How coronavirus could burst the social media influencer industry
Imagine becoming rich without showing up at an office or answering to a boss. You have no commute except for occasional paid flights to some of the most exotic locations on the planet for photos in the sun. Think about staying home and receiving shipments of designer clothes and jewelry to promote online. It may sound like a dream to you, but for a huge number of young adults who make money as influencers, this is their own reality.
But this $8 billion social media influencer industry is probably a bubble, and the coronavirus may finally burst it. Instagram is certainly the most prominent platform for mostly women who utilize their accounts to gain followers and lucrative sponsorships with brands ranging from Target to Prada. While there are famous examples like Kylie Jenner, there is a major number of influencers with sizable audiences who are not big household names. Users with 100,000 to 250,000 followers can earn anywhere from $2,000 to $6,000 for each sponsored post, and those with over a million followers can command up to $10,000 or more for each sponsored post.
Estimates showed that companies would spend $15 billion on influencers by 2022. Before the pandemic, nearly 80 percent of major brands funded influencer campaigns on Instagram. Around 130 million accounts on the social media platform clicked on a sponsored post to learn more about a product at least once a month. But significant shifts in the economy and consumer spending these days could change the entire business model.
More than 30 million Americans are out of work. Retail and travel, those industries influencers rely on heavily for income, are taking perhaps the hardest hit. Overall retail spending was down almost 9 percent in March alone, while consumer spending on goods like clothes has fallen by over half. Mass layoffs, job insecurity, and a recession mean that people could adopt frugal spending habits until the economy recovers, which will take years. Americans concerned about putting food on the table are unlikely to spend on luxury goods like designer handbags or expensive furniture.
With consumer activity cratering, it is doubtful that large companies will continue to pour billions of dollars into Instagram influencer campaigns. Indeed, a case study of social media habits during the last recession saw that social media spending for each post fell dramatically between 2008 and 2010. Even goods in high demand during the current crisis, like face masks and hand sanitizer, have been banned from Instagram advertising.
The picture is no rosier for travel. Total domestic and international flights have declined by more than 90 percent, and the fear of flying could stay with us for long. Considering that 70 percent of Americans say that they are not comfortable traveling by air, and that it will likely take months to feel comfortable again, the ability to convince consumers to book their dream vacations is out of reach, even for the most popular influencers.
For those who earn a living on social media, the coronavirus marks a shift that will push influencers to evolve or become extinct. Some influencers could fare better in the pandemic than others. Those reliant on beautiful photos of vacations or luxury goods could be doomed by this pandemic. But accounts that can engage an audience that is increasingly thrifty and captive at home are more likely to survive. Users who live stream recipes or exercise routines will stand in a stronger position to weather the crisis than those who rely on free trips to Greece. Such live stream videos may be one of the few models that can still maintain corporate sponsorships.
While some influencers may climb out of the sponsorship apocalypse, the model is likely crushed by the pandemic. If that data from the 2008 crash is any indication, there could be a steep decline in not just the quantity of sponsorships, but those lucky accounts who can still bring them in could also see their rates slashed in half. Small and medium influencers reliant on this inflow of money could see their worlds crash down around them.
For an industry built on the idea of fame through mindless consumption, many Americans could actually welcome its stumble. The collapse of this vapid aspect of social media could shift attention away from conspicuous spending toward more responsible habits. There are few silver linings that come from fear and panic. So as we consider what is truly important in a crisis, the fall of Instagram influencers may not only allow us to clean out our feeds, but show us simply how shallow their model was to begin with.
Kristin Tate is a libertarian author and an analyst for Young Americans for Liberty. She is a Robert Novak journalism fellow at the Fund for American Studies. Her newest book is “The Liberal Invasion of Red State America.”
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.