the benefit of brands and consumers,” says Mike Bandar, co-founder of Hopper HQ, the UK-based maker of a social media tool that allows users to schedule posts on Facebook, Twitter and Instagram.

Celebrities—Bollywood actors, musicians, sportspersons, comedians and authors—are increasingly being paid several lakhs per tweet or Instagram post to promote products, services and even social causes. Official celebrity accounts with a massive follower count can leverage their social media clout to showcase brands to their followers. This is done subtly so that it appears organic, says Amol Dighe, EVP and business head, CA Media Digital, a digital influencer network. CA Media handles exclusive digital rights of leading celebrities like Amitabh Bachchan and Priyanka Chopra.

A brand post can be a temporary story on Instagram, a permanent post on Twitter or Instagram, a Facebook or Instagram Live video, a Q&A session, or a re-share from the partner profile.

The lure of social media influencing is so strong that sometimes the payout per tweet or Instagram post may even exceed what celebrities can make in their profession. So, an influential sportsperson or singer may earn more for one tweet or Instagram post than what they would by playing one match or singing one song.

According to the Board of Control for Cricket in India, as of April 2018, cricketers are paid ₹3 lakh per T20 match, ₹6 lakh per one-day international, and ₹15 lakh per Test match. Industry sources say popular cricketers can earn anywhere between ₹4 lakh and ₹50 lakh, and sometimes even more, for a tweet or Instagram post. While singers earn a meagre fee (₹10,000 to ₹50,000) to sing one song in the movies—a majority of their annual earnings come from live shows and events—they can make ₹10-20 lakh per Instagram post, depending on their popularity.

Hopper HQ released its 2018 Instagram Rich List earlier this year. Kylie Jenner topped the list, with Hopper HQ noting the TV personality and entrepreneur gets $1 million (₹7.07 crore) per sponsored Instagram post. Indian cricket captain Virat Kohli is ranked at #17; he rakes in a whopping $120,000 (nearly ₹85 lakh) for a single sponsored Instagram post, according to Hopper HQ. He was also the only Indian celebrity who made it to the global Instagram Rich List.

“Virat Kohli is a fantastic addition to the Hopper HQ 2018 Instagram Rich List and a real titan on Instagram,” Hopper HQ’s Bandar tells Forbes India. “His Instagram presence balances coverage of the sport, him as an individual, and life around him. Despite being the only Indian celebrity on the list, he is just one of many Indian influencers who are doing amazing things on the social network.”  

From Celebrity to Influencer
A celebrity in the real world is an influencer in the digital world, says Vinit Karnik, business head, ESP Properties at GroupM. The journey of a brand from the real to digital world is also the journey from celebrity to influencer, he adds.
 
When Kohli tweets about Puma and the importance of staying fit or about cleanliness under the Swacch Bharat Abhiyan, the sponsored posts are perceived as his personal choice and opinion by his followers, and therefore become new trends as opposed to endorsements. His fans and followers immediately take notice and are likely to follow suit.

On social media, fans perceive that the celebrity is standing by the product. You don’t need to tell anyone to go and buy it, Jogesh Lulla, head, digital media team and chief operating officer, Cornerstone Sport, the agency that manages Kohli, says.  “Virat only picks the brands that fit his personality and that he is passionate about. Most of them are also things he uses so when he talks about them, it’s about what he feels about the product and it is genuine,” he adds.

Besides, Kohli’s followers who pick up on his new trends, are also trendsetters for their own followers. It’s this unique cascading effect of creating a larger impact, which Twitter and Instagram audiences provide, that brands are eager to cash in on. It’s more meaningful, strategic, subtle, and not in-your-face marketing, Karnik says. “And brands are willing to spend for this ability of an influencer to influence other influencers’ ecosystems.”
 
How the Remuneration Works
CA Media’s Dighe says the remuneration for such posts is decided after considering various aspects, including category of celebrity—number of followers, popularity, fan acceptance offline. Frequency of posts and format of the post—video, visual, GIF—are also taken into consideration.

While big celebrities typically won’t take up single sponsor or post deals—they rather go for three to five month deals—Twitter and Facebook usually go as a package, he says. Instagram only comes into the picture if a [Instagram] story or video is a part of the campaign. Brand videos by celebrities demand a slightly higher premium over plain text or image. Agencies like GroupM usually decide the deliverables which are created, and the videos or images are shot within the dates the celebrity gives for the ad shoot or appearance.

