From having entered the advertiser’s lexicon as a buzz word a couple of years ago, influencer marketing is increasingly becoming a big-ticket item on a brand’s ad spend plans. According to the latest 'State of influencer marketing in India' report by EY, influencer marketing is set to surge by 25% in 2024, reaching Rs 2,344 crore and projected to hit Rs 3,375 crore by 2026.

As Generation Z and Generation Alpha come to the forefront and change consumption patterns and habits, and look beyond the limelight traditionally hogged by celebrities like actors, athletes, and musicians, this cavalcade of content creators are challenging the status quo, and commanding the same kind of paychecks. But, like with everyone else, even their jobs aren’t immune, thanks, naturally, to AI.

Lil Miquela, a virtual influencer with over 3 million Instagram followers, has successfully partnered with major brands like Samsung and Calvin Klein.  Her ability to connect with a younger demographic in a relatable yet aspirational way is a testament to the power of VIs.

Venugopal Ganganna, CEO, Langoor Digital, agrees that one trend that's captured his attention – and the attention of marketers worldwide – is the rise of virtual influencers (VIs).  “These computer-generated personalities are not just a fad; they represent a significant shift in how brands connect with consumers.”

Advantage AI

The collaboration between virtual influencer Lil Miquela and BMW serves as a compelling indication that the trend towards virtual endorsements is gaining momentum

John Paite, chief creative officer, India, Media.Monks points out that virtual influencers could serve as lifelong brand ambassadors without the need for pay or discipline, offering brands remarkable efficiency across the board.

“While the initial setup and production costs can be steep, the long-term benefits promise significant returns on investment. As AI technology advances and tools for creating virtual influencers, digital avatars and AI characters improve, their development is expected to become quicker and simpler. Given these trends, it's likely that more brands will adopt this model in the coming years,” says Paite.

Indeed, a 2022 consumer survey by the Influencer Marketing Factory revealed that 58% of respondents follow at least one VI.  Furthermore, 35% of consumers have purchased products recommended by VIs, demonstrating their potential to drive sales.

In India, boAt, Titan Eye & Realme have already collaborated with Indian virtual influencer Kyra. “While the flare of AI and the curiosity of the audience are primary reasons for the brands to adapt at this moment, there is potential for virtual influencer creation and management to grow into a market itself,” says Sajeesh Radhakrishnan, Revenue Director - SME & Startups, HiveMinds.

“For one of our QSR clients, 16-18 % of all digital (performance marketing) orders came through influencers. In another client from the insurance sector, we see a conversion of 1.6X higher for influencer-led ad assets. The ease of creating virtual assets will definitely boost brands to adapt virtual influencer strategy to every part of digital channels,” he adds.

Virtual vs Reality?

However, Karan Pherwani, Vice President, Chtrbox says that while it is convenient for brands to have an individual face of the brand in terms of availability and delivery of the brand message, it lacks the authenticity and credibility that the content creator brings to the table. “While AI influencers can flawlessly execute a brand's vision, fostering a genuine connection with the audience, which ultimately drives business growth, often relies on the creator's unique perspective and their leading execution for the brands.”

 “What makes influencers desirable is their unique style, be it their regional accent, familiar setup or the topics they are passionate about. Almost all good influencers keep things real and add their signature to any brand message they deliver. They don’t use brand ad assets but co-create ad assets with brands. There is trust and familiarity between an influencer and their followers,” agrees Radhakrishnan.

And given the burgeoning of the influencer economy, experts agree that there’s plenty of space to grow, with brands going into a future happy in the knowledge that they have plenty of options, both real and virtual. And as alongside its real-life counterparts, AI technology continues to evolve, so will the capabilities of VIs, from VIs interacting with customers in real-time, to personalizing the shopping experience or offering product tutorials. 

“Instead of a zero-sum game, I see VIs and real influencers coexisting and complementing each other. Brands can leverage VIs for targeted campaigns and precise messaging, while partnering with real influencers for broader brand awareness and a touch of human connection,” says Ganganna. Imagine a scenario where a VI spearheads a product launch, generating initial excitement, while a real influencer then reviews the product, offering an authentic user experience. This combined approach can be incredibly effective.

“In summary, virtual influencers are becoming popular because they're easy to manage and cost-effective. However, this trend also allows human influencers to stand out by highlighting their unique human traits. As the industry evolves, human and virtual influencers must find new ways to work together and enhance the overall marketing landscape,” says Paite.