What Do Beagles, Babies, and Bikini Bloggers Have In Common?

Aspiring influencer Natalie Schlater went on vacation to Bali and posted a controversial photo as she is dressed in nothing but a white bikini and staring off into the distance, her caption’s deep thought is how her life compares to a local rice farmer’s. The post went viral and generated tremendous backlash. She has since deleted her Instagram account.

What do beagles, babies, and bikini bloggers have in common? They’re all influencers, and they all want to sell something to you or for you.

Being photogenic, whether you’re a pet or a person, can be lucrative in the age of social media: Influencers have made their lives into content, and companies have been quick to team up with them, hoping that their endorsement will lead to sales from followers. Yet the pandemic and social justice protests have led to an upheaval in the industry, as influencers face backlashes for their stances, for fleeing coronavirus hot spots, or just for tone-deaf campaigns to sell expensive clothes at a time of record unemployment. While influencing will likely survive, not all influencers will, meaning brands will have to be picky about who they partner with, or face guilt by association.

“Not all influencers are created equal, and the consumer’s not stupid; they know who’s authentic,” says Jefferies analyst Randy Konik. “Companies are learning that just aligning themselves with the faddish or most popular influencers may not be the best strategy long term.”

That’s truer now more than ever: While influencers have always been able to buy followers and comments to exaggerate their reach, the public nature of their lives means that problematic opinions and past actions can come back to haunt them even if they’ve tried to scrub their accounts. And consumers have been quick to criticize brands that have partnered with influencers who have behaved badly.

“It’s a tricky place to be…I would not want to be that kind of business owner right now,” says Gabriella Santaniello, founder of A Line Partners, an independent retail research firm. “No one is immune; if people see an injustice…[an influencer and a company] will get called out on social media. That’s forced a lot of retailers and brands to go back, look at their DNA,” and re-examine their influencer partnerships.

Not all these partnerships will go away: While influencers and companies that sponsor them are notoriously unforthcoming with dollar amounts, the market was worth about $8 billion last year, by some estimates, with nearly two-thirds of companies increasing their budget for this category. Some industry sources say that the majority of companies generate at least $2 in sales for each dollar invested.

Yet questions of authenticity will be more important than ever because shoppers are becoming more discerning. If consumers see a constant barrage of ads from many different companies on an influencer’s Instagram or have bad experiences with products they recommend, it weakens the connection they feel to that influencer—and thus diminishes their selling power. “People have more skepticism these days, so the idea of trust is very important,” says Cowen & Co. analyst Oliver Chen.

So which companies are doing this best? In many cases, it’s specialty retailers and athletic brands. That’s because instead of throwing money and influencers with the highest follower counts, they’ve been able to cultivate relationships with niche celebrities who have smaller but more loyal and engaged audiences that dovetail with their products.

Lululemon Atheltica (LULU) and Nike (NKE) are prime examples. Lululemon recently purchased an at-home fitness company founded by one of its former brand ambassadors. Nike’s Play for the World campaign harnessed the star power of top athletes to encourage responsible behavior and to stay front of mind as more consumers focus on their fitness at home. That led to the brand reporting double-digit increases in digital sales across the globe in its most recent quarter. Skeptics might point out that Nike’s overall sales fell in the period, but that appears to have more to do with store closures than a problem with strategy. Given the ongoing headwinds from Covid-19, “right now working with influencers is very much retaining your customer base and not losing them versus necessarily expanding sales,” says Santaniello. Brand ambassadors are one way to connect with consumers during the pandemic, who will be willing to spend more often and freely when the virus threat recedes. This will be especially valuable—for both companies and influencers—because even as people are willing to spend, ongoing economic uncertainty may alter their habits. “People are less open to discovery now, they’re not just sitting there scrolling for inspiration,” says BMO Capital Markets analyst Simeon Siegel. “Influencers used to convince you to buy something you didn’t know you wanted. Now people know what they want.”

The companies’ sales are also robust, showing their strategy, including the use of brand ambassadors, is working. Pre-pandemic, Nike hadn’t seen sales growth contract year over year since 2010; Lululemon hadn’t seen sales growth fall below double digits since it went public in 2007.

Of course, that’s not all attributable to their work with social media stars, and neither company has executed flawlessly in this area. Yet both have chosen wisely in recent years, speaking to the value of brand ambassadors that have honed their image, rather than those who have just chased a variety of lucrative sponsorships.    

Jerry Seinfeld once opined that our entertainment should be pithy and interesting: “If I want a long boring story with no point to it, I have my life.” Yet for influencers, their lives are their story, and those with the best narratives will be the ones to survive.