It’s important to note that celebrities rarely take up only social media campaigns. They are usually an extension of their offline brand endorsement commitments and may constitute about 5-10 percent of their total brand endorsement payout.

Digital vs Advertising
Consumers are learning to question endorsements, moving to ad-free over-the-top (OTT) platforms to consume content, and using ad-blockers, all of which restricts the impact of advertising and its reach to the right target audience. Using celebrities to market a product, service or social cause on social media resolves the three-pronged problem. Since ads on social media and sponsored posts are relatively new, there are no filters that can effectively keep them out of a timeline. While Twitter has a “mute” button to weed out topics from the timeline, the fact that such sponsored posts aren’t required to have any pre-determined words by law allows them to filter through on the timeline, extending their reach and engagement and making such digital campaigns more effective for brands.

There’s better targeting of the audience too. Marketers spend millions of dollars every year to understand their audience. On social media, celebrities know their audience best, and brands maximise this to sell their product effectively. “Brands are working with influencers with a strong relevance between them and the product, so the content produced and distributed is often much more effective as the influencer knows their audience better than anyone else,” Hopper HQ’s Bandar adds.

Moreover, since it’s a personal space run by celebrities themselves, the celebrities are also more involved in what goes on the handles. Cornerstone Sport’s Lulla says that the Indian captain is involved in the conceptualisation and creation of every social media campaign that he agrees to do. While the campaigns are created by the agency, “they are run past him and he is involved in everything; nothing goes up on his social media handles without him being happy about it. We get suggestions and tweaks from him often; he has a point of view on everything.”

The return on the investment is also more easily measurable. In advertising, it’s nearly impossible to accurately calculate that. It’s also not possible to link these investments to the change in sales with certainty. In print or TV, subscription or viewership numbers don’t yield any important data. Social media tools for analytics, however, can track the number of people reached, interactions and engagement to know exactly how many eyeballs a tweet or Instagram post has garnered.

The payout per post may exceed what celebs earn professionally

Lulla has a word of caution. “It’s unfortunate to think that getting a celebrity to promote your product on social media will increase sales right away. That’s the wrong way to look at it,” he says. “It’s more of a brand-building exercise. You need to be realistic about sales, no matter who’s promoting your product.”

With all its popularity, it’s also important to note that some popular celebrities such as actors like Ranbir Kapoor and Kareena Kapoor Khan are not on social media yet. “Not everyone big is on social media because they know their value and everyone will flock to cash in on that,” Karnik believes.

Regulations on Social Media
There are no clear guidelines on sponsored posts from the government so far, which means the lines between sponsored and unpaid posts are often and easily blurred. While on Twitter, the best practice is to add a sponsored or paid hashtag which is often not followed by influencers, Instagram has introduced a ‘paid partnership’ tag to alert its users.

“We are committed to upholding the integrity and ensuring transparency on our platform. The paid partnerships tag alerts people when a creator is in a paid partnership with a business. Businesses have access to insights for their branded content posts. We believe that if creators and business partnerships are done well, they can drive meaningful value for creators, businesses and most importantly, for people,” an Instagram spokesperson tells Forbes India.

The Way Ahead
On Facebook, the official celebrity pages have some of the largest fan followings, but the algorithm restricts the number of people who can see the posts, points out Dighe. Today, Instagram and Twitter are the two biggest platforms so that’s what people want. Sponsored posts haven’t made it to homegrown social media platforms like ShareChat that cater to the majority vernacular audience, but Dighe believes once they get bigger, thanks to widespread internet penetration, the phenomenon can reach other homegrown vernacular or regional platforms as well.

India is the seventh largest market, in user terms, for Twitter with 7.83 million active users and second largest for Instagram with 71 million monthly active users as of October 2018, according to Statistica. With cheaper smartphones and data in the market, these numbers are likely to increase. While many social media users are also choosing to delete their profiles and take a break from social media, the number of people who will get online in India will far outstrip them.

CA Media’s Dighe is of the opinion that as social media becomes more and more popular among Indians, the payouts to celebrity influencers will only increase. But for now it remains a tricky business. “It’s not nascent but it’s also not mature yet, which means there is no rate card or benchmark on the financials that the industry follows yet,” says Karnik. But he expects that the government will soon come out with a manual on it.

As the influencer market matures, we may see it getting more structured, with industry standards being set on rates across celebrity categories and some regulations too. Whatever the way ahead, influencer marketing is here to stay. After all, India loves its celebrities.