2023 has been a big year for the influencer marketing space as more and more brands, including legacy players, included these brand ambassadors in their marketing mix. This huge and sudden expansion of the influencer marketing space forced government and regulatory bodies like ASCI & SEBI to come up with endorsement guidelines to limit unfair trade practices and misleading promotions on the web.

The influencer marketing space is set to grow at a CAGR of 25% to reach Rs 2,200 crore by 2025, according to industry estimates. e4m spoke to industry experts to understand how has the year been for them and what are they expecting out of the next year.

The year that was 

From brands increasing their spending to government bringing in rules and regulations, this year has been quite eventful for the influencer marketing industry.

Tusharr Kumar, Chief Operating Officer at Only Much Louder said,“The influencer marketing industry has continued to grow significantly over the past year. The pandemic accelerated the shift towards digital platforms, and influencer marketing has been a key beneficiary of this trend. Brands have increased their marketing budgets for influencer campaigns, recognizing their effectiveness in reaching and engaging with audiences."

"However, with increased investment, expectations for measurable returns and impact have also risen. Marketers are now more focused on data-driven strategies and ROI, making the industry more competitive and performance-oriented,” he added.

According to Neelesh Pednekar, Co-Founder & Head of Digital Media at Social Pill, “Influencers marketing category as a whole has shot up from $4.99 BN in 2022 to a projected $6.16 BN in 2023. In India, Instagram has led this change from the front, followed by YouTube. Overall, we have seen a lot of micro and nano influencers come to light this year.  A July report by Neilsen showed that the return on investment for influencer marketing is on par with mainstream media, and the industry is poised to grow at a CAGR of  25 per cent to reach Rs 2,200 crore by 2025. It’s good to see brands allocating dedicated budgets towards influencer marketing campaigns. The pie share of the influencers budget has grown by about 20% in 2023 as compared to 2022.”

“It has been a good year for the micro and nano influencers. However, this year has also upped the expectations bar from the category,” Pednekar added.

Shivam Agarwal, Co-founder, Kromium, says that sectors like luxury retail, retail, gaming, ed-tech, beauty and cosmetics have increased their budgets by 10-15% on influencer marketing.

The year of RRR – Rules, Regulations, Reign 

While influencer marketing truly claimed a spot in the marketing meetings and grabbed a pie of the marketing budgets, it also became a sector that now needed a lot of paperwork. Agencies, brands and creators now have to read up on the rules and regulations before any collaboration. The guidelines by fgovernmental and self-regulatory bodiescovered all categories, right from health & wellness influencers tofinfluencers.

Speaking on the same Kunal Sawant, Business Head, Goat, GroupM India, “In my opinion increasing scrutiny by regulatory bodies on the influencer marketing sector signifies a pivotal juncture. While this endeavour holds the promise of bringing much-needed structure and accountability, the path ahead is not without its challenges. The sheer size of influencers and clients poses hurdles in terms of compliance and standardization. Navigating these complexities requires a concerted effort from both regulators and stakeholders.”

“Striking a balance between regulation and fostering growth is key, and collaborative initiatives hold the potential to create a more resilient and regulated landscape. We recognize the pivotal role we can play in shaping a compliant landscape within the evolving regulatory framework. By providing insights, resources, and support, we aim to empower our clients to navigate regulatory complexities effectively. Through these, we aspire not only to ensure our own compliance but also to contribute to a broader culture of regulatory awareness and adherence within the industry.”

Agarwal says rules are good for the industry. He said, “I think it’s good that regulatory bodies get involved in this sector. Having regulations around things only makes it easier for agencies and brands in the ecosystem to function. Some creators who are not aware of the business world, feel they are being cheated on. But the matter of the fact is they are just not aware. It’s not going to be an easy road, but if the government were to get involved, it would not be too difficult to achieve. We try to educate creators on what different types of taxes are and why it’s important for them to be transparent in their handling.”

Game of Influence: Road Ahead 

In the upcoming year, experts are expecting the stabilization of the industry. What will be intriguing to see is - are budgets going to go up and how are the brands going to measure the success of a campaign.

As per Kumar technological advancements will help the industry to grow. He said, “Advancements in AI and data analytics will further refine targeting and personalization capabilities, making campaigns more effective. The influencer marketing and analytics platform that we have built at OML - Hypothesis aims at helping brands and agencies maneuver the ecosystem better. The self-serve tools let them discover the right creator with detailed filters, conduct outreach, set up the campaign, and track performance on one platform.”

“Overall, while the influencer marketing industry faces challenges such as increased expectations and regulatory scrutiny, its trajectory remains upward, driven by evolving consumer behaviours, technological advancements, and a deeper understanding of the value influencers bring to the marketing mix”, he added.

While Pednekar, this 2024 will be a promising year for the industry. He said, “Year 2024 looks to be a promising year for the influencer marketing industry. Authenticity would be the keyword in most campaigns. Brands will be more focused on partnering with influencers who provide genuine content and have a true follower base. Numbers will start losing their importance. In 2024, more brands are likely to collaborate with micro and nano influencers for targeted campaigns. vCommerce or VideoCommerce or Social Commerce will be a major adoption in 2024 in the field of influencer marketing. Brands would prefer to build long term relationships with influencers they work with and they possibly could become the ambassadors of the brands. The short content format will lead the way for influencer marketing in 2024. Performance driven influencer marketing will increase where the focus would start shifting to the ROI.”