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Social media influencers are making their mark

As much as 12% of online sales in China are done are through affiliate links of social media stars.

Social media influencers, who were once a niche, are now competing with celebrity endorsements for many industry segments. It’s not that these social media stars only make a name for themselves, and get likes and followers, but are handsomely paid by consumer brands for selling their products.

Regulation in some countries has forced these influencers to disclose if a certain post is paid or not but still a majority of them do not state so, making it hard to gauge their income.

A big proof of their stature is that the Chinese tax authorities in 2021-end had to slap a mighty $210 million fine against one such icon who tried to hide her income. Following that the Chinese tax regulator had said that they will go on a drive to ensure that live e-commerce influencers pay their fair share of income tax. As much as 12% of online sales in China are done through affiliate links of these fashionistas, according to an Economist article.

According to estimates, the spending on these social media stars may scale up to as much as $16 billion globally most of them targeted towards the top players who have a following of more than 100,000.

While the focus has often been on how companies are spending their advertising and marketing budget on this new generation of stars, influencer marketing can be cost-effective.

The best case of this is Elon Musk, who is the in-house social media influencer for SpaceX and Tesla, two companies he himself founded. At a time when car brands spend millions in advertising dollars, Tesla does not have an advertising budget.

While Musk is an outlier, even for traditional brands adding influencer marketing to their existing marketing mix can reach undiscovered markets. This is truer for the complex and diverse markets of China and other parts of southeast Asia.

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